“The State Government of any State may by notification in the Official Gazette, direct that the provisions of this chapter shall not apply to that State or to any part thereof specified in the notification.
The purpose underlying this provision was to exempt any undeveloped area to which its provisions may not be suited. So section 56 authorises the State Government of any State to exempt that State from the operation of this chapter, operation of the Act.
(1) The State Government may appoint Registrars of firms for the purpose of this Act and may define the areas within which they shall exercise their powers and perform this duties.
(2) Every Registrar shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code, 1860 (XLV of 1860).
Provision has been made under this section regarding the appointment of Registrar. Powers have been given to the State Government to appoint Registrar of firms for the purpose of this Act and may define the areas within which they will exercise their powers. Sub-clause (2) lays down that the Registrar shall be deemed to be public servant within the meaning of section 21 of Indian Penal Code.
(1) The Registration of a firm may be effected at any time 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 stating—
(a) the firm name,
(b) the place or principal place of business of the firm,
(c) the name 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 their behalf.
(2) Each person signing the statement shall also verify it in the manner prescribed.
(3) A firm name shall not contain any of the following words namely—
“Crown “Emperor”, Empress, Empire, Imperial, King, Queen, Royal or words expressing or implying the sanction, approval or patronage of Government except cover the State Government signifies its consent to the use of such words as part of the firm name by order in writing”.
This section gives executive directions which speaks plainly for themselves. It can be taken to have been settled that the registration of a firm takes place only when the necessary entry is made in the Register of firms under section 59 by the Registrar.
“When the Registrar is satisfied that the provisions of section 58 have been duly complied with, he shall record an entry of the statement in a register called the Register of firms, and shall file the statement.”
Arvind Construction Co. Pvt. Ltd. v. Kalinga Mining Corporation, MANU/SC/7697/2007 : AIR 2007 SC 2144:
“The Supreme Court held that re-registration of firm in the same name does not affect its status. In this case, the firm had been constituted in the year 1949. The appellant company had a contract with the said firm. It was being reconstituted from time-to-time. The fact that foolish or otherwise, a firm in the same name was again registered in the year 2005. It was held that it does not affect the status of the firm.
This section lays down that the Registrar shall record an entry of the statement in the register known as Register of firms only when he is satisfied that the provisions of this section have been duly complied with.
(1) “When an alteration is made in the firm name or in the location of the principal place of business of a registered firm, a statement may be sent to the Registrar accompanied by the prescribed fee, specifying the alteration and signed and verified in the manner required under section 58.
(2) When the Registrar is satisfied that the provisions of sub-section (1) have been duly complied with, he shall amend the entry relating to the firm in the Register of firms in accordance with the statement, and shall file it along with the statement relating to the firm under section 59.”
According to Lindley; As soon as the details are received with the Registrar; registration becomes complete. Filing of the deed and giving certificate thereon are all ministerial work and they will not deprive the firm from the advantage of the Act.
It is necessary that the notice be given to the Registrar for every change introduced in the name or place of business of the firm. Necessary fee is also required to be given to get the change registered for such purposes. Notice of change should be given according to the specifications laid down under section 58 and the same should be verified and signed. The Registrar will record the said change in the Register of firms when he is satisfied about the legality of procedure in giving notice.
“When a registered firm discontinues business at any place or begins to carry on business at any place, such place, not being its principal place of business, any partner or agent of the firm may send intimation thereof to the Registrar, who shall make a note of such intimation in the entry relating to the firm in the Register of firms and shall file the intimation along with the statement relating to the firm filed under section 59.”
According to this section, when new branches of the firm are opened or any running branches of the firm are closed down its notice must be given to the Registrar. Notice of such particulars can be given by any partner of the firm. If, however, no such notice is given the status of the firm will remain the same as it is in case of an unregistered firm. Registrar thereon shall enter it at the concerned place.
“When any partner in a registered firm alters his name or permanent address an intimation of the alteration may be sent by any partner or agent of the firm to the Registrar, who shall deal with it in the manner provided in section 61.”
According to the section when any registered firm or any partner thereof wants to introduce any change in his name as permanent address then this fact must be informed to the Registrar of firms by any partner or agent of the firm. The Registrar will act thereon according to the provisions of section 61 of the Act.
