REGISTRATION OF FIRMS: SOME PROBLEMS

Author(s): K. Ponnuswami
Source: Journal of the Indian Law Institute , Jan.-Mar., 1964, Vol. 6, No. 1 (Jan.-Mar.,
1964), pp. 54-68
Published by: Indian Law Institute

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 REGISTRATION OF FIRMS : SOME PROBLEMS
K. PONNUSWAMI*

The English precedent1 of compulsory registration of partnership

firms and punishment for non-registration was not adopted into the
Indian Partnership Act, 1932, 2 perhaps for well-founded reasons.
That Act which for the first time provided3 for registration of firms in
this country has made such registration optional. However, »indirect
compulsions and inducements have been designed,4 lest these newly
introduced provisions should become futile.
These provisions which abound in ambiguity have given rise to a
number of problems which has resulted in a welter of conflicting deci-
sions in the various High Courts.
A recent division Bench decision of the Patna High Court in
Chaman Lal v. Firm New India Traders 5 and an earlier division Bench
decision of the Punjab High Court in Bahal v. Kapur & Co.6 advert to
one such problem and arrive at conflicting conclusions.
The problem involved in these two decisions can be thus stated :
Before a firm can sue a third party on a contract, is it necessary for
the maintainability of the suit that the names of all those persons who
are partners in the firm on the date of the institution of the suit
should appear on the Register of Firms ?
This question was answered in the negative by the Patna Bench
and in the affirmative by the Punjab Bench.
In the Patna case, a firm was registered in 1948 with two partners
A and B. Subsequent to the registration, three more persons (C,D,E)
joined the firm as partners, but their names were not brought on the
Register as provided by Section 63 of Partnership Act.
In the 1954 firm, by its managing partners A and B, sued7 the
defendants to recover the price of mica sold to them. The defendants

* Lecturer, Faculty of Law, University of Delhi.

1. Business Names Registration Act, 1916.
2. Act IX of 1932.
3. Gh. VII of the Act: Ss. 56-71.
4. Section 69 (which come into force one year after the rest of the Act).
5. A.I.R. 1962 Patna 25 (Kanhaiya Singh and Ramratna Singh, J J.).
6. A.I.R. 1956 Puqjab 24 (Bhandari* C J., and Falshaw, J.).
7. Under 0. 30, r. 1, Civil Procedure Code, the suit can be instituted in the firiń
name.

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 K. PONNUSWAMI 55

contended that the suit should fail as th

not appear on the Register of Firms on
suit. The court rejected this contenti
maintainable.

In the Punjab case, a firm was registered in 1940 with A, B and C

as partners to carry on hotel business in Delhi and Kanpur. In 1942
C retired from the partnership, the Kanpur business was given to him
in settlement of his accounts and his retirement was duly notified to
the Registrar. The business of the firm in Delhi was thereafter carried
on in the same firm name by A and B. In 1946 D joined the firm as
a partner but this was not notified to the Registrar.8 In 1950 the
firm, by its managing partner A, sued the defendants who were long
time occupants of rooms in the firm's hotel in Delhi to recover
arrears of rent due.
The defendants raised two contentions : (1) The retirement of C
in 1942 amounted to a dissolution of the firms and this necessitated a
fresh registration of the reconstituted firm. The court rejected this
contention and rightly so.9 (2) In view of the new partner having
joined in 1946 and the failure to bring his name on the Register
before the institution of the suits, the, suits cannot be maintained.
The Court upheld this contention and dismissed the suits.
In both the cases the firm was originally registered and subse-
quently new partners joined the firm. This change in the constitution
of the firm was not notified to the Registrar before the institution of
suits against third parties to enforce contractual rights. The Patna
Bench held that the suit was maintainable and the Punjab Bench to
the contrary.
Which of these views is correct? To examine this, it is necessary
to outline briefly the scheme of the Act relating to registration of
firms.

Section 58 requires a statement to be made to the Registrar in

the prescribed form signed and verified by all the partners of the firm
or their duly authorised agents. When the Registrar makes an entry
of the statement in the Register of Firms and files the statement, the
registration is effected.10 Any subsequent change in the name of the

8. Until a year after the institution of the suits.

9. The courts have not found any difficulty in taking this view in a number oi
cases: See Sudarsanam v. Viswanatham Bros., A.I.R. 1955 Andhra 12 ; Sohanlal Pachisia
& Co. v. Bilasray, A.I.R. 1954 Cal. 179.
10. Sec. 59.

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56 REGISTRATION OF FIRMS

firm or its principal place of business has to be n

by a statement signed and verified by all the pa
authorised agents just in the same manner in
statement when they applied for registration of
is thereupon required to record those changes in
the firm closes its existing branches or opens n
a partner's name or address changes, intimation t
any partner or an agent of the firm.12 In the s
cant, when a change occurs in the constitution o
the entry of a new partner or the exit of an exis
provides that any incoming, continuing or outg
duly authorised agent, may give notice to the R
tant to note that in such a case the firm is n
statement.

