Registration of a Partnership Firm

Under the Indian Partnership Act, 1932, registration of a firm is not compulsory — a partnership can be validly formed, and can carry on its business, without ever being registered. Registration, where a firm chooses to seek it, is done with the Registrar of Firms of the State in which the firm's place of business is situated.

Procedure: the firm (or any partner on its behalf) sends the Registrar a Statement in the prescribed form, under Section 58 of the Act, signed by all the partners, stating the firm's name, the principal place of business and any other places where it carries on business, the date each partner joined the firm, the full name and permanent address of every partner, and the duration of the firm, if any. Once the Registrar is satisfied that these requirements are met, he records the entry in the Register of Firms and issues a Certificate of Registration.

Effects of non-registration: even though registration is optional, Section 69 of the Act attaches real, practical disabilities to an unregistered firm — it can still exist, function, and even be sued by others, but:

• An unregistered firm, or any of its partners, cannot sue a third party in any court to enforce a right arising from a contract, unless the firm is registered by the time the suit is filed.
• A partner of an unregistered firm cannot sue the firm or a co-partner to enforce a right arising from the partnership contract or under the Act (for example, to claim his agreed share of profits).
• An unregistered firm is restricted in its ability to claim a set-off (an adjustment against a claim) in a suit filed against it by a third party. …