According to India Partnership Act 1932, it is not compulsory for a partnership firm to get itself registered, then why do partners prefer to get the firm registered ?

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Solution

Legally it is not compulsory for a partnership firm to get itself registered. Nevertheless, partners prefer to get the firm registered to overcome the following limitations :

(i) The partner of an unregistered firm cannot file a suit against any other partner to settle the disputes.

(ii) The partner of an unregistered firm cannot file a suit against the partnership firm.

(iii) The partner of an unregistered firm cannot file a suit against an outsider or third party for recovery of any claim.

(iv) Outsiders can file a suit on an unregistered firm for claim.

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If registration is optional, why do partnership firms willingly go through this legal formality and get themselves registered? Explain.

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