When a change occurs in the constitution of a registered firm any incoming, continuing or outgoing partner and when a registered firm is dissolved any person who was a partner immediately before the dissolution, or the agent of any such partner or person especially authorised in this behalf, may give notice to the Registrar of such change or dissolution, specifying the date thereof, and the Registrar shall make a record of the notice in the entry relating to the firm in the Register of firms, and shall file the notice along with the statement relating to the firm filed under section 59.
When a minor who has been admitted to the benefits of partnership in a firm attains majority and elects to become or not to become a partner, and the firm is then a registered firm, he or his agent specially authorised in this behalf, may give notice to the Registrar that he has or has not become a partner, and the registrar shall deal with the notice in the manner provided in
sub-section (1).”
Section 63 deals with the provision regarding changes in and dissolution of the firm. It lays down that when any change takes place in the constitution of the registered firm then any incoming, continuing or outgoing partner and when dissolution of the firm takes place then anyone who has been a partner just before the dissolution can give the notice of such change as dissolution of the firm mentioning therein the date of such dissolution. Registrar will enter the same in the relevant register. Such notice can be given by the firm itself. This however, makes it necessary for a minor after he attains majority to inform the Registrar as to whether he wants to continue or not to continue as partner.
(1) “The Registrar shall have power at all times to rectify any mistake in order to bring the entry in the Register of firms relating to any firm into conformity with the documents relating to that firm filed under this chapter.
(2) On application made by all the parties who have signed any document relating to a firm filed under this chapter, the Registrar may rectify any mistake in such document or in the record or note thereof made in the Register of firms.”
Rights have been given to the Registrar under this section to rectify the mistake which might have crept into while entering it in the register. This power of the Registrar to rectify the mistakes will include any error or omission by the office staff or by the person himself giving such notice.
“A court deciding any matter relating to a registered firm may direct that Registrar shall make any amendment in the entry in the Register of firms relating to such firm which is consequential upon its decision, and the Registrar shall amend the entry accordingly.
Section 65 deals with the powers of the court determining the issue relating to firms. Court has been empowered by the virtue of this provision to issue directions to the Registrar to introduce such change in the register as has become necessary on account of certain decision of the court.
(1) The Register of firms shall be open to inspection by any person on payment of such fee as may be prescribed.
(2) All documents, notices and intimation filed under this chapter shall be open to inspection subject to such conditions and on payment of such fee as may be prescribed.
This section deals with the inspection of register and filed document. The Register of firms shall be opened for inspection on payment of such fee as may be prescribed from time-to-time.
Sub-section (2) lays down that all such statements and informations etc., shall be open for inspection subject to the following two restrictions—
(i) payment of prescribed fee.
(ii) any other condition which may be imposed by the government.
“The Registrar shall on application furnish to any person on payment of such fee as may be prescribed, a copy certified under his hand of any entry or portion thereof in the Register of firms.”
According to this section anyone can get the copy of the entries in the register on payment of prescribed fee. Certified copy of the register is a sufficient proof that it may be acted upon. The right to obtain certified copy extends only to “any entry or portion thereof”, in the register but does not extend to original documents. It is also to be noted that such rights can be exercised by any member of the public.
(1) Any statement, intimation or notice recorded or noted in the Register of firms shall, as against any person by whom or on whose behalf such statement, intimation or notice was signed, be conclusive proof of any fact therein stated.
(2) A certified copy of an entry relating to a firm in the Register of firms may be produced in proof of the fact of the registration of such firm and of the contents of any statement, intimation or notice recorded or noted therein.
This section deals with the rules of evidence. According to this section, the original documents filed with the Registrar of firms are the conclusive proof of the facts contained in them in relation to any person who has signed them or as against any person who has signed on his behalf. [Birbal v. Firm Bogri Brothers, 1963 MPW (N) 50].
Kapurchand v. Laxman, MANU/NA/0081/1951 : AIR 1952 Nag 57:
Certified copies of the entries are evidence of registration and of the contents of the original but the same cannot be replaced by the secondary evidence.
Het Ram v. Firm Subhag Chand, AIR 1941 Oudh 376:
There is a presumption with the Register of firms that parties shown as members of the firm and as registered are actually members of the firm. Though of course such presumptions are rebuttable.
(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 behalf of any person 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.
(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.
