INDEX

I. Introduction.
II. Problem faced by non-registration of firm.
III. Registering a Partnership.
IV. When is Partnership registered?
V. Proof of Partnership.
VI. Business Name of firm.
VII. Advantages of registration.
VIII. Challenges faced by every business Partnership.
IX. Bare Act Section wise discussion.
X. Conclusion.
XI. Reference.

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 ✓ Introduction
The fundamental premise of understanding of the statutory provisions
associated with the area of partnership is principally derived from the
understanding of the Indian Partnership Act 1932. This was one of the
earlier precedent set in the Indian statutory history which fundamentally
evaluates and analyses the critical junctures associated with the process of
partnership in India.

Partnership firms in India are administered by the Indian Partnership Act,

1932. While it is not necessary to enter one’s partnership firm as there are no
fines for non-registration, it is appropriate since the certain rights are denied
to an unregistered firm.

✓ Fundamentals Problems Faced By Not Registering a Firm.

The following can be understood as the principle disadvantages faced by a
partner if he/she does not register the firm under Indian Partnership Act,
1932:

(1) A partner is not entitled to file a suit in any court of law against the other
partners or the firm for the execution of any right emerging from any
undertaking or right bestowed by the Partnership Act.

(2) A right evolving from an undertaking cannot be implemented in any

Court of law by or in support of one’s firm against any other firm.

(3) Moreover, the firm or any of its associates cannot assert a set off (i.e.
fundamental negotiation of debts possessed by the argufied parties to one
another) or other actions in a disagreement with a third party.

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 ✓ The Process of Registering a Partnership under Indian
Partnership Act, 1932.
The primary initiative regarding the process of registration or incorporation
of partnership firm is to forward an application filling Form No. 1. As per
the provision of section 58 it should include following details:

1. The name of the firm.

2. The full names and permanent resident address of the partners.
3. The timespan of the firm.
4. Business the date when each partner effuse to the firm.
5. The principal place of business transaction of the firm.
6. The names of any other places where the firm carries its functional
obligations.

This undertaking is needed to be signed by all the associate partners, or by

their respective agents principally given authority in their behalf.

Secondly, all partners should necessarily solicit their signature application

form or their authorised agents in their behalf in the occupancy of a witness
who must be Advocate, Gazetted Officer, Vakil or Magistrate of Registered
Accountant. If a partner declines to sign the application form, registration
cannot happen unless that partner’s name is dribbled.

The application as mentioned above has to be sent to the Registrar at the

enumerated address along with the prescribed fees. As per section 71 of
Indian Partnership Act, states are authorized to make their own regulations
with respect to prescribe the fee structure for registration or incorporation of
partnership. However, Schedule I of Indian Partnership act states the at most
or maximum prescribed fees that can be charged by the states. As per
Schedule I, the maximum registration fees for a statement under section 58
is Rs.525.

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 ✓ When is Partnership Registered?
As provided in the Section 59, a partnership is said to be registered when a
registrar is well pleased with the fidelity of application filed according to
section 58 and an entry of statement in the register known as Register of
Firms is recorded.

✓ Proof of Registration.
According to Rule 9 under Indian Partnership Act, a documented proof of
registration or incorporation for that matter is a registration certificate signed
by Registrar.

✓ Business Name of the Firm.

Alteration of Particulars
Whenever an amendment or change is made in any of the understated
particulars then it should be conveyed to the Registrar of firms and a
satisfactory alteration is rendered in the register. The change to be rendered
is sent in a stipulated form and with the stipulated fees. Following
amendments or alterations are to be sent to the Registrar:

1. Any alteration in the name of the firm.

2. Any alteration in the principle place of business transaction. The
alteration in name or principle place of business transaction almost
requires a fresh new registration. These alterations should be sent in
a stipulated form and should be rendered signature by all the
partners.
3. Whenever the constitution of the firm is altered i.e., an old partner
may retire or a new partner may be added.
4. Any alteration in the name of a partner or his residential/official
address.
5. When a minor partner gains the age of maturity and he is left to the
discretion whether to elect to become or not to become a partner.
6. When the firm is subjected to dissolution.
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 ✓ Advantages of Registration.
The registration of a firm is done not only towards the benefit of the firm but
also for those who deal with it. The following benefits are obtained from the
registration of a firm:

(i) Benefits to the Firm

The firm gets an unmitigated right towards the third parties in civil suits for
getting its rights discharged. In the non-existence of registration, the firm is
not entitled to sue outside partners in courts.

(ii) Benefits to Creditors

A creditor can employ any partner for recuperating his money due from the
firm. All partners whose names are set in the registration are personally
accountable to the unknowns. So, creditors can restore their money from any
partner of the firm.

(iii) Benefits to Partners

The partners can seek the help of a court of law against each other in case of
disagreement among partners. The partners can sue external parties also for
restoring their amounts, etc.

(iv) Benefits to Incoming Partners

A new partner can contest for his rights in the firm if the firm is registered.
If the firm is not registered then he will have to rely upon the trustworthiness
of other partners.

(v) Benefits of Outward-bound Partners

The registration of a firm acts as an advantage to the outward-bound partners
in numerous ways. The outward-bound partners may be divided into two
categories:

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(i) On the demise of a partner,

(ii) On the superannuation of a partner.

On the demise of a partner his heirs are not accountable for the obligations
acquired by the firm after the date of his demise. In case of a superannuation
partner, he remains to be accountable up to the time he does not give public
notice. The public notice is not recorded with the Registrar and he terminates
his liabilities from the date of this notice. So, it is vital to get a firm registered
for getting this benefit.

✓ Challenges Faced By Every Business Partnership.

