Ans.
An unregistered firm and the partners thereof suffer from
certain disabilities.
Suit between partners
and firm [sec. 69(1)]
A partner of an unregistered firm cannot file a suit
(against the firm or any partner thereof) for the purpose of enforcing a right
arising from contract or a right conferred by the Partnership Act.
Suits between firm &
third parties [sec. 69(2)]
No suit can be filed by or on behalf of an unregistered
firm against any third party for the purpose of enforcing a right arising from
a contract, unless the firm is registered and the persons suing are or have
been shown in the Register of Firms as partners in the Firm.
Claims of set-off [sec.
69(3)]
An unregistered firm cannot claim a set-off in a suit,
('set-off’ means a claim by the defendant which would reduce the amount of
money payable by him to the plaintiff).
EXCEPTIONS
There are certain exceptions to the rules stated above.
1. A partner of an unregistered firm can file a suit for
the dissolution of the firm or for accounts of dissolved firm.
2. The Official Assignee or Receiver acting for an
insolvent partner of unregistered firm may bring a suit for the realisation of
the properties of an insolvent partner or further realisation of the property
of dissolved firm.
3. There is no bar to suits by firms which have no place
of business in the territories to which the Indian Partnership Act extends.
4. There is no bar to suits by unregistered firms or by
the partners thereof in areas where the provisions relating to the registration
of firms do not apply by notification of State Government under Section 56.
5. An unregistered firm can file a suit (or claim a set
off) for a sum not exceeding ₹ 100 in value, provided the suit is of such a
nature that it has to be filed in the small Causes Court. Proceedings
incidental to such suits, e.g., execution of decrees, are also allowed.
6. Non-registration will not affect the enforcement of
rights arising otherwise than out of contract e.g. for an injunction against
wrongful infringement of a trademark etc.
An unregistered firm suffers from certain disabilities
but is not an illegal association. Therefore registration of a firm is
optional.
