27 May 2021
The Central Registration Centre by the Ministry of Corporate Affairs offers a seamless and quick approach to applicants to incorporate a company. The system automatically vets the name and the requisite forms to highlight any defects in the application. If a defect is found, the applicant is alerted and directed to take the next steps accordingly. This system is generally reliable but, in the case discussed below, it proved rather counterproductive for the applicant.
In the case of Kunhi Muhammed Etayattil vs The Assistant Registrar of Companies and another, the Kerala High Court expressed disappointment over the mistreatment of the applicant’s application by the respondents.
Background:
The applicant, Etayattil, had proposed to incorporate a company and named it Reef Wellness and Excellence LLP. The request was approved due to availability of the chosen name, but the system found certain defects in the application. These were rectified and the application was resubmitted yet, the applicant faced another technical snag as it was alerted by the system. Upon clarifying the subsequent issue, the application was rejected again, the applicant’s response was not entertained by the Registrar, and the matter was escalated to appropriate authorities.
After another series of rejections from the escalation authority, the applicant was directed to submit a fresh application as the maximum number of resubmissions had exhausted. The applicant complied and a filed a fresh application. But this time, a brand-new issue came forth where the system indicated that the word ‘Reef’ was already registered as a trademark in class 5 (pharmaceuticals and related products), hence the application cannot be processed.
The applicant clarified that his business fell in class 35 (advertising and business services), so he was directed to resubmit the application. Upon doing so, the application was rejected again citing the same issue of the prior registration of the word ‘Reef’. In response, the applicant submitted that he made the reservation of the name before the registration in class 5 was made. Even though the period of reservation of 3 months had expired, the applicant was reassured that the name was still available without any objections.
However, none of the representations bore positive results so the applicant instituted the suit in the Kerala High Court.
Verdict:
The court stated that this case put forth a “sorry picture of what can 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 agonizing phase of suffering, where he is condemned to deal with faceless men and machines.”
The petitioner continued to deal with system-generated mails which highlighted different issues in instalments and the petitioner had to make numerous representations and resubmissions. It is important to note that none of the objections mentioned any issues related to the registration of the mark ‘Reef’ during the initial communications.
As per the applicable laws, the name of a company (or LLP) can be rejected by the Registrar if it is undesirable or identical to the name of any other company or its trademarks. Moreover, according to the trademark law, a registered mark can be used only in respect of the class of goods and services for which it is registered. Based on this, different applicants can get the same mark registered if the product or service belongs to different classes.
The court cited the judgment passed by the Supreme Court in Nandhini Delux vs Karnataka Cooperative Milk Producers Federation Limited where the issue of registering similar trade name by different entities for difference classes of products was resolved.
Finally, the court stated that the applicant has presented a strong case because the Registrar had recorded different registered marks like ‘Reeflec’, ‘Reef’, ‘Reefit Forte’, ‘Reefer (Hematanic)’ for products in class 5, which was starkly different from the services the applicant seeks to offer under the name ‘Reef Wellness and Excellence LLP’ in class 35. The respondents were held to be unjustified in rejecting the name and the issue of identical similarity was dismissed.
The Registrar was directed to incorporate the applicant’s company without raising further objections and without causing delays.
This verdict emphasizes the reliance on technology for conducting complicated tasks. The failure of the automated objections may lead to frustrations and delays as it happened in this case. The legal viewpoint of incorporating two or more companies with similar names and different products/services was also clarified while placing reliance on precedent.
Manisha Singh and Simran Bhullar write about the case of Kunhi Muhammed Etayattil vs The Assistant Registrar of Companies & Anr where the Kerala HC expressed disappointment over the dependency on automated systems which caused long delays in processing the application of the petitioner.
The article was 1st published in Lexology
For further information, please contact:
Manisha Singh, Partner, LexOrbis
manisha@lexorbis.com
