Skip to main content

Effects of Non-Registration

 Effects of Non-Registration


The Companies Act, 2013 evidently highlights that the main essential for any

organization to turn into a company is to get itself registered. A company cannot

come into existence until it gets registered. But no such obligation has been

imposed for firms by the Indian Partnership Act, 1932. If a firm is not registered

it does not cease to be called as a firm, it still exists in the eyes law. Certainly,

such a big advantage is not absolute but is subjected to a lot of limitations which

we will study further.

Non-registration of a firm simply means that the business skips the

formalities of incorporation and ceases to exist in the eyes of the law. section 58

of the Indian Partnership Act, 1932 deals with the procedure of incorporation.

Likewise, the meaning of non-registration is the exact opposite of registration,

meaning when a firm does not go through the procedure of incorporation or

start carrying on activities without getting registered.


Effects of Non-Registration

1. No Suit in a Civil Court Against a Third Party or Co-partner.

A partnership firm does not own the right to sue a third party until and unless

the firm itself is registered. Any partner or person on behalf of the firm cannot

file a complaint against that party either. As a consequence of the non-

registration of the firm, a partnership firm cannot approach the legal authorities

for help in case of any dispute or breach of contract. To do so, the firm or the

concerned partner has to have its name registered with the Registrar of Firms.

The case of Jagat Mittar Saigal vs Kailash Chander Saigal can be cited as an

instance of this effect of non-registration of the firm.


2. No suit to enforce rights against any third party

A non-registered firm cannot file a suit against a third party in any court, neither

can they file any suit against any party and nor any party can sue them if they

are registered in the registrar. No suit can be filed in any court of jurisdiction

within India.


3. No Relief Partners for Set-off Claim

Section 69(3) under the Indian Partnership Act specifies the set-off claims and

other proceedings. A set-off claim is an equitable defence to the whole or a part

of a plaintiff’s claim. Here, the debtor has the right to balance mutual debts with

the concerned creditor. Set-off claims also include arbitration proceedings.

4. Partners cannot bring legal action against each other

An aggrieved partner of an unregistered firm cannot bring legal action towards

each other as they are in no position to file a suit in the court or have the power

to enforce any right. 

5. Third Parties Can Sue the Firm

Even if a particular partnership firm is not registered under the law, a third party

can file a legal case against the firm. This is, again, an undesirable effect of the

non-registration of a firm. While the firm itself is restricted from filing

complaints against third parties, the partnership norms do not safeguard the firm

from facing third-party suits. An outsider or a third-party entity can sue an

unregistered company. But as an effect of the non-registration of the partnership

firm, it would not be rejected as invalid.

Labels:

Comments

Post a Comment

Popular posts from this blog

POONAM VERMA VS. ASHWIN PATEL & ORS (10 MAY, 1996)

     POONAM VERMA VS. ASHWIN PATEL & ORS (10 MAY, 1996) INTRODUCTION The medical profession is perhaps the noblest profession among any remaining professions in India. For a patient, the specialist resembles God. What's more, God is trustworthy. In any case, that is the patient's opinion. As a general rule, doctors are individuals. Furthermore, to fail is human. Doctors might submit a slip-up. Doctors might be careless. The care staff might be imprudent. Two demonstrations of carelessness might bring about a lot more pressing issue. It very well might be because of gross carelessness. The sky is the limit. In such a situation, it is basic to figure out who was careless, and under what conditions. For this situation, the Supreme Court separated carelessness, impulsiveness, and foolishness. An individual is supposed to be a careless individual when he/she unintentionally submits a demonstration of exclusion and disregards a positive obligation that he/she ought to ...
Post a Comment
Read more

Case Laws related to Defamation in favour of ClaimantCase Laws related to Defamation in favour of Claimant. TOLLEY Vs, J.S FRY & SONS LTD – (1931) Facts The defendants were owners of chocolate manufacturing company. They advertised their products with a caricature of the claimant, who was a prominent amateur golfer, showing him with the defendants’ chocolate in his pocket while playing golf. The advertisement compared the excellence of the chocolate to the excellence of the claimant’s drive. The claimant did not consent to or knew about the advertisement. Issue The claimant alleged that the advertisement suggested that he agreed to his portrait being used for commercial purposes and for financial gain. He further claimed that the use of his image made him look like someone who prostituted his reputation for advertising purposes and was thus unworthy of his status. At trial, several golfers gave evidence to the effect that if an amateur sold himself for advertisement, he no longer maintained his amateur status and might be asked to resign from his respective club. Furthermore, there was evidence that the possible adverse effects of the caricature on the claimant’s reputation were brought to the defendants’ attention. The trial judge found that the caricature could have a defamatory meaning. The jury then found in favor of the claimant. Held The House of Lords held that in the circumstances of this case – as explained by the facts – the caricature was capable of constituting defamation. In other words, the publication could have the meaning alleged by the claimant. The Lords also ordered a new trial limited to the assessment of damages. NEWSTEAD V LANDON EXPRESS NEWSPAPER LTD, (1939) Facts: A newspaper published a defamatory article about Harold Newstead. However, another person with this name brought an action in libel. He claimed that the article had been misunderstood as leading to him. The defendant newspaper recognised that they published the article. Also, they denied that they had the intention of being defamatory of him. Consequently, the claimant argued that the newspaper was under a duty. The duty was to give a clear and complete description of the correct person. Moreover, the claimant argued that the defendants were in breach of the duty. Issues: The issue in Newstead v London Express Newspaper, was if the reasonable persons would have understood the words complained of to refer to the plaintiff. Held: The Court of Appeal stated that in accordance with the current law on libel, liability for libel does not depend on the intention of the defamer; but on the fact of the defamation. Accordingly, a reasonable man, in this case a newspaper publisher, must be aware of the possibility of individuals with the same name and must assume that the words published will be read by a reasonable man with reasonable care.

  Case Laws related to Defamation in favour of Claimant.  TOLLEY  Vs,  J.S FRY & SONS LTD – (1931) Facts The defendants were owners of chocolate manufacturing company. They advertised their products with a caricature of the claimant, who was a prominent amateur golfer, showing him with the defendants’ chocolate in his pocket while playing golf. The advertisement compared the excellence of the chocolate to the excellence of the claimant’s drive. The claimant did not consent to or knew about the advertisement.   Issue The claimant alleged that the advertisement suggested that he agreed to his portrait being used for commercial purposes and for financial gain. He further claimed that the use of his image made him look like someone who prostituted his reputation for advertising purposes and was thus unworthy of his status. At trial, several golfers gave evidence to the effect that if an amateur sold himself for advertisement, he no longer maintained his amateur ...
1 comment
Read more