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“A system generated harassment:” Kerala High Court on Central Registration Centre of MCA declining incorporation of LLP on Trademark grounds

The Kerala High Court recently took a dim view of delays and hardships caused by Central Registration System of Ministry of Corporate Affairs in processing application for incorporation of a Limited Liability Partnership (Kunhi Muhammed Etayattil v. Assistant Registrar of Companies).

A Bench of Justice N Nagaresh noted that the hassles faced by the petitioner before the Court can be described as “system generated harassment” caused by officials who leave everything to the system instead of applying their minds.

“The facts of the case disclosed 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.

It, therefore, held that the Ministry of Corporate Affairs (MCA) was not justified in declining incorporation of a Limited Liability Partnership (LLP) of the petitioner on Trademark grounds.

Advocates Shameem Ahamad and Cyriac Tom appeared on behalf of the petitioner.

Advocates P Vijayakumar and PR Ajith Kumar represented the Central government.

Facts

Round 1

The Court was dealing with a writ petition filed by the petitioner who with the intention of starting an LLP for providing wellness services, had 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.

The petitioner was informed in May 2019 that the name was available for registration and this was valid for three months.

The petitioner could not, however, make an application for incorporation of LLP within three months.

The same was made on January 23, 2020, when the petitioner filed Form FiLLiP for incorporation of the Limited Liability Partnership under the name ‘Reef Centre for Wellness and Excellence LLP’.

The Assistant Registrar of Companies, approved the proposed name of the LLP with the remark “No Resemblance found, Name can be given”.

However, by way of a system generated mail the petitioner was asked to cure certain defects in his application.

The petitioner was required to re-submit the form by February 2020, failing which the form would be treated as invalid. He was warned that it is a system generated mail and the petitioner should not reply to the mail.

As his address proof, the petitioner had given KSEB electricity bill as a utility bill which did not contain the complete address of the consumer.

To rectify this, he obtained a BSNL telephone connection in the name of the proposed LLP and substituted the same as utility Bill.

He resubmitted the FiLLiP form on February 5, 2020.

Subsequently, another defect was brought to his attention via another system generated email stating that the NOC should be provided by the same person in whose name the utility bill was furnished.

“NOC for registered office is to be provided by the same person or whose name utility bill is furnished if utility bill is on the name of partnership firm than furnished proper deed and name of signing partner should be reflect in the deed,” the mail said.

The petitioner submitted an explanation stating that he had already submitted NOC of the building owner and since there is no existing partnership in the name of the proposed LLP, copy of partnership deed cannot be given.

Later, the application was rejected on the grounds that in case of proprietorship firm, NOC for registered office was to be given on letterhead duly stamped and signed and that Business Visa/OCI card/PIO of one of the proposed partners who is a non-resident Indian, should be furnished.

Round 2

The petitioner again made a representation before the Escalation Authority that the Assistant ROC cannot demand an OCI Card from an Indian Passport holder. Thereupon, the Escalation Authority on March 2, 2020 required the petitioner to file a fresh Form FiLLiP as the maximum number of re-submissions was already over.

The petitioner complied and filed a fresh form but to his surprise and predicament, the respondents informed him that the proposed name included the word “REEF” which is a ™ under Class 5 and hence it cannot be considered.

The petitioner then submitted a clarification stating that Class 5 deals with Pharmaceuticals and related products whereas service being provided by the petitioner falls under Class 35.

Round 3

The petitioner by way of a mail dated June 22, 2020 was again requested to re-submit, with the remark that subscriber sheet submitted in FiLLiP is too old. The petitioner accordingly resubmitted the Form.

The petitioner’s application was again rejected on July 9, 2020, this time on the ground that the proposed name REEF has an existing trademark under Class 5.

The petitioner once again submitted a representation stating that he had reserved the name earlier. Though the period of such reservation was over, in the subsequent communications the petitioner was informed that the name is available and no objections were raised.

Further, the already existing trade mark with the word REEF is under Class 5 whereas the petitioner’s service falls under Class 35, he pointed out.

The said representation did not yield any positive results leading to the writ petition before the High Court.

High Court Judgment

The High Court noted that the petitioner had applied for reserving the name REEF Wellness and Excellence LLP and the name was reserved for the petitioner for three months.

The Court acknowledged that the petitioner could not make an application for registration of LLP within three months.

However, it observed that the petitioner submitted an application for incorporation of LLP in the said name on January 23, 2020. Defects in the application were noted by the respondents in instalments by way of emails and the petitioner was made to file fresh applications time and again, the Court said.

“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.

Eventually, however, the respondents finally rejected the application for the reason that the proposed name of LLP cannot be allowed as it is an existing trade mark.

The High Court then proceeded to examine the issues on merits as regards the Trademark claim.

It noted that the word REEF was included in the names of entities dealing in Class 05 goods in Fourth Schedule to Trade Marks Rules, 2002, namely, 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.

The petitioner, however, proposed to deal in services and his activity fell under Classes 44, 35 or 41 as is evident from communication of the respondents, the Court held.

In this regard, reliance was placed by the High Court on the Supreme Court judgment in Nandhini Delux v. Karnataka Co-operative Milk Producers Federation Limited [AIR 2018 SC 3516].

In that case, the apex court had held that if a trader or manufacturer actually trades in or manufactures only one or some of the articles coming under a broad classification and such trader or manufacturer has no bonafide intention to trade in or manufacture other goods or articles which also fall under the said broad classification, such trader or manufacturer should not be permitted to enjoy monopoly in respect of all the articles which may come under the broad classification and by that process preclude the other traders or manufacturers from getting registration of separate and distinct goods which may also be grouped under the broad classification.

The case of the petitioner in the instant case is on an even stronger footing, the High Court said.

“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 name proposed by the petitioner cannot be said to be identical or deceptively similar,” it was held.

The Court made it categorical that when the petitioner sought for a name for a service which is not identical or deceptively similar to other names already registered for a different class of products, the respondents are not justified in rejecting the application of the petitioner for the reason that the proposed name include the word “REEF” which is existing trade mark under Class 05.

Accordingly, the officials were found to be unjustified in declining incorporation on the ground of similarity of name.

The Assistant Registrar of Companies, Central Registration Centre, and MCA was, therefore, directed to incorporate the LLP without raising any dispute on the name proposed by the petitioner.

 

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