(3) The provisions of sub-sections (1) and (2) shall apply also to a claim of set off or other proceeding to enforce a right arising from a contract, but also not affect,—
(a) the enforcement of any right to sue 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, or
(b) the powers of an official assignee, receiver or court under the Presidency Towns Insolvency Act, 1909 (3 of 1909) or the Provincial Insolvency Act, 1920 (5 of 1920) to realise the property of an insolvent partner.
Comments
(a) to firms or to partners in firms 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 of 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 Presidency Small Cause Court Act, 1882 (5 of 1882), or outside the Presidency Town is not of a kind specified in the Second Schedule to the Principal Small Cause Courts Act, 1887 (9 of 1887) or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.”
(4) This section shall not apply—
This section lays down a nugatory principle. It means that no action will lie against partners or even against third person when the firm is not registered. Court is bound to observe this principle and no amount of agreement between partners can change. It is not only necessary that the firm should be registered but it is also necessary that all partners at the time of institution of suit must be or have been shown as such in the Register of firms.
Badrimal Ramcharan & Co. v. Gana Kaul, 1971 Kash LJ 127:
The object of this section is to make sure that the general policy of the Legislature that all partners should be registered should be carried out. It is also to be noted that though the Partnership Act came into force on 1st October, 1933 it was expressly provided that section 69 will come into force only on 1st October, 1933, and hence section 69 will not bar a suit which had accrued before section 69 came into force having regard to section 74 of the Act.
It may be noted that Partnership Act neither makes the registration of a firm compulsory nor does it impose any penalties for non-registration. However, it provides certain disabilities for an unregistered firm and partners of such a firm or the partners whose names have not been shown as registered partners even though the firm is registered.
Ram Adhar v. R.K. Tiwari, MANU/UP/0224/1981 : AIR 1981 All 405:
Yet registration becomes compulsory at one time or the other because section 69 seriously cuts short the capacity of an unregistered firm and its partners to sue.
Krishna Motors Service v. H.B. Vittala Kamath, MANU/SC/0558/1996 : (1996) 10 SCC 88: AIR 1996 SC 220:
Section 69 is mandatory in nature. Its effect is to render a suit by a partner in respect of a right vested in him or acquired under a contract which he entered into as a partner to be maintainable.
Andhra Pradesh Coop. Wool Spg. Mills Ltd. v. Mahanandi & Co., (2003) 3 BC 313:
The burden of proving that the firm is registered as required under the Act is on the firm or the partner suing.
According to section 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—
(i) the partnership firm is registered, and
(ii) the partners filing the suit have been shown in the Register of firms as the partners of the firm.
(1) Shivraj Fine Arts Litho Works v. Purushottam, MANU/MH/0003/1993 : AIR 1993 Bom 30.
(2) Kerala Roadlines Corp. v. C.I.T. Kerala, MANU/KE/0076/1964 : AIR 1964 Ker 251.
Thus, there should be registration of a firm and the persons suing are or have been shown in the register of firms as partners in the firm. The firm is registered when the entry of the statement is recorded in the Register of firms and the statement is filed by the Registrar as provided by section 59.
(3) Chimanlal v. Firm New India Traders, MANU/BH/0008/1962 : AIR 1962 Pat 25:
This provision bars a suit between partners or between partners and the firm if the firm is unregistered. Even if the firm is registered, only such partners can sue whose names appears in the Register of firms. Therefore, if some partners join after the firm with certain other partners who have already been registered, unless the newly introduced partners are also shown in the Register of firms, they suffer from the disability because only the registered partners can get benefit of the decree.
(4) Loonkaran Sethia v. Mr. Iva E. John, MANU/SC/0048/1976 : AIR 1977 SC 336:
The observation made by the Supreme Court—“A bare glance at the section is enough to show that it is mandatory in character and its effect is to render a suit by a plaintiff in respect of a right vested in him acquired by him under a contract which he entered into as a partner of an unregistered firm whether existing or dissolved void.
In other words, a partner of an erstwhile unregistered partnership firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of section 69 of the Partnership Act.
(5) Jagat Mittar Saigal v. Kailash Chander Saigal, AIR 1983 Del 134:
If the firm is not registered and has been dissolved and suit for accounts of the firm has been filed under section 20, the suit shall not be barred under section 69(1) because such suits have been protected under sub-section 3(a) and (b) of section 69, the right to refer a dispute to arbitrators arises out of contract between the parties. If the relief is limited to accounts or property of the dissolved firm, the non-registration of firm shall not bar the reference of matter to arbitration.
