23 March 2024 21:45

Synopsis:
Introduction
Types of Partnership Firms
Is Registration compulsory?
Laws governing registered Partnership Firms
Can an unregistered partnership firm file suit?
Case law
Conclusion

Introduction

Registration means to get the partnership firm registered with the registrar of the firms. Before the registration
of the partnership firm in India. Now the registration of partnership firms is governed by the Indian Partnership
Act, 1932. This present Act made the registration of a partnership firm optional entirely at the discretion of the
partners.

Types of Partnership Firms

Under the Partnership Act it is not necessary for every partnership firm to get itself registered. The partnership
business is regulated under Indian Partnership Act, 1932which prescribes two types of partnership firms:
Unregistered firms, and
Registered firms.

An Unregistered firm is formed by entering into an agreement between two competent persons, known as
partners, where the firm is not registered with the registrar of the firms.
Whereas the firms which subsequently get registered with the registrar of the firms by submitting the copy of
partnership deed is known as Registered Partnership Firm.
Chapter VII (Section 56-71) of the Indian Partnership Act, 1932 deals with Registration of partnership firms.

Is Registration compulsory?

Partnership Act, 1932 does not provide for compulsory registration of firms. It is optional for partners to set the
firm registered and there are no penalties for nonregistration.

Laws governing registered Partnership Firms

An overview of the sections 56-71 is as follows:

Sec. 56: Power to exempt from application of this Chapter.
Sec. 57: Appointment of Registrars.
Sec. 58: Application of Registration.
Sec. 59: Registration.
Sec. 60: Recording alterations in firm name or principal place of business.
Sec. 61: Noting of closing and opening of branches.
Sec. 62: Noting of changes in names and addresses of partners.
Sec. 63: Recording of changes in and dissolution of the firm & Recording ofwithdrawal of a minor.
Sec. 64: Rectification of mistakes.
Sec. 65: Amendment of Register by order of Court.
Sec. 66: Inspection of Register and filed documents.
Sec. 67: Grant of Copies.
Sec. 68: Rules of evidence.
Sec. 69: Effect of non-registration.
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Sec. 69: Effect of non-registration.
Sec. 70: Penalty for furnishing false particulars.
Sec. 71: Power to make rules.

Can an unregistered partnership firm file suit?

Effect of Non-Registration of Partnership Firm

Under
section 69,
the consequences of non-registration of partnership firm includes a number of disabilities which are as follows:
1.
No suit to enforce rights arising from a contract under this Act-
A firm whichhas not undergone the process of incorporation cannot file a suit against any otherfirm or third
party. A non-registered firm does not have the privilege to file a suit likeall other registered firms. Another
important essential about this sub-point is that theperson or the third party suing the non-registered firm shall
be already registered inthe register as a firm.
2.
No proper relief-
If the firm is not registered, the claim exceeding ₹100 cannot beset off by a third party, so there is no relief in
this regard to the party. Such a rightcan be only enjoyed by the registered firm.
3.
Partners cannot bring legal action against each other
– An aggrieved partner ofan unregistered firm cannot bring legal action towards each other as they are in
noposition to file a suit in the court or have the power to enforce any right.

Case law

Pradhan Traders v Balaji Provision Stores, 2015

The high court dismissed the petition on the grounds of sec 69(2) as the plaintiff was not a registered firm thus
the suit was not maintainable.

Conclusion

The registration of a partnership firm is optional and not compulsory under the Indian Partnership Act. It is at
the discretion of the partners and voluntary. The firm’s registration can be done at the time of its formation or
incorporation or during the continuance of the partnership business.

However, it is always advisable to register the partnership firm as a registered partnership firm enjoys certain
special rights and benefits as compared to the unregistered firms.

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