Chapter: 1.5 Registration of Firm in the Indian Partnership Act

Registration of Firm

Section 58

A. Application for registration

The registration of a firm may be effected at any time by sending by post or delivering to Registrar of firms 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 authorized in his behalf.

B. Each person signing the statement shall also verify it in the manner prescribed.

C. A firm name shall not contain any of the following words, namely:

"Crown", "Emperor", "Empire", "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.

The word 'may' shows that registration is optional. The words 'at any time' shows that the registration may be done at any time subject to the provisions sec. 69 as pointed out under sec. 56. The registration under this Act should not be confused with the registration of documents under Indian Registration Act.

Section 59- Registration

When the Registrar of firms 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.

The fact of registration raises presumption about his satisfaction.

When the Registrar acts bona fide and follows the prescribed procedure, his satisfaction on the said points is not open to question in a Court of Law.

Section 69 - Effect of non-registration

In this context Section 69 is reproduced as follows:

(1) No suit to enforce a right arising from a contract of 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 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 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 partner in the firm.
(3) The provisions of sub-sections (1) and (2) shall apply also to a claim to setoff or other proceedings to enforce a right arising from a contract, but shall 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, car the Provincial Insolvency Act, 1920, to realize the property of an insolvent partner.

(4) This section shall not apply:

(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 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,
(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 Clauses Courts Act, 1882, or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.

Object of the section

By providing certain disabilities, this section renders the registration of a firm compulsory. The disabilities provided are as under:

(a) A firm may not enforce in a court of law its due from third parties; nor will be the partners are enabled to do so by filing a suit in their own names instead of in the name of the firm. Thus it is necessary that not only the firm should be registered but also the person suing must be shown as a partner in the firm.
(b) A partner will not be entitled to recover through a court his dues from the firm or from his fellow partners, though he may sue for dissolution, or pay for accounts and realization of his shares where the firm has been actually dissolved.
(c) Neither the firm nor the partners will, when sued, be entitled to counter

Claim or set-off subject to clause (b) of sub-sec (4).

It should be noted that 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 an official assignee to realise the property of an insolvent partner.

It is also important to note that the Act does not say that any transaction of an unregistered firm will be invalid. There would not be a bar to file a fresh suit on the same cause of action after a firm gets registration and for doing that no permission is needed.