A change in the constitution of a firm may occur by the exit

partner by death, insolvency,13 retirement,14 or expulsion,15 or
entry of a new partner.16 Death or insolvency of a partner will
dissolve the firm, if the partnership contract so provides.17 Bu
introduction of a new partner or the retirement or expulsion17
partner do not in a any case dissolve the firm. It is well known
our law of partnership has "relaxed its rigid application of the agg
theory and given, to a limited extent, a legal personality to a fi
This is also evident from the provision of the Act that there is
solution of a firm5 only when there is a dissolution of the partn
between all the partners of a firm.19 The insolvency of all, or a
one, partners will compulsorily dissolve the firm.20 The dea
retirement, or expulsion, of all, or all but one, partners sho
course result in the compulsory dissolution of the firm and it is p
unnecessary for the Act to mention them as in the special case o
solvency.

11. Sec. 60.

12. Sees. 61,62.
13. Sec. 42(c) (d).
14. Sec. 32.
15. Sec. 33.
16. Sec. 31.
17. Sec. 42 ; see also, sec. 41 (a).
17a. Unless the number of partners is reduced to one.
18. The 7th Report of the Law Commission (1957), p. 3.
19. Sec. 39.
20. Sec. 41(a).

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 K. PONNUSWAMI 57

Section 69 deals with the consequence

These consequences have to be con
firm may be an unregistered firm
persons whose names do not appea
(2) the firm might have been reg
partner or the exit of an existing pa
the Register as provided by section
We may use the phrase " unregiste
registered under Section 59 and "u
partner of an unregistered firm as
firm whose name has not been brou
Section 69(2) forbids a suit by or
third party to enforce a right arisin
(1) the firm is registered and (2
been registered partners.
The crux of the problem is the me
suing" in section 69(2). It is signif
section uses the words " the person
the persons who are partners of th
theless thought that the words "the
text mean anything but that all the
time of the institution of the suit must be or have been shown on
the Register.21 If this view is right, not only the non-registration of
the firm, but the nonrecording of changes in the constitution of the firm,
at any rate caused by the entry of new partners since registration of
the firm, is fatal to the firm suing third parties on contracts. It will
be useful to examine whether such a consequence in the case of non-
recording of changes in the constitution of the firm was intended by
the framers of the Partnership Act.
The Special Committee in their Report on the Partnership Bill
thus observed :
"The English precedent in so far as it makes registration compul-
sory and imposes a penalty for nonregistration has not been follow-
ed... Indeed, it is proposed that registration should lie entirely within

21. "The question which arises in the present case is whether in order to institute
a suit a partnership must not only be a registered firm, but also all the persons who
are partners at the time of the institution of the suit must be or have been shown on
the Register. This certainly appears to be the plain meaning of the words in
s. 69(2).... It is difficult to imagine what other meaning the words "person suing" are
capable of bearing in this context." per Falshaw, J., A.I.R. 1956 Punj. 24, 26.

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58 REGISTRATION OF FIRMS

the discretion of the firm or partner concerned

precedenty any firm which is not registered will
claims against third parties in civil courts ; an
registered will be unable to enforce his cla
parties or against his fellow partners... The fr
register changes in a firm has been difficult, b
the Bill are put forward as being as strong as
absence of a penal section and without altering any
ples of partnership law . As regards a partner
firm, if he fails to register he will incur a gra
claim his dues from his partners and will hav
good faith or sue for dissolution. On the othe
who deals with a firm and knows that a new
duced can either make the registration of the
precedent for further dealings or content hi
security of the other partners and the cha
evidence the partnership of the new but unre
party who deals with a firm without knowin
partner counts on the credit of the old partn
prejudiced by the failure of the new partner t
The scheme of the Act, therefore, is as foll
as to registration of firms will become effecti
the firm is made a bar to the institution of a
firm or its partners (a) to enforce contractual rig
and (b) to enforce the rights of such partners int
(2) The provisions regarding notificatio
changes in the constitution of a registered fir
effective (a) in the case of a change due to a n
firm, by disabling him from enforcing his rig
other partners and (b) in the case of a c
partner leaving the partnership by retire
making the register conclusive against him
and the firm liable for each other's acts until
by section 72 is given of his leaving the partn

22. Report of the Special Committee, paras. 17 to

The Report is given in Pollock & Mulla's Commenta
(1934 Edn.) as Appendix I.
23. But where the third party actually knows of a
The Central United Bank , Ltd. v. Ve nkatarama I.L.R. 196

