Q.X, Y and Z have been running a partnership firm for four years without ever registering it with the Registrar of Firms. A customer, W, owes the firm ₹80,000 for goods supplied on credit, and now refuses to pay. Can the firm sue W to recover this amount? Would your answer differ if it were W who wanted to sue the firm for a defective batch of goods delivered earlier?

Section 69 blocks an unregistered firm from suing a third party on a contract, so the firm cannot sue W — but the same section does not stop W from suing the firm.

Step 1 — Identify the governing provision. Section 69 of the Indian Partnership Act, 1932 deals with the effect of non-registration of a firm.

Step 2 — Can the firm sue W? Section 69(2) specifically bars an unregistered firm from suing any third party to enforce a right arising from a contract. The firm's claim against W for the ₹80,000 owed on goods sold on credit is exactly such a contractual right. Since X, Y and Z's firm has never registered, it CANNOT bring this suit against W so long as it remains unregistered.

Step 3 — Would registering later help? Yes — if the firm registers with the Registrar of Firms at any point (there is no deadline), it can then sue on contracts entered into or enforced after that registration; but this does not retroactively validate a suit filed while it was still unregistered.

Step 4 — Can W sue the firm? Section 69's bar applies only to the unregistered firm (and its partners) as a PLAINTIFF suing on a contract or partnership right. It places no restriction whatsoever on an outsider like W suing the firm. W is therefore fully entitled to sue the firm for the defective goods, regardless of whether the firm is registered. …