So, disability mentioned in section 69(1) is not such as cannot be cured or removed. In order to remove this disability, partners may get the firm registered before filing the suit.
(6) P. Ananda Rao v. G. Raja Rao, AIR 1978 AP 256:
In a case before the Andhra Pradesh High Court, on the death of a partner, his interest devolved upon his sons who became partners. But this change was not registered with the Registrar and therefore for purposes of suits the firm became an unregistered firm. The sons found that the other partner sold his interest to an outsider. This was a breach of the partnership agreement, which provided for sale only to the other partners. The sons attempted to enforce the partnership agreement but the suit was not allowed. This contention that they should be permitted to sue as the co-owners of the property was also not accepted. Thus, the only chance was dissolution and then to realise the assets of a dissolved firm.
(7) Oriental Fire and General Insurance Co. Ltd. v. Union of India, MANU/BH/0033/1991 : AIR 1991 Pat 250:
It has been 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.
(8) Mahendra Singh Chaudhary v. Tej Ram Singh, MANU/UP/0170/1987 : AIR 1987 All 152:
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 and 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.
Popular Auto Mobiles v. G.K. Channi, MANU/KE/0119/2001 : AIR 2002 Ker 33:
The suit was filed on behalf of the firm. The plaint was signed by the manager of the firm. No power-of-attorney was given to him by the firm to verify and sign plaint on behalf of the firm, nor his name appeared in the Register of firms as a partner. It was held that the suit was bad for non-compliance of mandatory provision contained in section 69(2) requiring the filing of the suit by a partner or an authorised person. Such suit is liable to be dismissed. Such defect cannot be cured by subsequent incorporation of verification and signatures by a partner.
Inder Singh Sham Singh v. Brahma Deo Prasad, (1958):
When one partner is a creditor of another partner or of the partnership, he may be allowed to bring an action for the same.
Section 69(2) deals with enforcing claims by the firm against third parties, and prohibits the enforcing in a suit of any right arising from a contract against a 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.
One important point is to be noted in connection with this rule. This section does not affect the right of a third party to proceed against the firm or its partners even though unregistered, nor does it affect the right of the official assignee to realize the property of an insolvent partner.
It is also important to note that the Act does not lay down that any transaction of an unregistered firm will be invalid, it merely says that a firm will not be allowed to take the assistence of a civil court, except upon the condition precedent that it is registered. Registration may be affected by a firm at any time before filing a suit or taking other civil proceedings in a court against third parties.
A & Co. is registered as a partnership firm in 2000 with A, B and C as partners. In 2002 A dies. In 2003 B and C sue X in the name and on behalf of A & Co. without fresh registration. Is the suit maintainable? What difference would it make, if in 2003 B and C had taken a new partner D and then filed a suit against X without fresh registration?
Ans. The suit is maintainable without fresh registration if an additional partner D, had come into the firm as a partner and his name had not been entered in the register in accordance with notice of a change in the constitution could not sue, because although it was a registered firm D, one of the person suing, would not be shown in the Register of firms as a partner in the firm at the date of the suit. Pratapchand v. Jehangirji, 42 Bom LK 487.
According to section 69(2), if the firm is unregistered, no suit to enforce a right arising from a contract can be instituted by the firm or its partners against a third party. Sub-section (2) also requires two conditions to be fulfilled before a suit can be instituted against a third party.
(i) the firm must be registered firm, and
(ii) the person suing must be shown in the Register of firms as partner of the firm.
To enforce the rights against third party, it is not enough that the firm is registered, it is further necessary that the person suing is or has been shown in the Register of firms as a partner in the firm.
(1) Ram Adhar v. Rama Kiral Tiwari, MANU/UP/0224/1981 : AIR 1981 All 405:
The plaintiff sold bricks to the defendant. The defendant not having paid price of bricks to the partnership firm, the plaintiff sued the defendant for the recovery of the price of bricks. The Allahabad High Court held that such a suit is barred by section 69(2) and as such the suit was not maintainable.
(2) Loonkaran Sethai v. Ivan E. John, MANU/SC/0048/1976 : AIR 1977 SC 336:
A plaint filed in violation of section 69(1) and (2) shall be void and cannot be amended under Order VI, rule 17 of Civil Procedure Court. The court is not competent to entertain such a plaint.
