The statement reflects the principle of Continuity of Registration under the Indian Partnership Act, 1932. Once a firm is registered with the Registrar of Firms, that registration remains valid even if there are internal changes, such as the admission of a new partner, retirement, or death, provided these changes are notified to the Registrar.
However, while registration is technically "permanent," the effects of non-registration are so severe that they practically force firms to register to protect their legal interests.
1. Effects of Non-Registration (Section 69)
In India, partnership registration is voluntary, not compulsory. However, Section 69 imposes several disabilities on an unregistered firm that make it difficult to conduct business securely.
A. No Suit by a Partner against the Firm or Other Partners
A partner of an unregistered firm cannot file a lawsuit in court against the firm or any fellow partner to enforce a right arising from a contract or conferred by the Partnership Act.
Example: If Partner A refuses to give Partner B their share of profits, Partner B cannot sue them if the firm is unregistered.
B. No Suit against Third Parties
An unregistered firm cannot file a lawsuit against any third party for the breach of a contract. To sue a third party, two conditions must be met:
The firm must be registered.
The persons suing must be shown in the Register of Firms as partners.
C. No Right to "Set-off"
If a third party sues the unregistered firm for a debt (e.g., ₹5,000), the firm cannot claim a "set-off" (a counter-claim) for any money that the third party might owe the firm (e.g., ₹2,000) if the value exceeds ₹100.
D. Suit by Third Parties is Allowed
Non-registration does not prevent a third party from suing the firm or its partners. The disabilities apply only to the firm and its partners, not to outsiders.
2. Exceptions: What Non-Registration Does Not Affect
Even if a firm is not registered, certain rights remain intact:
Suits for Dissolution: A partner can still sue for the dissolution of the firm or for the rendering of accounts of a dissolved firm.
Realization of Property: The right to realize the property of a dissolved firm remains.
Official Assignee’s Power: The power of an Official Assignee or Receiver to realize the property of an insolvent partner is unaffected.
Small Claims: Suits or set-offs where the value does not exceed ₹100.
3. Changes in Constitution and Registration
The opening statement suggests that the "identity" of the registration is tied to the firm's name and its initial entry.
Notice of Change (Sections 60-63): When a change occurs (e.g., a partner retires), the firm must send a notice to the Registrar. If they fail to record these changes, they may face the same disabilities as an unregistered firm during litigation, because the "current" partners won't match the "registered" partners.
Rectification of Mistakes: The Registrar has the power to rectify the register at any time to ensure it reflects the true status of the firm.
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