

Consequences of Non-Registration of Firms :- Non-registration: Before moving to understand what is meant by non-registration, let us first see what does registration means. The basic meaning of registration means the process of incorporation of any firm. Registration can be the process through which brings the firm into existence. Registration has not been properly defined in any statute but 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: As mentioned above that the working of a firm without the process of incorporation is an advantage but it is subjected to limitations. A non-registered firm does not have all the rights of a registered firm. Its working is different from that of a registered firm and the right of a non-registered firm is restricted. The effect on a firm for not being a registered one is mentioned under section 69 of the Indian Partnership Act, 1932. There are certain consequences to it which are as follows below No suit to enforce rights under the Act: A firm which has not undergone the process of incorporation cannot file a suit against any other firm or third party. A non-registered firm does not have the privilege to file a suit like all other registered firms. Another important essential about this sub-point is that the person or the third party suing the non-registered firm shall be already registered in the register as a firm. 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. No proper relief: If there is no registration of the firm, the claim exceeding Rs100 cannot be set off by a third party, So there is no relief in this regard to the party. Such a right can be only enjoyed by the registered firm. 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.
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