(3) Shreeram Finance Corporation v. Yasin Khan, MANU/SC/0341/1989 : AIR 1989 SC 1769:
On the date when the suit was filed, two of the partners shown as partners as per the relevant entries in the Register of firms were not in fact partners, one new partner had come in and two minors had been admitted to the benefit of the partnership firm regarding which no notice was given to the Registrar of firms.
(4) Shreeram Finance Corp v. Yasin Khan, MANU/SC/0341/1989 : AIR 1989 SC 1769:
The Supreme Court held that the suit filed by the appellants is clearly hit by the provisions of sub-section (2) of section 69 and is not maintainable.
(5) C.M. Mutukumaraswami v. Kumar Textiles, MANU/TN/0080/1996 : AIR 1996 Mad 433 (435):
The provisions of section 69(2) are mandatory. If the firm suing has not been registered and even if no objection has been made by defendant on this aspect, the Trial Court must arrive at a finding on this issue after giving opportunity to both the parties to adduce evidence.
(6) C.M. Muthukumaraswami v. Kumar Textiles, AIR 1966 Mad 433:
It has been held that the provision contained in 69(2) is mandatory and registration of the firm is a condition precedent to its right to institute a suit. Even if the defendant does not raise an objection, the provisions contained in section 69 cannot be flouted. The Trial Court is to find if the plaintiff firm is registered and for that purpose the court should enable the parties to adduce evidence to that effect.
(7) Gandhi & Co. v. Krishna Glass Pvt. Ltd., MANU/MH/0272/1987 : AIR 1987 Bom 348:
It was held that if the name of one of the partners had not been shown in the Register of firms, the suit filed by the partnership firm must fail.
(8) Kavita Trehan v. Balsara Hygiene Products Ltd., AIR 1992 Del 92:
If a suit is filed by the partners of a firm which is not registered on the date of the institution of the suit, the same would be hit by the provisions of section 69(2) of the Partnership Act and shall be dismissed.
(9) J.K. Finance Chit Funds v. R. Surya Kumar, MANU/AP/0927/2003 : AIR 2004 AP 190:
The registration of the firm is sufficient to maintain the suit against any third party. The only requisite under section 69(2) of the Act is that a registered firm can only file a suit against third party and the persons suing have been in the Register of firms as partners in the firm. Therefore, there is no need for registration of the partnership deed of the registered firms.
(10) Gandhi & Co. v. Krishna Glass Private Ltd., MANU/MH/0272/1987 : AIR 1987 Bom 348:
It was held that the suit filed by a partnership firm must fail, if the name of one of the partners has not been shown in the Register of firms on the date of filing of the suit.
(11) Shreeram Finance Corporation v. Yasin Khan, MANU/SC/0341/1989 : AIR 1989 SC 1769:
The suit was filed by Registered firm, but there was a change in its constitution. Two of the partners shown in the Register of firms retired, one new partner was added and minors admitted to the benefit of the firm. The suit was filed by the firm after change in constitution, but before change was notified to the Registrar, the suit was held to be not maintainable as the current partners on the date of the suit were not shown in the Register of firms.
Section 69(2) applies to a suit to enforce a right arising out of a contract. A suit, therefore, is not barred if a statutory right or a common law right is being enforced. The purpose behind section 69(2) was to impose a liability on the unregistered firm or its partners to enforce rights arising out of contracts entered into by the plaintiff firm with the third party defendant in the course of the firm’s business transaction. Once a firm is registered, there is nothing in law to disable it from bringing about claims or from pursuing remedies in a court of law in relation to transactions, which preceded such registration.
Haldiram v. Anand Kumar, MANU/SC/0144/2000 : AIR 2000 SC 1287:
In this case, the emphasis was on the words “right arising from a contract” in section 69(2) of the Partnership Act, 1932. After looking into the report of the Special Committee which preceded the Partnership Act, 1932, the Apex Court rules that the contract by the unregistered firm referred to in section 69(2) must not only be one entered into by the plaintiff firm in the course of business dealings of the plaintiff firm with such third party defendant. Thus, the Legislature when it used the words arising out of contract in section 69(2).
