Can an architect incorporate a company or a limited liability partnership (popularly known as LLP) to carry on architectural practice? If not, whether companies or LLPs already set up for the purpose have to wind them up? Is it necessary to obtain prior approval/NOC from Council of Architecture (COA) to set up a company or LLP for carrying on architectural practice? All these doubts and confusions have been put to rest in a recent judgment issued by Delhi High Court.
The Ministry of Corporate Affairs had issued two circulars, viz., circular dated 10.10.2011 and circular dated 01.03.2012. Both these circulars collectively direct that no company or LLP will be incorporated, if it contains the provision of architectural services as one of its objectives, unless it obtains an approval/NOC from the COA to carry on the business or profession of architecture. Further, on 20.05.2013, the COA had issued a notice which stated that it had received a complaint of violation of the Architects Act, 1972 by LLPs and companies by:
- using the word “architect‟ or its derivatives in their names and objects, for the purpose of carrying on the profession of an architect; and
- by appointing foreign architects to carry out architectural works in India, without the prior approval of the Central Government under the Act.
Through the notice, the COA had directed all companies and LLPs to stop such aforementioned alleged violations of the Act, by removing the word “architect‟ or its derivatives from their respective names and styles, and by amending the objects in their respective MOAs (Memorandum of Association) to remove the provision of architectural services in any form.
In a recent court case filed by two architects Sudhir Vohra and Anil Kumar Sharma at Delhi High Court, it was argued that architectural services can only be rendered by those to whom the Architects Act, 1972 applies. In other words, it was argued that only natural persons registered as architects under the Act can use the title and style of ‘architect’ or its derivatives and, further, that only such natural persons can provide architectural services.
Justice Rekha Palli while delivering her judgment observed that “The Architects Act neither prescribes that only registered architects can provide architectural services, nor contains any clause prohibiting companies and LLPs from providing architectural services. In fact, what emerges from the entire scheme of the Architects Act is that it neither defines as to who can provide architectural services nor puts any fetters on persons who wish to provide architectural services. It merely defines an architect to mean a person whose name is entered in the register maintained by the COA and lays down the mandatory qualifications for an entry in the said register. On the other hand, the Advocates Act and CA Act include specific provisions laying down as to who can practice as an advocate or accountant.”
Thus, the Act, while clearly prescribing that unregistered persons, including juristic entities, cannot describe or style themselves as architects, does not preclude any one from providing architectural services. Merely because the Act includes a specific provision prescribing that only a registered architect can use the title of an ‘architect’ or style himself/herself as an “architect‟, it cannot be concluded that the Act in any manner envisages that architectural services can be rendered only by those to whom the Act applies. “In the absence of any provision in the Act prohibiting unregistered natural persons or juristic entities from rendering architectural services, I am not inclined to accept the aforementioned contention that the provision of architectural services is the exclusive privilege of natural persons registered as architects under the Act,” said the Justice Rekha Palli in her judgment. The Statement of Objects and Reasons clearly stipulates that the Act does not make the design, supervision and construction of buildings an exclusive responsibility of architects, it was observed.
Regarding the argument that only natural persons can practice as architects the Justice Palli observed that “Once the 1989 Regulations are applicable to all architects, whether in practice or employment, it can be safely said that all juristic entities carrying out architectural services through registered architects in their employment, are also accountable on a second level, since the registered architects in their employment are bound by the Act and the rules/codes/regulations framed thereunder.”
The HC quashed two circulars issued by the Ministry of Corporate Affairs in October 2011 and March 2012 and notice issued by COA in May 2013, which prohibit the incorporation of companies that include rendering of architectural services as one of their objectives without an approval from the COA.