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'A Sorry Picture Of System Generated Harassment':Kerala High Court Expresses Dismay At Delays By Central Registration Centre In Allowing Incorporation Of LLP

Lydia Suzanne Thomas
24 April 2021 11:47 AM GMT
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The Kerala High Court recently expressed dismay at the delays and hardships brought on by the Ministry of Corporate Affairs' Central Registration System in processing applications for the incorporation of Limited Liability Partnerships (LLP).

Taking note of the predicament of the petitioner, whose application for incorporation was being delayed for various reasons, Justice N Nagaresh remarked,

"The facts of the case disclose a sorry picture of what could be described as a 'system generated harassment' aggravated by non application of mind by officials who leave everything to be dealt with by the system, thereby putting the common man to an agonising phase of suffering, where he is condemned to deal with faceless men and machines," the Court said.

The Court was faced with a writ petition by one Kunhi Muhammed who hoped to incorporate an LLP for providing wellness services. To this end, he filed an application to reserve the name REEF Wellness and Excellence LLP invoking Rule 18(4) and (5) of the Limited Liability Partnership Rules, 2009.

In May 2019, Muhammed was told that the name he chose, REEF Wellness, was available for registration and this was valid for three months. He could not, however, register in time.

Registering in January 23, 2020, he petitioner filed Form FiLLiP for incorporation of the LLP under the name 'Reef Centre for Wellness and Excellence LLP'. The Assistant Registrar of Companies approved this name, which was, however, followed by a system generated mail to cure certain defects in his application. The system generated mail was followed by multiple rounds of communication from both the system and officials each pointing out defects to be cured. The primary defect pointed out was that there was an existing trademark with the proposed name REEF under Class 5 of the Trademark Rules. Despite Muhammed's representations that his class of services did not belong to products covered by Class 5 and that he had reserved the name earlier, there was no progress on his application.

Aggrieved, he moved the High Court.

Taking note of Muhammed's plight, the Court remarked that system generated harassment was aggravated by non-application of mind by officials who left everything to be dealt by the system.

From the facts, Justice Nagaresh highlighted that Muhammed had applied for reserving the name REEF Wellness and Excellence LLP and the name was reserved for the petitioner for three months. While the Court acknowledged that Muhammed did not apply for registration of LLP within three months, the Court pointed out that none of the mails finding defects in Muhammed's application stated any issues with the name.

"In none of the afore mails, the respondents did point out that the proposed name of the LLP is not available. Furthermore, in one mail pointing out certain defects, the respondents even stated that the proposed name can be given to the petitioner," the Court observed.

With respect to the trademark concern that ultimately prompted the rejection of the application, the Court stated that the word REEF was included in the names of entities dealing in Class 5 products - Pharmaceutical, veterinary and sanitary preparations, dietetic substances adapted for medical use, food for babies, plasters, materials for dressings; materials for stopping teeth, dental wax; disinfectants, preparation for destroying vermin; fungicides, herbicides.

Muhammed, however, proposed to deal in services and his activity fell under Classes 44, 35 or 41, which is evident from communication of the respondents, the Court stated.

In this light the Court emphasized that the name proposed by the petitioner cannot be said to be identical or deceptively similar to those trademarks registered in Class 5.

"The registration of word mark already granted by the respondents are "REEFLEC', REEF", "REEFIT FORTE", "REEFER (HEMATANIC)" which are all for products falling under Class 05. The petitioner seeks the name "Reef Wellness and Excellence LLP", not for any product but for a service, and that too which does not fall under Class 05, the Court said.

Holding the officials unjustified in declining incorporation on the ground of the similarity in name, the Court set aside the rejection.

The Court instructed the Assistant Registrar of Companies, Central Registration Centre, MCA to incorporate the 'A Sorry Picture Of System Generated Harassment': Kerala High Court Expresses Dismay At Delays By Central Registration Centre In Allowing Incorporation Of LLP'A Sorry Picture Of System Generated Harassment': Kerala High Court Expresses Dismay At Delays By Central Registration Centre In Allowing Incorporation Of LLPLLP without raising any dispute on the name proposed by the Muhammed.

CASE: Kunhi Muhammed Etayattil v. Assistant Registrar of Companies

COUNSEL: Advocates Shameem Ahamad and Cyriac Tom for Muhammed, Advocates P Vijayakumar and PR Ajith Kumar for the Central government.

Click here to download the judgment


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