Kishore Kumar B. Zaveri v. Navinchandra H. Somaiya, MANU/MH/0338/1998 : AIR 1998 Bom 153:
Bombay High Court after a perusal by section 69(2) and (2A) of the Indian Partnership Act, 1932 observed that the bar under section 69(2) can be raised when a suit is instituted in the name of a firm. The suit may be filed by the firm or on behalf of the firm by some other individuals. If the suit is filed by some individuals, then it would be necessary that the names of the persons suing are shown in the Register of firms as partners of the firm.
Uttat Pradesh State Sugar Corpn. Ltd. v. Jain Construction Co., MANU/SC/0681/2004 : AIR 2004 SC 4335:
If a unit of a registered firm which is not separate from it, sells some goods and files the suit for recovery of price, it cannot be said that the said unit is not registered of consequently section 69(2) will not apply.
For initiation of arbitral proceedings, the firm must be registered at the time and initiation thereof and not later on.
According to sub-section (3) the disabilities mentioned above also apply to a claim of set-off or other proceedings to enforce a right arising from a contract. For example if a third party brings an action against the firm to recover some money, the firm cannot say that the third party also owes some money to the firm and therefore the claim of third party should be adjusted against the claim of the firm, which means the unregistered firm cannot claim a set off.
The two disabilities also apply to a claim of set off or other proceedings to enforce a right arising from a contract. Rabindra Nath v. P.A. Padmanabhan, MANU/TN/0051/1992 : AIR 1992 Mad 264:
“A claim of set off means that if for example, an unregistered firm is sued by a third party to recover a sum of money the firm cannot say that the money owing by that third party to the firm should be set off against the claim. The word other proceedings had created some difficulty as to their import particularly in reference to the question whether they included arbitration proceedings.”
Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd., AIR 1964 SC 1881:
The Supreme Court ended this controversy and held that the words “other proceedings to enforce a right arising from a contract” include arbitration proceedings because the right to refer to arbitration depends on the contract between parties.
Where a dispute between an unregistered firm and the other party was referred to arbitration at the instance of the other party and the arbitrator having submitted his award which went in favour of the firm, the question arose whether the firm had the right to get the award converted into a court decree and then enforce it.
Ram Nandan Prasad Sinha v. K.M. Consultants, MANU/MH/0540/2001 : AIR 2002 Bom 90:
Where a reference to arbitration was possible without recourse to the court, it was held that unregistered firm could do so.
Exceptions
The disabilities discussed above are not applicable to the unregistered firm in the following exceptional cases:
Section 44 mentions certain circumstances under which on the suit of a partner the court may dissolve a firm.
Chagganlal Gupta v. State of Uttar Pradesh, AIR 2008 (NOC) 2638:
Section 69(3) (a) permits a suit even by the partners of an unregistered firm to sue for the dissolution of a firm or for the accounts of a dissolved firm.
Pradeep Kumar v. Gopal Chandra, MANU/WB/0025/1981 : AIR 1981 Cal 85:
In case the firm has already been dissolved, the partners of the unregistered firm can realise the property of the dissolved firm. The right includes enforcing a claim arising from contract prior to dissolution. The disability for non-registration works only during the subsistence of the partnership.
D.C. Upreti v. B.D. Karnatak, MANU/UP/0176/1986 : AIR 1986 All 32:
After the firm is dissolved, it is not the disability mentioned in sub-sections (1) and (2) of section 69 which governs the position, but it is the provisions of section 69(3) (a) which operates giving the partners power to “realise the property of the dissolved firm.”
S. Ahmed Khan v. Turup Mohd Hayat, AIR 1953 Mys 4.
“A and B purchased a taxi to ply it in partnership. They had done business for about a year when A, without the consent of B, disposed of the taxi. B brought an action to recover his share in the sale proceeds. A’s only defense was that the firm was not registered.
The court held that the business having being closed on the sale of the taxi, the action was for the realisation of the assets of a dissolved firm and, therefore maintainable.
Rampadevi v. Bishambar Nath, MANU/UP/0005/1976 : AIR 1976 All 19:
The right to go to the court for dissolution and accounts continues to enjoy full respect inspite of the fact that the firm was not registered and there was an arbitration clause which was not enforceable because of non-registration.
In this case an earlier suit for accounts was dismissed for want of registration, yet that was not a bar (res judicata) for a subsequent suit for dissolution and accounts.
Section 69(3)(b) mentions another exception when an action would be brought on behalf of an insolvent partner against an unregistered firm. It provides that an official assignee, receiver of court has the power to bring an action to realise the property of the insolvent partner.
