Prior to the passing of the Indian Partnership Act, 1932, there was no provision for the registration of partnership firms in India. As a result it was difficult for a third person to prove the existence of partnership and make his claim against all the members of the firm.
Whenever the question of partners’ liability arose, they did not hesitate to deny their membership of the partnership in question.
As such there was a demand for compulsory registration, as prevalent in England, so that necessary particulars regarding the constitution of the firm could be made available to those who may be dealing with the firm.
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In view of the very large number of small partnership firms working in India, where registration may not produce much public benefit, the present Act has made the registration optional entirely at the discretion of partners.
Under the Partnership Act it is not compulsory for every partnership firm to get it registered, but an unregistered firm suffers from a number of disabilities. In practice, therefore, few partnerships would deem it advisable to remain unregistered.
Time of registration:
Registration may take place at any time during the continuance of the partnership firm. Where the firm intends to institute a suit in a court of law to enforce rights arising from any contract, registration must be affected before the suit is instituted otherwise the court shall not entertain the suit.
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Registration may also be affected even after a suit has been filed by the firm but in that case it is necessary to withdraw the suit, get the firm registered and then file a fresh suit. Registration of the firm subsequent to the institution of the suit cannot by itself cure the defect.
Procedure of registration (Sec. 58):
The procedure of registration is very simple. An application in the prescribed form along with the prescribed fee has to be submitted to the Registrar of Firms of the State in which any place of business of the firm is situated or proposed to be situated.
The application or statement must be signed by all the partners or by their agents specially authorised in this behalf, and must contain the following particulars:
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1. The name of the firm.
2. The place or principal place of business of the firm.
3. The names of any other places where the firm carries on business.
4. The date when each partner joined the firm.
5. The names in full and permanent addresses of the partners.
6. The duration of the firm.
When the Registrar is satisfied that the above provisions 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 (Sec. 59). This completes the procedure of registration.
Change of particulars:
With a view to keep the Registrar of Firms posted with up-to-date information regarding the firm, if any change takes place in any of the particulars given above, it should be notified to the Registrar, who shall thereupon incorporate the necessary change in the Register of Firms.
Further, the Registrar should also be informed when any partner ceases to be a partner by retirement, expulsion, insolvency or death, or when a new partner is admitted or a minor, having been admitted, elects to become or not to become a partner, or when the firm is dissolved. (Sees. 60-63)
Penalty for false particulars (Sec. 70):
If any person knowingly or without belief in its truth signs any statement, amending statement, notice or intimation containing false or incomplete information to be supplied to the Registrar, he shall be punishable with imprisonment which may extend to three months, or with fine, or with both.