What can an unregistered partnership firm not sue for?
An unregistered partnership firm cannot sue a third party to enforce a right arising from a contract, and a partner cannot sue the firm or the other partners to enforce a right arising from a contract. The firm is still lawful. Registration does not limit the partners’ liability.
Which suits does section 69 bar?
Section 69 applies while the firm is unregistered. The firm cannot sue a third party to enforce a contractual right. A partner cannot sue the firm, or the other partners, to enforce a right arising from a contract. A claim of set-off that depends on the same sort of right is in the same position. The disability is about those suits. It is not a prosecution.
Which claims are still open?
A third party can sue the firm. The partners can still sue for dissolution of the firm, or for the accounts of a dissolved firm, and they can realise the property of a dissolved firm. Criminal law is untouched. What the deed should record, including the profit share the Act applies when the deed is silent, is on the deed page.
Where is the firm registered?
The application goes to the Registrar of Firms of the state where the firm sits, with the particulars section 58 requires. That office is not the Registrar of Companies. The deed is stamped under the state stamp law. How the application is made is on the partnership page.
Registration does not make the partners’ liability limited. Joint and several liability remains. A limited liability partnership is a different person, registered under a different Act, on the LLP page. Converting the firm later is a separate filing. It is not a consequence that registration automatically completes.
Frequently asked questions
Four questions cover legality, a customer’s suit, liability, and which registrar receives the form.
Is an unregistered firm illegal?
No. The Act allows a firm to exist without registration. Section 69 takes away particular suits. It does not make the business a crime.
Can a customer still sue the firm?
Yes. The bar is on the firm and the partners enforcing contractual rights. A third party can still sue the firm.
Does registration limit liability?
No. The partners remain jointly and severally liable. Limited liability is the limited liability partnership, which is a different registration.
Is the Registrar of Firms the Registrar of Companies?
No. A partnership firm is registered with the Registrar of Firms of the state. A company is registered with the Registrar of Companies.
Sources
The effect of non-registration is section 69 of the Indian Partnership Act, 1932. Registration of the firm is section 58, with the Registrar of Firms.