Question

Deepak and Gaurav joined the prestigious law university in Ahmedabad in the year 2010. During the course of study they became good friends and they both realized that their common interest lies in the field of corporate law. After completion of their degree they decided to start a firm of their own, namely ‘Corpo Law Firm’ wherein both of them will be co-owners dividing the profit and loss. After successfully running the firm for a year, they realized that there are certain rights which are denied to their firm as it is not registered. 

Explain the consequences of non-registration of their firm. 

Answer 1

Consequences of non-registration of a partnership firm: 

a. A partner cannot file a suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act. 

b. A right arising from a contract cannot be enforced in any court by or on behalf of the firm against the third party. 

c. The firm or any of its partners cannot claim a set off or other proceedings in a dispute with a third party.