The Act does not make the registration of partnership firms compulsory in India nor does the Act impose any penalties for non-registration. However, certain disabilities are provided in s 69 of the Act for unregistered firms and their partners. In this article we shall discuss registration of partnership firm and effects of its non-registration

The procedure for registration is very simple and the disadvantages of non-registration are so great that generally the partners of a firm would like to get the firm registered. Ss 58 and 59 deal with the procedure for the registration of a firm. The registration of a firm may be affected by submitting to the Registrar of Firms a statement in the prescribed form and accompanied by the prescribed fee. The Registrar of Firms are appointed by the State Government and State Government is also to define the areas within which the Registrars shall exercise their powers and perform their duties.

Appointment of Registrar of Firms and Deputy and Assistant Registrars of Firms:

Section57

Appointment of Registrar of Firms and Deputy and Assistant Registrars of Firms

(1) The State Government may, by notification in the Official Gazette, appoint a Registrar of Firms who shall exercise, perform and discharge the powers, functions and duties of the Register under this Act throughout the State of Maharashtra.

(2) The State Government may likewise appoint one or more Deputy Registrars of Firms and Assistant Registrars of Firms who shall exercise, perform and discharge all or such of the powers, functions and duties of the Registrar and in such areas as the State Government may, by notification in the Official Gazette, specify.

(3) The officers appointed under sub-section (1) and sub-section (2) shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code.

The Registrar of Firms are appointed by the State Government and State Government is also to define the areas within which the Registrars shall exercise their powers and perform their duties. The Registrar of Firms shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code.

Application of Registration:

Section58

Application of Registration:

(1) Subject to the provisions of sub-section of sub-section (1A), the registration of a firm effected by sending by post or delivering to the Registrar of the area in which any place of business of the firm is situated or proposed to be situated, a statement in the prescribed form and accompanied by the prescribed fee and a true copy of the deed of partnership stating :

(a) the firm-name,

(aa) the nature of business of the firm;

(b) the place or principal place of business of the firm,

(c) the names of any other places where the firm carries on business,

(d) the date when each partner joined the firm,

(e) the names in full and permanent addresses of the partners, and

(f) the duration of the firm.

The statement shall be signed by all the partners, or by their agents specially authorised in this behalf.

The application for registration has to be made in the prescribed form, and the same has to be accompanied by the prescribed fee. The State Government has been authorised to make rules prescribing the fee but that shall not exceed the maximum fees specified in Schedule 1, which is Rs. 3/- for the purpose. The application must state the following:

• The firm’s name;
• the nature of business of the firm;
• The place or principal place of business of the firm;
• The names of any other places where the firm carries on business;
• The date when each partner joined the firm, e) The names in full and permanent addresses of the partners; and
• The duration of the firm.

The statement shall be signed by all the partners, or by their agents specially authorised in this behalf. Each person signing the statement shall also verify it in the manner prescribed.

Under Section 56(3) of the Act, a firm’s name shall not contain any of the following words, namely:- “Crown”, “Emperor”, “Empress”, “Imperial”, “King”, “Queen”, “Royal”, or words expressing or implying the sanction, approval or patronage of Government except when the State Government signifies its consent to the use of such words as part of the firm name by order in writing.

When the Registrar is satisfied that the above-mentioned requirements have been complied with, he shall record an entry of the statement in the register called the Register of Firms, and shall file the statement. This amounts to the registration of the firm.

In Rajasthan Trading Co. v Registrar of Firms AIR 1975 A.P. 232 case, the Court observed that a firm may be got registered at any time after the creation of partnership. It is not necessary that it should be registered at the time of its formation. Moreover, the Act does not lay down any time limit within which the firm should be registered. Therefore, there is no period of limitation either for the original registration, or recording of subsequent changes, as contemplated in s 63 of the Act. Thus, the concept of any limitation period or that of reasonable time cannot be introduced either for original registration or for subsequent changes in a firm. Hence, any legislation by the State Government laying down any time limit either for original registration or for recording of subsequent changes will be ultra vires the Partnership Act and, therefore, bad in law.

In Harijan Boot House v Registrar of Firms AIR 1988 Guj. 188. Case, the Court held that the Registrar of Firms cannot reject an application for recording changes in the constitution of the firm on the ground of inordinate delay in submitting the application.

Effect of Non-Registration:

Section69

Effect of Non-Registration:

(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on a behalf of any persons suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm : Provided that the requirement of registration of firm under this sub-section shall not apply to the suits or proceedings instituted by the heirs or legal representatives of the deceased partner of a firm for accounts of the firm or to realise the property of the firm.

(2) No suit to enforce a right arising from a contract shall be instituted in any court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. (2A) No suit to enforce any right for the dissolution of a firm or for accounts of a dissolved firm or any right or power to realise the property of a dissolved firm shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or have been a partner in the firm, unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm : Provided that the requirement of registration of firm under this sub-section shall not apply to the suits or proceedings instituted by the heirs or legal representatives of the deceased partner of a firm for accounts of a dissolved firm or to realise the property of a dissolved firm.

(3) The provisions of sub-sections (1), (2) and (2A) shall apply also to a claim of setoff or other proceedings to enforce a right arising from a contract but shall not affect

(a) the firms constituted for a duration upto six months or with a capital upto two thousand rupees; or;

(b) the powers of an official assigned, receiver or Court under the Presidency Towns Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, to realise the property of an insolvent partner.

(4) This section shall not apply

(a) to firms or partners in firm which have no place of business in the territories to which this Act extends, or whose places of business in the said territories are situated in areas to which, by notification under section 56 this Chapter does not apply, or

(b) to any suit or claim of set-off not exceeding one hundred rupees in value which, in the presidency towns, is not of a kind specified in section 19 of the Presidency Small Cause Courts Act, 1882, or outside the Presidency towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887, or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.

Suits between partners and the firm According to s 69 (1), no suit to enforce a right arising from a contract or conferred by the Partnership Act can be instituted in any Court unless the following two requirements are satisfied:

• The partnership firm is registered; and
• The partners filing the suit have been shown in the Register of Firms as the partners of the firm.

In Neelakantan Omana v Neelakantan Raveendran, AIR 1993 Ker. 196 case, the Court held that if firm is unregistered, the suit by a partner demanding rendition of accounts would not be maintainable.

In Oriental Fire & General Insurance Co. Ltd. v. The Union of India, AIR 1991 Pat. 250 case, the Court held that when a firm takes an insurance policy on a motor vehicle belonging to the firm, the claim under that policy arises out of a contract of insurance, rather than out of statute, i.e., the Insurance Act, and therefore, the same cannot be enforced by filing a suit if the firm is unregistered.

In Mahendra Singh Chaudhary v. Tej Ram Singh, AIR 1987 All 152 case, where one of the partners of the firm, i.e., “A” brought an action for injunction requiring that the cheques for payment to the firm should not be paid singly to the other partner “B”, but should be paid in the joint name of A & B so that the money could reach the coffers of the firm. The said firm was unregistered. It was held that the suit brought by A was on behalf of the firm, and the firm being unregistered, the suit was not maintainable under section 69.

In Atmuri Mahalakshmi v Jagadesh Traders, AIR 1990 A.P. 288 case, the Court held that if the firm is not registered when the suit is filed, but it gets registered during the pendency of the suit, the plaint already filed can be treated as valid from the date of registration of the firm. The Court followed decision of the Madras High Court in Varadarajulu v Rajamanika AIR 1937 Mad. 767 case where it had been held that when the registration has been carried out, the requirements of the Legislature are fulfilled and there is no reason in equity why from the moment of registration suit previously filed should not be allowed to go on.