CA Success Path- Foundation: post #4083 — TG.ME

As per the Indian Partnership Act, 1932, the registration of a partnership firm is not mandatory. An Indian partnership firm need not be registered from the beginning but can be registered during continuation also. But, if a partnership firm is not registered, it has to face some consequences: 1) No suit in a civil court by the firm or other co-partners against the third party: The firm or any of its partners cannot bring an action against the third party for breach of contract entered into by the firm unless the firm is registered. 2) No relief to partners for set-off of claim: If an action is brought against the firm by a third party, then neither the firm nor the partner can claim any setoff for more than ₹100 or pursue other proceedings to enforce the rights arising from any contract. 3) An aggrieved partner cannot bring legal action against other partners or the firm: A partner of an unregistered firm (or any other person on his behalf) cannot bringing legal action against the firm or any partner of the firm. But, such a person may sue for dissolution of the firm or for accounts and realization of his share in the firm’s property if the firm is dissolved. 4) Third-party can sue the firm: In the case of an unregistered firm, an action can be brought against the firm by a third party.