JAIIB LRAB Unit 54 - Effect of Non-Registration

The partner's may or may not enter into a partnership deed and may decide to have an oral partnership if they have a strong understanding amongst themselves.

Even if a partnership deed is entered into by the partners they may not opt for registration of the partnership firm.

The provisions of the Section 69 are briefly stated hereunder:

A partner of an unregistered firm cannot enforce by way of a suit, any right available to him under the Partnership Act or a right conferred by a contract amongst the partners against the partnership firm or any partner thereof.

Similarly an unregistered firm cannot enforce by way of a suit, any right arising by a contract against any third party.

Due to the provision which is stated in the Section 69, a majority of the partnership firms decide to register the firm to avoid future hassles and complexities on solving issues amongst the partners as well as with third parties.