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Registration of a partnership firm: judicial interpretation

Authored By- Pooja Koul

Keywords-Company, Indian Partnership Act, Partnership, Registration, Section 58-59


In this article writer initially investigates the current registration procedure of general partnerships under section 57 to section 59 in Chapter 7 of the Act and furthermore Limited Liability Partnership, which was introduced recently. On an everyday premise, numerous partnerships are entered yet because of the optional nature of registration in Indian Partnership law, numerous partnerships are not enrolled. Report of Special Committee in Para 12-24 expresses the explanation for the same, which is significantly because of the brief timeframe and single ventured nature of partnerships common in India at the time of formation. Section 69, which manages the impacts of non-enrollment of partnership firm make enlistment of partnership firm strongly recommendatory. Numerous youths and graduates fantasize about possessing a firm, yet what prevents them from seeking this rewarding and profoundly mindful profession? Is it the absence of clearness over the master plan regarding how a law firm comes into existence? This is excessively little, an obstacle to prevent you from seeking your dreams. This article will give you the lucidity to begin your firm and enrolled under the Indian Partnership Act.

What is a firm?

An organization is a legitimate entity representing the relationship of individuals, whether natural, lawful, or a blend of both, with a particular target. Organization individuals share a common reason and join to accomplish specific, declared objectives.

What is a partnership and Registration of a Partnership?

An organization is a course of action where parties, known as colleagues, agree to participate to propel their shared advantages. The partners in an association might be people, organizations, interest based organizations, schools, governments, or combinations.

The enrollment of a partnership is at the sole discretion of the partners. The Partnership Act doesn't request enrollment as a compulsory cycle that must be clung to.

However, it is advisable to enlist the firm under the act since it gives the firm different advantages that send animplied message of the act preferring enrolled firms than the unregistered. Just enlisted firms are considered lawfully existing.

The firm can be enrolled whenever before the presence or during the continuation of the association. However, if a firm wishes to authorize a lawful right emerging out of any authoritative report by documenting a case, the firm shall do so simply after the enlistment of the organization deed is finished.

Another occurrence where enrollment of the firm becomes mandatory is the point at which the firm wishes to embrace another type of association, for example, LLP or company more easily.The firm is enrolled when the registrar of firms is happy with the compliance of section 58 of the partnership act. Note that enrollment at the income tax office is mandatory for both enlisted and unregistered firms by the registrar.

Criteria for partnership

The minimum number of partners that is basic to make a partnership firm is 2. However, the Companies Act to make a top with regards to the most extreme number of partners that can be engaged with a firm.

· For a Banking business, the number of partners shall not surpass 10.

· For some other business other than banking the number of partners shall not surpass 20.

If the limit is surpassed by the firm then it will be enrolled as a company under the companies act if not the firm will be considered to be unlawful.

Name of the firm

· The name of the partnership firm will not be similar like other existing firms or businesses.

· The name of the partnership firm may include names of the individuals included in the register of members.

· The name of the partnership firm will be of consonance with the provisions of The Names and Emblems (Prevention of Improper Use) Act, 1950.

· The name of the partnership firm may end with suffixes, for example, "and Company", "and Co." or "and Associates".

· The firms are limited from utilizing words that propose, support, or patronization of the firm.

· The name of the partnership firm may utilize "and/&" to separate the principal name/center name/surname of the partners of the business.

· It is compulsory to utilize "and/&" either in the center of the full first names and full center names, full surnames of the partners or before the last full first name or full center name or full surname of the accomplices.

Proofs of registration

An ensured copy of any entry relating to the firm in the Register of firms will go about as definitive evidence of the enrollment of the firm. Any statement, notice of intimation recorded or noted in the registrar of firms will be convincing confirmation of any fact expressed in that.

How is a partnership registered?

The initial phase in the enlistment of the partnership firm is to send an application filling Form No. 1. According to the provisions of section 58, it ought to contain the following details:

· The firm name,

· The place or principal place of business of the firm,

· The names of other places where the firm carries on 4 business the date when each accomplice joined the firm,

· The names in full and perpetual locations of the accomplices, and

· The duration of the firm. The statement will be marked by all the accomplices, or by their operators specially authorized in this behalf.

Furthermore following reports to be added to the application form:

· Application for enlistment with appropriately filled details in Form No. 1.

· Duly filled Specimen of Affidavit

· A genuine copy of the partnership deed. Partnership deed can be composed on stamp paper and enlisted in Sub Registry Office like any other document.

· Ownership proof of principal place of business or rental/rent agreement thereof.

· As per the section 58(3), if a firm uses a business name which demonstrates illustrious or government authorization or patronage like "Crown", "Emperor", "Empress", "Empire", "Imperial", "King", agree to the utilization of such words as a part of the firm name by order in writing should attach.

Thirdly, all accomplices must sign the application form or their agents specially authorized in this behalf in the presence of a witness who must be Gazetted Officer, Advocate, Vakil, and Magistrate of Registered Accountant. If a partner refuses to sign the application form, enrollment can't happen except if that accomplice's name is dropped.

Finally, the aforementioned application must be sent to the Registrar at the given address alongside the charges. According to section 71 of the Indian Partnership Act, states are enabled to make their own rules with respect to the expense structure for enlistment of organization. However, Schedule I of the Indian Partnership act recommends the most extreme expenses that can be demanded by the states. According to Schedule I, the maximum enrollment fees for a statement under section 58 are Rs. 525.