Page 152 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Unit 8: Formation of Company

Held, if a company is practically defunct, it is not a bar to registration of a new company with a Notes
similar name.
Use of certain key words as part of the name. The Department of Company Affairs has clarifi ed
that if a company used any of the following key words in its name, it must have a minimum
authorised capital mentioned against the key words:
Keywords Required
authorised
capital ( ` )
(i) Corporation 5 crores
(ii) International, Globe, Universal Continental, Inter-continental, Asiatic, Asia, being 1 crores
the first word of the name

(iii) If any of the words at (ii) above is used within the name (with or without 50 lakhs
brackets)
(iv) Hindustan, India, Bharat, being the first word of the name 50 lakhs

(v) If any of the words at (iv) above is used within the name (with or without 5 lakhs
brackets)
(vi) Industries/Udyog 1 crore
(vii) Enterprises, Products, Business, Manufacturing 10 lakhs
Publication of name (s.147). Every company shall:
(a) Paint or affi x its name and the address of its registered offi ce and keep the same painted
or affixed, on the outside of every office or place of business in a conspicuous position in

letters easily legible and in the language in general use in the locality.

Department of Company Affairs has clarified that exhibition of its name in English alone,
without at the same time showing it in the local language will not be suffi cient compliance
with the requirements of the Section.
The words ‘outside of every offi ce’ do not mean outside the premises in which the offi ce
is situated [Dr. H.L. Batliwala Sons & Co. Ltd. v. Emperor (1941) 11 Comp. Cas. 154 (Bom)].
Where office is situated within a compound, the display outside the office room though

inside the building is suffi cient.
(b) have its name engraven in legible characters on its seal.
(c) have its name and address of its registered office mentioned in legible characters in all

business letters, bill heads, negotiable instruments, invoices, receipts, etc. of the company.
Penalty. If a company does not paint or affix its name and the address of its registered offi ce in

the prescribed manner, the company and every officer of the company who is in default shall be
punishable with fi ne.

Also, every officer of a company or any person on its behalf who signs or authorises to be signed
on behalf of the company any bill of exchange, hundi, promissory note or cheque, etc., wherein
the name of the company is not mentioned in the prescribed manner, shall be personally liable to
the holder of such bill of exchange, hundi, promisory note, cheque, etc., for the amount thereof
unless it is paid the company. Personal Liability will, however, be not incurred in the following
cases:
(a) The holder of a negotiable instrument, on which the company’s name has been incorrectly
stated, will not be able to enforce the personal liability under s.147(4) against the offi cer
concerned if the error was due to the holder’s own act [Durham Fancy Goods Ltd. v. Michael
Jackson (Fancy Goods) Ltd. and Another (1968) 2 Q.B. 839].
(b) The word ‘Limited’ is abbreviated to ‘Ltd.’ (P. Stacey & Co. v. Wallis (1912) 28 T.L.R. 219.

LOVELY PROFESSIONAL UNIVERSITY 147