Section 58 lays down the procedure for effecting the registration of firms. It provides that a firm may get itself registered (at any time during the continuance of the partnership) by making an application to the Registrar of Firms of the area in which any place of business of the firm is situated. Such application or statement may be sent either by post or personally delivered to the Registrar. The application for registration must be made in the prescribed form (accompanied by the prescribed fees) and must contain the following particulars.
The following particulars are :
- The firm name
- The place of business of the firm or if there is more than one place of its business, the principal place of business
- The names of any other place where the form carries on business
- The date when each partner joined the form
- The names in full and permanent addresses of the partners
- The duration of the firm
The application shall be signed by all the partners, or by their agents specially authorized on this behalf.
A firm may register under any name subject to the restrictions in section 58 (3). If a firm contravenes these restrictions, the firm may not be registered. 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. When the registrar does so, the firm is duly registered.
Effect of non-registration
Section 69 relating to the effect of non-registration of the firms is by far one of the most important sections of the Act. Nowhere in the Act has made registration of the partnership firms compulsory. An option is given to the partners to get the firms registered or not, but this section provides certain inducements in favor of registration. As such, every partnership firm shall practically choose to get the firm registered. Section 69 is designed to encourage registration of the firms, for any firm not registered will be unable to enforce its claim against third parties in the Court of law. However, the rights of the third parties are not affected by whether the firm is registered or not.
An unregistered firm and its partners suffer from the following disabilities.
1. No suit by a partner against the firm or the partner
Section 69 (1) suspends the right of a suit between partners inter suit until the firm is registered, A partner of an unregistered firm cannot file a suit to enforce his right arising from a contract or conferred by this Act against the firm and its partners. In order to institute a suit, not only the firm must be a registered one, but the partner suing must also be shown in the Register of firms. Registration is necessary only to enforce a right arising from a contract or in respect of a right conferred by this Act.
2. No suit by the firm against third parties
A firm that has not been registered shall not be able to file a suit against third parties to enforce a right arising from a contract. The suit can only be filed when the firm is registered and the names of the partners suing are shown in the register of rims, A suit for the price of goods supplied by a firm to the third party is not maintainable if the firm is not registered.
Section 69 (2) is designed to protect the interest of third parties. There is no bar against a suit being brought by third parties against an unregistered partnership.
3. Neither the unregistered firm nor its partners when sued can claim a set-off
Section 69 (3) provides that the disabilities mentioned above shall also apply to a claim of set-off. Thus neither the unregistered firm nor its partners when sued can claim a set-off. A 'Claim of set-off'' means that if a third party files a suit against an unregistered firm for the recovery of debt from the firm, the firm cannot say that the money owed by the third party to the firm should be set off against the claim.
But the right to sue or a claim of set-off is not affected where the suit or a claim of set-off is less than one hundred rupees in value.
Exceptions
- Non-registration does not affect the following and registration of firms in such cases is not necessary.
- Where the suit is for the dissolution of the firm.
- Where the suit is for the accounts of a dissolved firm.
- Where the suit is for the realization of the property of the dissolved firm.
- Where the suit or a claim of set-off does not exceed Rs. 100 in value.
- Where the firm concerned has no place in business in India.
- Where the place of business of the firm concerned is situated in an area which is exempted, under Section 56, from the operation of the provisions of this Act relating to registration of firms.
- Where the Official Receiver or the Official Assignee of the Court, as the case may be, seeks to realize the property of an insolvent partner.