1) Problems with Partnerships

With all partnerships originate potential glitches. We all recall when Enron
recognized that the partnerships they shaped were used unsuitably,
expanding the company’s financial reports which depositors and thousands
of Enron staffs trusted on in pivotal to buy or sell its stock. These
partnerships, fixed with other major accounting errors, ruined the public’s
assurance in the company and Enron sank into insolvency.

2) Liability

Commonly partners are 100% liable for the activities of other partners. If one
general partner marks a blunder, all general partners are responsible for that
error and any supplementary debt or other responsibilities that go along with
that error.

3) Raising Capital

It is problematic to elevation capital in general partnerships since all common

partners have unrestrained liability. Selecting an LP or LLP may be more
striking to investors, as it allows a limited partner to participate without
taking on any accountability. As stated above, however, there are limitations

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to LPs and LLPs that must be taken into thought. Moreover, LPs and LLPs
are more affluent to form than a general partnership.

4) Protecting Your Stake in a Partnership

There are several benefits to forming a partnership, but also numerous

entities to watch out for when acquiring on a partner. In all cases, partners
must have a legal covenant that places limitations on each partner’s decision-
making abilities. The agreement must condition, among more things, how
choices will be made, profits will be allocated, and disagreements will be
determined. If in case the partnership does not work out, the legal covenant
should also designate in facts how partners can be credited out, how fresh
partners will be acknowledged to the partnership, or what steps would be
taken if the partnership wants to be suspended.

SECTION 56-Power to exempt from application of the chapter.

The state government of any state may, by notification in the official
Gazette, direct that the provisions of this chapter shall not apply to the state
or to any part thereof specified in the notification.
SECTION 57-Appointment of registrars.
1. The state government may appoint Registrar of Firms for the purposes
of this Act, and may define the areas within which they shall exercise
their powers and perform their duties.
2. Every Registrar shall be deemed to be a public servant within the
meaning of Section 21 of the Indian Penal Code (45 of 1860).
SECTION 58-Application of registration.
1. The registration of a firm may be effected at the 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,
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 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.
2. Each person signing the statements 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, or 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.
SECTION 59-Registration.
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.
SECTION 60-Recording of alterations of firm in firm name and
principal place of business.
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 relating
to the firm filed under Section 59.

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SECTION 61-Noting of closing and opening of branches.
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 of
the Registrar, who shall make a note of such intimation in the entry
relating to the firm in the Registrar of Firms, and shall file the intimation
along with the statement relating to the firm filed under Section 59.
SECTION 62-Noting of changes in names and addresses of partners.
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.
SECTION 63-Recording of changes in and dissolution of a firm.
1. 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 specially
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, shall file the notice along with the statement
relating to the firm filed under Section 59.
Regarding of withdrawal of a minor-
2. 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).

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SECTION 64-Rectification of mistakes.
1. The Registrar shall have power at all times to rectify any mistake
in order to bring the entry in the Registrar 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
documents relating to the firms filed under this Chapter, the
Registrar may rectify any mistake in such documents or in the
record or note thereof made in the Registrar of the Firms.
SECTION 65-Amendment of registrar by order of court.
A court deciding any matter relating to a registered firm may direct that the
Registrar shall make any amendments 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 66-Inspection of register and filed documents.
1. The Register of Firms shall be open to inspection by any person on
payment of such fee as may be prescribed.
2. All statements, notices and intimations filed under this Chapter shall
be open to inspection, subject to such conditions and on payment of
such fees as may be prescribed.
SECTION 67-Grant of copies.
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.
SECTION 68-Rules of evidence.
1. Any statement, intimation or notice recoded 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 any entry relating to a firm in the Register of
Firms may be produced in proof of the fact of the registration of such

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 firm, and of the contents of any statements, intimation or notice
recorded or noted therein.
SECTION 69-Effect of non-registration.

1. No suit to enforce a right a rising 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.
2. 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 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 (3 of 1909) or the
Provincial Insolvency Act, 1920 (5 of 1920) to realise 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

10[the territories to which this Act extends], or whose places of
business in 11[the said territories], are situated in areas to which,
by notification under 12[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 (5
of 1882), or, outside the Presidency-towns, is not of a kind
specified in Schedule II to the Provincial 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.

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SECTION 70- Penalty for furnishing false particulars

Any person who signs any statement, amending statement, notice or

intimation under this Chapter containing any particular 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.

SECTION 71- Power to make rules

1. The 3[State Government] 13[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 documents 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 14[also] make rules-

a. prescribing the form of statement submitted under section 58, and

of the 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;

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 i. providing for the maintenance and form of an index to the
Register of Firms; and
j. generally, to carry out the purposes of this Chapter.

3. All rules made under this section shall be subject to the condition of
previous publication. 15[(4) Every rule made by the State Government
under this section shall be laid,

✓ Conclusion
On a concluding note it can be observed that the essential notion associated
with the partnership and its associated statutory provision needs an essential
visitation as the relics of the colonial past are fundamentally needed to be
polished to accommodate them to our social realities which requires a
visitation to our social realities.

✓ References
• Benjamin Gerald A and Margulis Joel (2001): The Angel Investor &
Handbook: How to Profit from Early-Stage Investing, London:
Bloomberg Press.
• T, Michale (2005): Hands –On Partnership, London: University
Press London.
• In focus Institute: Page on Partnership in India.
• Indian Partnership Act, 1932

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 UNIVERSITY OF LUCKNOW

SUBJECT-COMMERCIAL LAW
TOPIC-REGISTRATION OF FIRMS AND
CONSEQUENCES OF NON-REGISTRATION.

SUBMITTED BY- ANURAG PATEL (LL.B. HONS.)

SEMESTER-3RD
ROLL NO-180001450021
SUBMITTED TO-PROF. R.C. SINGH
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