registration of firms

1. Registration of Firms
By
Dr. Sridevi Krishna
Asst. Professor
VVLC

2. Section 56
• The State Govt may appoint registrars of firms for the purpose of
the partnership Act and may define the areas within which they
shall exercise their powers and perform their duties.
• They are public servant as per section 21 of IPC.
• Application for Registration: Section 58:
• (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 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 authorized in this behalf.

3. Section 59
• 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 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, and shall file it along with the
statement relating to the firm filed under section 59.

4. Section 61
• Noting of closing and opening of branches.—
When a registered firm discontinued 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.

5. 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.

6. Section 63
• (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 authorized 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.
• Recording 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 authorized 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).

7. Sharad Vasant Kotak V Ramniklal Mohanlal Chawda
• The first deed of partnership was entered into on 29/11/1979
and that partnership was registered in 15/12/1980.one of the
partners died on 16/5/1986 and in his place his widow was
inducted. The second deed of partnership was drawn on
20/10/1986.
• Question was: whether by second deed of partnership, can it
be said that the existing firm dissolved or ceased?
• In both the deeds it was mentioned that death, insolvency or
retirement of any partner shall not dissolve the firm on the
other hand it was provided that the partners shall be entitled
to carry on the partnership business on the terms and
conditions mutually agreed upon by the said partners.
• SC: Thus it cannot be said that the said firm is dissolved. The
existing firm continued and that there is no new partnership
formed.

8. Rectification of mistakes section 64
• (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.

9. Amendment of register by order of court
• Section 65: A Court deciding any matter
relating to a registered firm may direct that
the 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.

10. 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 fee as may be prescribed.

11. 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.

12. Section 68
• Rules of evidence.—
• (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

13. Section 70
• 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.

14. Effect of non-registration
• Registration of firm is not compulsory. There is no penalty if a
firm is not registered.
• But the consequences of non-registration of firm are such that
at sometime or the other it becomes necessary for them to
get the firm registered.
• The disabilities or difficulties on account of which it becomes
necessary to register the firm are following-
• 1. Suits between Partners and Firm- section 69(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.

15. Continued..
• 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.
• In Loonkaran Sethia V Mr. Ivan E john and others.
• In this case the firm was not registered and the plaintiff filed
the suit to enforce an agreement entered into by a partner of
the firm. The suit was filed on behalf of the firm and for its
benefit.
• SC held: the suit was not maintainable.
• But if the firm is not registered and has been dissolved and
the 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 69(3).

16. Section 69(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 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 realize the property of a dissolved firm, or
• (b) the powers of an official assignee, receiver or Court under
the Insolvency Act to realize the property of an insolvent
partner.
• The right to refer a dispute to arbitrators arises out of a
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.

17. Continued..
• 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.
• 2. Suits between the Firm and Third Parties-
section 69(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

18. Continued..
• Thus until the firm is registered, no suit can be
filed by the firm against third parties.
• If the firm gets itself registered during the
pendency of the suit, it should be allowed to
revive from the date of registration.
• If a partner of unregistered firm is guilty of
misconduct then suit is maintainable against
him.

19. V. Anjaneya Setty V M/s M.G Brothers
• M/s M.G Brothers is a registered firm carrying on business in
cement, paints, kerosene, groundnut oil etc. this firm deals in oil
under the name M/s M.G Brothers Oil Mills which is not a separate
entity working with different partners. In other words M/s M.G
Brothers Oil Mills is only a name employed for the purpose of
identifying the oil business carried on by the registered firm M/s
M.G Brothers.
• Appellants became indebted to the firm during various business
deals entered into with him under the name M/s M.G Brothers Oil
Mills. On his failure to pay the amount due, M.G Brothers filed a
suit against him for recovery of the amounts due from him. App
claim that the suit is not maintainable because the dealings were
between him & M.G Brothers Oil Mills and not between him and
M.G Brothers and M.G Brothers Oil Mills not being registered firm
cannot sue him.
• Is A’s plea tenable?

20. Continued..
• Held: A’s plea is not tenable and cannot
be accepted because M/s M.G Brothers
Oil Mills is only a part of M/s M.G
Brothers. M/s M.G Brothers Oil Mills is
not a separate unit nor its partners are
different. Therefore, the suit of M/s M.G
Brothers is not barred by section 69(2)
and is maintainable.

21. M/s IBM Company & Anr V Uday Singh Jeet Ram
• Registration of firm after filing the suit- cures
the initial defect provided the bar of limitation
does not come in. Even fresh suit on same
cause of action is permitted.

22. Continued..
• Uday Singh Jeet Ram respondent 1 filed Civil Suit No. 453 of 1998
on 14-10-1998 seeking a declaration to the effect that the
partnership deed and agreement dated 26-10-1992 is illegal, null,
void and not binding on him.
• The case of respondent 1 as per pleadings in the suit is that the
partnership deed and agreement dated 26-10-1992 have never
been signed by Uday Singh nor any dissolution deed was ever
executed between the partners of the plaintiff-firm.
• The afore mentioned partnership deed and agreement dated 26-
10-1992 is alleged to be fake and fictitious and that the name of
respondent 1 has been wrongly entered into the records of the
petitioners as Uday Singh Ajit Singh instead of Uday Singh Jeet Ram.
• Further relief of restraining the petitioners from stopping the
supply of petroleum products and high speed diesel to Uday Singh
Ajit Singh by way of permanent injunction has also been prayed. It
is pertinent to mention that petitioner, namely I.B.P. Company is the
supplier of petroleum products and high speed diesel to the firm
constituted as Uday Singh Ajit Singh.

23. Continued..
• The petitioners submitted that respondent 1 is not a
registered firm which is a mandatory requirement
under Section 69(2) of 1932 Act and, therefore, the suit is
liable to be dismissed.
• The aforementioned stance taken by the petitioners has been
contested by respondent 1 stating that the suit was filed on
14-10-1998 when the firm was not registered. However, on
27-1-1999, the firm had been registered.
• On the basis of aforementioned facts it was submitted that
the initial defect in the filing of the suit in view of Section
69(2) of 1932 Act stood cured by subsequent registration.
Moreover, it was argued that since the suit is for a declaration
that the partnership deed and agreement dated 26-10-1992 is
illegal, null, void and not binding on him.
• In other words, it was contended that no right arising from a
subsisting contract between petitioners and respondent 1 is
sought to be enforced.

24. AIR 2004 PH300
• It was observed that the initial defect of non-
registration would stand cured if he puts its
use in order and gets itself registered. The
objection of lack of registration, then would
not survive.
• Thus the petition was dismissed.