Although, in India it is not mandatory to register a partnership firm but the registered partnership firm enjoys certain rights. In this presentation,I have talked about a Partnership firm, effects of its non-registration and procedure of getting a firm registered.

1. IMS UNISON UNIVERSITY
LAW OF CONTRACT II
REGISTRATION OF A
PARTNERSHIP FIRM
PRESENTED BY
SHATAKSHI SINGH

2. 1. What is Partnership & Partnership Firm?
• Partnership is a form of business entity where two or more persons come
together to provide the requisite resources and share the profits in an
agreed ratio.
• Section 4 of The Indian Partnership Act, 1932 defines “Partnership” as
“An agreement between the persons who have agreed to share the
profits of the business carried on by all or any of them acting for all.”
• A partnership firm is an organization which is formed with two or more
persons to run a business with a view to earn profit. Each member of
such a group is known as partner and collectively known as partnership
firm.
• Partnership firms in India are governed by the Partnership Act, 1932.
Registration of the partnership is a very important area which has been
dealt in Chapter VII of the Act

3. 2. Characteristics of a Partnership Firm
• Following are the characteristics of Partnership Firm:
1. Number of Partners : Minimum number of person required to start a
partnership firm is two and maximum limit is 10 in case of banking business and
20 in case of all other types of business.
2. Contractual relationship : A written agreement known as partnership deed
which is signed by all the partners, binds them in a contractual relationship.
3. Voluntary Registration : Registration of partnership firm is not compulsory.
Since the registration provides various benefits to the firm thus it is desirable.
4. Competence of Partners : Every partner must be competent enough to enter
into the partnership agreement. He should not be minor (in some cases minor
can be admitted only to the benefits of the partnership), lunatic or insolvent.

4. 5. Sharing of Profit and Loss : In partnership firm all the profits and losses
are shared by the partners in any ratio as agreed. If it is not given then they
share it equally.
6. Unlimited Liability : Liability of partners of a partnership firm is unlimited.
They are jointly held liable for the debts and losses of the firm.
7. Legal Status : Partnership firm has no distinct legal status separate from its
partners.
8. Transfer of Interest : No partner can transfer its interest in the firm to
anybody without the consent of other partners.
9. Principal - Agent Relationship: This relationship is based on mutual trust
and faith among the partners in the interest of the firm. Business of the firm
may be carried on by all the partners or any one of them acting for all.
According to this, every partner is an agent when he is working on behalf of
other partners and he is the principal when other partners act on his behalf.

5. 3. Effects of Non-Registration of a Partnership
Firm
• Section 69 of the Indian Partnership Act, 1932 offers a detailed explanation of the
consequences of not opting for firm registration.
• In the case of Seth Badri Prasad & Ors vs Seth Nagarmal & Ors (1955) it was held
that if the partnership firm does not choose to get itself registered, then the firm
as well as the partners are under the disabilities which are extremely
inconvenient
• If a partnership firm is not registered, then the firm and partners will have to be
deprived of the following advantages :
a) The firm cannot file a suit against the third party.
b) No partner can file a suit against co-partners.
c) The firm cannot file a suit against any partner.
d) A partner cannot file a suit to enforce a right arising from the contract or
conferred by the Partnership Act against the firm.
e) Third parties can file a suit against the firm to enforce their rights.

6. 4. Rights not Affected by Non-Registration
• Non-registration of the partnership firm does not affect the following:
a) The right of a partner to sue for dissolution of a firm or for accounts of a dissolved
firm or any right to realise the property of the dissolved firm.
b) The rights of the firm or its partners having no place of business in India.
c) One partner can bring a suit for damages for misconduct against the other partner.
d) The power of an official assignee to realise the property of an insolvent partner.
e) Suits arising otherwise than under a contract, for example, a suit against the third
party for infringement of trademarks of the firm.
 In the case of Haldiram Bhujiwala v Anand Kumar Deepak Kumar it was held that a
suit to prevent infringement of trademark is not barred by the S.69 of the Indian
Partnership Act, 1932 whether the firm is registered firm or not.

7. 5. What is a Partnership deed and how is it
formulated ?
• The document containing the agreement in writing amongst partners
is called a Partnership Deed.
• Thus, Partnership deed is a written agreement between two or more
persons for managing the affairs of a partnership firm.
• The partnership firm has is to be duly stamped as per The Indian
Stamp Act , and duly signed by all the partners.
• A Copy of the Partnership Deed should also be filed with the Registrar
of Firms in case the firm is being registered.
• It is enforceable by law in act as a guide to the partners in
carrying out the day to day business activities.
• Further , it helps to avoid any discrepancy or this agreement
with regards to the role of each partner in the benefits that
accrue to them.

8. 6. Content of Partnership Deed
1. Name and address of a firm
2. Nature of business
3. Date of commencement of partnership
4. Name, description and address of a partner
5. Amount of capital to be contributed by the partners
6. Ratio in which profits or losses are to be shared by the partners
7. Salaries , commissions or any other amount to be payable to partners .
8. Adjustments or processes to be followed on account of the death of a partner
or dissolution of firm.
9. Interest on capital invested , drawings by partners or any loans by either
partners.
10. Date on which accounts shall be closed every year.
11. Methods of solving disputes

9. 7. Registration of Partnership Firm in India
• Chapter VII of the Act deals with ‘Registration of Firms’ of which
sections 56 to 65 deals with the procedure for registration.
• Sub section (1) of Sec 58 provides for the documents required for
registration
• Indian Partnership Act, 1932 governs the partnerships. Registration
of partnership firm is optional and at the discretion of the partners.
• Registration of the partnership firm may be done at any time – before
starting a business or anytime during the continuation of partnership.
• It is always advisable to register the firm as it provides special rights
which aren’t available to the unregistered firms.
• Registration of a Partnership Firm means entering of a firm’s name in
the register of firm kept with the Registrar.

10. 8. Procedure of Partnership Firm in India
 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:
• The name of the firm.
• The full names and permanent resident address of the partners.
• The timespan of the firm.
• Business the date when each partner effuse to the firm.
• The principal place of business transaction of the firm.
• 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.

11. 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 an Advocate, Gazetted Officer, 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 and some other documents,
such as, Specimen of affidavit, Certified original copy of Partnership
Deed, Proof of principal place of business or area of business has to
be sent to the Registrar at the enumerated address along with the
prescribed fees.
If the registrar is satisfied with the documents, he will register the
firm in Register Of Firms and will issue certificate of registration

12. 9. Fee and Proof of a Registered Partnership
Firm
• As per section 71 of Indian Partnership Act,1932, 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.
• 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.
• According to Rule 9 under Indian Partnership Act,1932 , a documented
proof of registration or incorporation for that matter is a registration
certificate signed by Registrar.

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