Section 69(4) (a) exempts such firm from the operation of the provisions of this section whose place of business is not in India or whose place of business is in such areas, where because of notification under section 56, this chapter does not apply.
Section 69 (4)(b) provides an exception for firms having small claims. If the value of the suit does not exceed Rs 100, an unregistered firm or its partner can bring an action against the third party.
Kishore Kumar B. Zaveri v. Navin Chandra H. Somaiya, MANU/MH/0338/1998 : AIR 1998 Bom 153:
It has been held that if a suit has been filed in the individual capacity by a person who had been a partner of the dissolved firm against another person who had also been a partner of the dissolved firm, the bar under section 69(2A) would not be attracted.
If the firm is not registered on the date of the filing of the suit, the suit is liable to be dismissed. In view of the mandatory provisions of section 69 making registration a condition precedent to the institution of the suit, registration of the firm subsequent to institution of the suit cannot cure the defect.
A criminal proceedings under section 138 of the Negotiable Instruments Act, 1881 for the dishonour of a cheque is not in the nature of a civil suit and therefore, the bar of section 69 would not prevent an unregistered firm from launching such a proceeding.
Any person who signs any statement, amending statement, notice or intimation under this chapter containing any particulars which he knows to be false or does not believe to be true, or containing particulars which he knows to be incomplete or does not believe to be complete shall be punishable with imprisonment which may extend to three months, or with fine, or with both.
This section deals with the penalty for furnishing false particulars and lays down that if any person has signed any statement or notice which contains any particulars which he knows to be false or even does not believe to be true shall be punishable with imprisonment which may extend to three months or with fine or with both.
(1) The State Government may by notification in the Official Gazette make rules describing the fees which shall accompany documents sent to the Registrar of firms, or which shall be payable for the inspection of document in the custody of the Registrar of firms or for copies from the Register of firms:
Provided that such fees shall not exceed the maximum fees specified in Schedule I.
(2) The State Government may also make rules,—
(a) Prescribing the form of statement submitted under section 58 and of verification thereof;
(b) requiring statements, intimations and notices under sections 60, 61, 62 and 63 to be in prescribed form and prescribing the form thereof;
(c) prescribing the form of the Register of firms and the mode in which entries relating to firms are to be made therein and the mode in which such entries are to be amended or notes made therein;
(d) regulating the procedure of the Registrar when disputes arise;
(e) regulating the filing of documents received by the Registrar;
(f) prescribing conditions for the inspection of original documents;
(g) regulating the grant of copies;
(h) regulating the elimination of registers and documents;
(i) providing for the maintenance and form of an index to the Register of firms; and
(j) generally, to carry-out the purpose of this Chapter.
(3) All rules made under this section shall be subject to the condition of previous publication.
(4) Every rule made by the State Government under this section shall be laid as soon as it is possible, before the State Legislature.
Power has been given to the State Government to prescribe fee which should accompany the document sent to the Registrar of Firms. The State Government shall also prescribe fee which is to be charged from anyone who applies for inspection of documents kept in the custody of Registrar of Firms.
A public notice under this Act is given,—
(a) where it relates to the retirement or expulsion of a partner from a registered firm, or to the dissolution of a registered firm, or to the election to become or not to become a partner in a registered firm by a person attaining majority who was admitted as a minor to the benefits of partnership, by notice to the Registrar of Firms under section 63, and by publication in the Official Gazette and in at least one vernacular newspaper circulating in the district where the firm to which it relates has its place or principal place of business.
(b) in any other case, by publication in the Official Gazette and in at least one vernacular newspaper circulating in the district where the firm to which it relates has its place or principal place of business.
[Rep. by Repealing Act, 1938 (1 of 1938) section 2 and Sch.].
Nothing in this Act or any repeal effected thereby shall affect or be deemed to affect,—
(a) any right, title, interest, obligation or liability already acquired, accrued or incurred before the commencement of this Act, or
(b) any legal proceeding or remedy in respect of any such right, title, interest, obligation or liability, or anything done or suffered before the commencement of this Act, or
(c) anything done or suffered before the commencement of this Act, or
(d) any enactment relating to partnership not expressly repealed by this Act, or
(e) any rule of insolvency relating to partnership, or
(f) any rule of law not inconsistent with this Act.
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