Consequences of Non-registration of partnership firm-

TANMOY MUKHERJI INSTITUTE OF JURIDICAL SCIENCE

Dr. Tanmoy Mukherji

Advocate

 

Consequences of Non-registration of partnership firm-

Tanmoy Mukherji

Advocate

Section 69 of The Indian Partnership Act, 1932, deals with Consequences of Non-registration of partnership firm.

Under the Indian partnership Act, 1932, registration of partnership firm is not compulsory. However, non-registration creates serious legal disabilities. The entire effect is mainly governed by-

Sec. 69 — effect of non-registration-

Sec. 69 imposes restrictions upon-

→The firm

→The Partners

→Contractual claims of the firm.

Meaning of non-registration-

A firm becomes 'unregistered' when

→It is not entered in the register of Firms, or

→partners names are not properly recorded.

Consequences of Non-registration-

1. Partners Can-not Sue Firm or other Partners-

Reference. Case -

2. Firm Cannot Sue third parties-

Example:

→A partnership firm sells goods worth Rs. 5 lakhs.

→Buyer refuses payment.

→If the firm is unregistered, it cannot file a recovery suit.

Reference. Case -

3. No right of Set-off-

If—

→A third party sues the firm.

→The firm cannot adjust its own claim against that third party.

Reference. Case -

4. Contractual rights become unenforceable:

Example-

Reference. Case –

5. Subsequent registration does not cure earlier defect:

Reference. Case –

6. Even Registered Firm suffers if partners Names not updated-

Then suit may still fail.

Reference. Case –

7. Arbitration proceedings also barred-

Sec. 69 affects-

→Arbitration references

→Arbitration enforcement

If based upon contractual rights.

Exceptions to Sec. 69-

Statutory rights and common law rights may still be enforceable.

Reference. Case –