JAIPUR NATIONAL UNIVERSITY
(SEEDLING SCHOOL OF LAW & GOVERNANCE)
SUBJECT:- The Indian Contract Act, 1872
TOPIC:- Registration of Partnership is necessary or not
SUBMITTED TO SUBMITTED BY
Dr. Jyotsna Yadav Deepak Mehta
Assistant Professor LLB 2nd Sem.
Seedling school of law and Governance
Jaipur National University
1
DECLARATION
I declare that the assignment entitled “Registration of Partnership is
necessary or not” is the outcome of my own work conducted under
the supervision of Assistant Professor Dr. Jyotsna Yadav at Jaipur
National University, Jaipur. I further declare that to the best of my
Knowledge the dissertation does not contain any part of any work,
which has been submitted for the award of any degree either in this
University or in any other University / Deemed University without
proper citation.
Deepak Mehta
2
CERTIFICATE OF THE SUPERVISOR
This is to certify that the research work entitled “Registration of
Partnership is necessary or not” is the work done by Deepak Mehta
under my guidance and supervision for the Partial fulfillment of the
requirement of L.L.B degree of Jaipur National University, Jaipur
(Raj) India.
To the best of my Knowledge and belief the project: (i) embodies the
work of the candidate himself; (ii) has been duly completed; and (iii)
is up to the standard both in respect of contents and language for
being referred to the examiner.
Dr. Jyotsna Yadav
Assistant Professor
3
ACKNOWLEDGEMENT
I would like to express profound gratitude to Dr. Jyotsna Yadav
(Assistant Professor), for his invaluable support, encouragement,
supervision and useful suggestions throughout this research work. His
moral support and continuous guidance enabled me to complete my
work successfully. His intellectual thrust and blessings motivated me
to work rigorously on this study. In fact this study could not have seen
the light of the day if his contribution had not been available. It would
be no exaggeration to say that it is his unflinching faith and
unquestioning support that has provided the sustenance necessary to
see it through to its present shape.
I must also thank and express my heartfelt gratitude to the library staff
Jaipur National University, for helping me out in carrying out the
research necessary for the Project.
I express my gratitude to my all teachers and friends who has
supported and encouraged me during my study at Jaipur National
University, Jaipur
Deepak Mehta
4
Table of Contents
Introduction………………………………………………………………………
………….6
Is the registration of a partnership firm compulsory ? …………….6
Effect of registration of partnership
firm…………………………………..6
Effect of non- registration of the partnership firm……………………7
Right does not effect by non- registration…………………………………
7
Benefits of registration of Partnership
Firm……………………………….8
Conclusion…………………………………………………………………………
…………9
References…………………………………………………………………………
…………9
5
Introduction
As per the Indian Partnership Act, 1932, it is not compulsory to register a partnership
firm as the firm does not have a separate legal entity. However, having a registration
will make it definite that the firm exists legally .
Many business concepts are available worldwide, for example, private limited
company, public limited company, Limited liability partnership (LLP.), proprietor,
Partnership, etc. Among them, managing a business through the Partnership is an easy,
simple, and popular way.
Generally, the Partnership means refers to two or more partners, who can decide their
rights in the firm business, share the profit and liabilities of the Firm business. They can
also decide how to run a business, which partners can manage a Business on behalf of
all.
Is the registration of a partnership
firm compulsory ?
The Indian partnership act,1932, deals with the partnership Firm,
Whether it is register or not. There is no compulsory requirement for
the registration of partnerships in India.
We refer to the provision of section 58 of the Indian partnership act,
1932, which deals with the application for registration, according to
that section there is specific mention that the registration of a
partnership firm can be effected at any time, now it is clear that the
registration of a partnership firm is not compulsory in India. It may be
registered at any time or later stage.
Effect of registration of partnership
firm:
As we know, that a registered partnership firm is treated more
reliability in business compare to non registered firm. Everyone wants
to get more benefit from their business regarding that it is advisable to
register a partnership firm.
6
The question ” is registrations of partnership firm compulsory” to find
the answer here, we need to know the advantage of registration of
partnership firm. The Indian Partnership Act,1932, under section 69,
defines the non-registration of registration of a partnership firm.
Effects of Non-registration of the
partnership firm:
(1) The non-register partnership can not take legal action against a third party in the
curt.
In the case of Union of India vs. M/s. Durgadutta Biswanath and another, (AIR 1961
ASSAM 2), the Assam high court observed that Section 69(2) in terms prohibits the
institution of the suit by a firm without registration. The words in section 69 (2) are
mandatory and the suit instituted without obtaining registration of the firm is void and
cannot be proceeded with. The subsequent registration of the firm will not validate the
institution of the suit. Nor can the suit be deemed to have commenced on the date when
the registration has been obtained. (4).
(2) Due to the non-registration of a firm can not file suit against other partners of the
firm.
(3) As a partner of a non-registered firm can not file a lawsuit against other co-partners
of the firm regarding the dispute of the firm.
(4) Obliged any third party to file a lawsuit against the unregistered firm is not.
Right does not effect by Non-
registration :
7
Because of the non-registration of a firm, we see the above restriction, however, the
following right does not affect non-register firms, which are given below.
(1) A partner of a non-registered firm has a right to file a suit for dissolution of the
firm. Also, have a right to file a lawsuit for the accounting and recover his remaining
share from the dissolved firm.
(2) The partners, or the firm who have no place of business in India.
(3) Can not file any suit or set-off where the claim does exceed one hundred rupees.
Benefits of registration of Partnership
Firm:
(1) The firm can able to file a suit against third parties:
Due to the registration of a partnership firm, partners of the firm can be able to file a
suit against a third-party in court. For Example, the issues regarding the enforcement of
a right of contract, goods related, like price and supplies, Etc.
That type of issue always comes out during the business of the firm. The registered firm
has the power to file a lawsuit against the third parties.
That right can not be available to the partners of an unregistered firm. However, it
should note that an unregistered firm can file criminal proceedings. There is no bar to
file that type of case against third parties.
(2) The firm has the right to file a suit against co-partners:
During the partnership firm business, there are some possibilities that some issue will
come between the partners and a firm. Or that may be possible issues will arise among
the partners of a firm. For example, it could be any issue regarding profit sharing,
management of partnership firm or enforcement of legal rights in the firm, etc.
The registered firm enables a partner to establish their right in the court. The
unregistered partnership firm can’t enforce any clause of the partnership deed in the
court.
8
As per the above mention, the unregistered partnership firm’s partner can lay down
only criminal proceedings against the other partners and nothing else.
(3) The firm has the power to claim set-off:
The registered partnership firm’s partner is eligible to claim set-off if any third party
file a suit against the firm. Such power is not available for an unregistered firm.
9
Conclusion
After the above discussion regarding the registration of a partnership firm. We shall get
our perfect answer to the question that, “ Is registration of a partnership is necessary or
not ?” As we have discussed, there is no mandatory requirement in the law that
registration of a partnership firm is compulsory. But it is advisable to the partnership
firm should be registered to get all the above benefits.
References
(1) The Indian partnership act,1932.
(2) section 58 of the Indian partnership act 1932.
(3) The Indian Partnership Act,1932, under section 69.
(4) Union of India vs. M/s. Durgadutta Biswanath and another, (AIR 1961 ASSAM
2).
10
