Q. An unregistered firm applied for registration on March 5, 2007. On March 10, 2007 before the registration could be effected, the firm filed a suit against ‘P’ for the recovery of Rs. 2 lakhs. Registration certificate was given to the firm on March 25, 2007. Is the suit maintainable? Give reasons and refer case-law.
- 21st Bihar Judicial Service Exam. 1984 (Similar problem).
- West Bengal Judicial Service Exam. 2000 (Similar Problem).
- U.P. Higher Judicial Service (A.D.J.) Exam. (Identical Problem)
- West Bengal Judicial Service Exam. 1997 (Similar question)
Ans: No, suit is not maintainable—M/s Jammu Cold Storage v. M/s Khairati Lal, AIR 1960 J&K 101.
Reasons: According to Section 69 (Effect of non-registration) no suit can be instituted either between the partners inter se or against any third party if the firm is not registered.
Facts of this problem are similar to the famous case of M/s Jammu Cold Storage v. M/s Khairati Lal referred above. In this case M/s Khairati Lal & Sons instituted a suit to recover a sum of Rs. 1,000 from M/s Jammu Cold Storage and General Mills Ltd. On 15-4-1959. The firm was not registered on the date when suit was instituted but it was registered subsequently on 30-5-1959. It was held by the J&K High Court that since the firm was not registered on the date of the institution of the suit, the suit cannot proceed further and it must be dismissed.
On the basis of above discussions it can be said that in the given problem suit filed by firm against ‘P’ is liable to be dismissed as the firm was not registered on the date when the suit was filed. Hence, the suit is not maintainable in the eye of law.
Note: In West Bengal Judicial Service, 1997 Exam. a similar question was asked in following words—“An unregistered partnership firm filed a suit against third party for realisation of same dues. During the pendency of the suit the firm is registered. State whether the suit is maintainable after such registration.”
Source: Kishor Prasad