2023 (2) TMI 952 - HC - Companies Law

LLP Name Reservation Rejection Overturned; Court Clarifies Use of 'AND ASSOCIATES'

Santosh Kumar Verma Versus Union Of India And Another

The court overturned the rejection of an LLP name reservation application due to the use of 'AND ASSOCIATES,' clarifying that it did not require approval ... Rejection of application for reservation of name of the proposed L.L.P. - the words “AND ASSOCIATES” would be reflective of the profession of Advocacy or not - HELD THAT:- The word “AND ASSOCIATES” is not a word indicative of any specific profession and is a generic word which can be used with any vocation or profession or activity undertaken by a person. Other such or similar words as contemplated in the said Rule would safely be words such as Doctors, Architects, Engineers, Accountants, Cost Accountants, Hotel Managers etc. The object of the Rule is to ensure that the distinct word for a profession is not registered as a ‘Limited Liability Partnership’ under the act and rules framed thereunder unless approval thereof is accorded by the Governing Council or the Authority as nominated by the Central Government. The interpretation proposed by the respondent cannot be extended to apply to the use of any other generic word which may be used such as “& Associates” “& Sons”, & “Brothers”. There are no reasons assigned by the respondents in the impugned communication for declining registration of the LLP of the petitioner by the name as proposed by him on the aforesaid ground of the use of word “AND ASSOCIATES” as being a word indicative of a profession and mandating him to seek prior approval of the Bar Council of India is misplaced and is not sustainable and is liable to be set aside. Petition allowed. Issues:Challenge to rejection of LLP name reservation application based on use of 'AND ASSOCIATES' - Interpretation of Rule 18(2)(xvi) of LLP Rules, 2009.Detailed Analysis:1. Challenge to Rejection of LLP Name Reservation Application:The petitioner challenged the rejection of the LLP name reservation application by the Registrar of Companies, Central Registration Centre, Ministry of Corporate Affairs. The rejection was based on the use of 'AND ASSOCIATES' in the proposed name 'S.K. VERMA AND ASSOCIATES LLP.' The petitioner clarified that the application was for a Law Firm, not a Chartered Accountancy firm, as misunderstood by the respondents.2. Interpretation of Rule 18(2)(xvi) of LLP Rules, 2009:The key issue revolved around the interpretation of Rule 18(2)(xvi) of the Limited Liability Partnership Rules, 2009. This rule states that if a proposed LLP name includes words indicative of a profession, approval from the Governing Council of that profession is required. The respondents argued that 'AND ASSOCIATES' indicated a profession, necessitating approval. However, the petitioner contended that this interpretation was incorrect as the rule pertains to specific professional words, not generic terms like 'AND ASSOCIATES.'3. Application of Ejusdem Generis Principle:The judgment delved into the application of the Ejusdem Generis principle, citing precedents to support the interpretation of statutory texts. The principle restricts general words by the preceding restricted words. The court emphasized that the rule applies when there is a distinct genus or category, which was lacking in this case, as 'AND ASSOCIATES' is a generic term not specific to any profession.4. Decision and Directive:After thorough analysis, the court found the rejection of the LLP name reservation application based on the use of 'AND ASSOCIATES' as indicative of a profession to be misplaced and unsustainable. The court directed the respondents to proceed with the petitioner's application as per law and issue appropriate registration, setting aside the rejection.In conclusion, the judgment focused on the correct interpretation of Rule 18(2)(xvi) of the LLP Rules, emphasizing that generic terms like 'AND ASSOCIATES' do not require approval from professional governing bodies. The application of legal principles and precedents guided the court in overturning the rejection and directing the registration of the LLP name as proposed by the petitioner.