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 K. PONNUSWAMI 59

there is a change in the constitution

solvency of a registered partner, su
case liable and " Nothing in the way
insolvency of a partner... can impro
and no inducement need be offered."24

Section 69 of the Partnership Act, which is identical with Clause 68

of the Partnership Bill,25 seeks to carry out this scheme which itself is
based on the English precedent. It is nowhere envisaged in this
scheme that if the names of all those who are partners of the firm on
the date of the institution of the suit by or on behalf of the firm are
not borne on the Register, the suit ought not to be maintainable.
When a change occurs in the constitution of a firm, the Act, signifi-
cantly, does not require a statement to be made by all the partners
and leaves it to the concerned partner to notify the Registrar in his
own interest. How could it be said then that the legislature intended
to impose a disability upon the firm, when it did not choose to impose
a duty on the firm to notify by means of a statement signed and
verified by all the existing partners a change in its constitution?
When a firm is not registered, the defaulters are all the partners ;
when change in the constitution is not notified, the defaulter is the
concerned incoming or outgoing partner. The scheme of the Act seems
to be to disable the defaulter or defaulters concerned from enforcing
his or their rights.
It is, therefore, submitted that the words "the persons suing" in
Section 69(2) are not synonymous with "all partners of the firm at
the date of the institution of the suit" as was held by the Punjab High
Court. The question then arises what else those words mean. The
answer to this question will depend upon the frame of the suit filed
by or on behalf of the firm. Such a suit may be instituted in the
following ways :
I. All the partners may sue in their individual names as joint
promisees. Partners are joint promisees as envisaged by Section 45 of
the Indian Contract Act, 1872, and can sue as such. In fact before
the introduction of the present Order 30 in the Civil Procedure Code,
1908, they had to sue as joint promisees in their individual names.
As Order 30 is permissive and not obligatory,26 it is even now

24. Special Committee Report, para. 20.

25. Pollock & Mulla, ibid, Appendix B,
26. Chaudhari Atma Ram v. Mian Umar Ali, A.I.R. 1940 Lahore 256; Singhął't
Law of Partnership in Br. India (1918), p. 282,

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60 REGISTRATION OF FIRMS

open to those persons who were members

when the contract was made to sue the thi
individual names. If they do so, "persons
them thus suing in their individual names.
difficulties27 and is unlikely to be followed in
convenient procedure available under Order 3
where the firm is unregistered and the partne
in their own names. It is to prevent this tha
both the conditions, viz., that the firm shou
partners suing should be registered partners.
tered partners of a registered firm (e.g., where a
are dead or retired and there are only unregis
firm) cannot sue in their individual names jointly
registered, they are themselves unregistered
clear what the position will be where som
registered and the others unregistered and th
individual names. Is Section 69(2) a bar to s
is. What then will be the position if in such
partners are made defendants in the suit on t
refused to join in the suit and the suit is ther
the registered partners ? These questions are
and unlikely to arise in practice as in such a ca
will rather institute the suit in the firm name under Order 30 of the
Civil Procedure Code.
II. The more frequent case will be where the suit is instituted
in the firm name under Order 30 of the Civil Procedure Code.
Order 30, rule 1, enables "any two or more persons claiming as part-
ners and carrying on business in India" to sue in the name of the firm
of which such persons were partners at the time of the accruing of the
cause of action.28 Thus Order 30 enacts an exception to the general
rule in Section 45 of the Contract Act in cases where the joint pro-
misees are partners. The pleadings and other documents in such a
suit may be verified or certified by any one of such persons.
When a suit is thus instituted in the mercantile name of the firm,
who are "the persons suing"? As noticed earlier, the learned judges

27. If any partner is dead or dies during the pendency of the suit, his legal
representatives should be brought on record. See Raj Chund.tr Sen v. Ganga Das Seal ,
(1904) 31 Cal. 487 (P.C.).
28. Similarly, under the rule, any two or more persons being liable as partners
and carryiiig on business in India can be sued in the mercantile nanne of the firm.

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 K. PONNUSWAMI 61

in the Punjab decision took the v

suing" mean all the partners of the
of the suit.29 It is submitted that this view runs counter to the inten-
tion of the legislature. Order 30, r.l, C.P.C., enables any one of the
several partners in a firm to sue alone, provided he sues in the name of
the partnership firm.30 One partner may sue in the name of the firm,
although the other partners refuse to join in the suit and to such a suit
the objecting partners are not necessary parties.31 Similarly, suits
between a firm and one or more of its partners can be instituted in
the firm name.32 In a suit instituted in the mercantile name of
the firm, the defendant is entitled to demand a disclosure of the names
of the partners in the firm and when such a demand is made, the dis-
closure has to be made forthwith.33 When the disclosure is made, the
suit will nevertheless continue in the firm name and proceed and have
the consequence "as if" the persons so disclosed had been named as
plaintiffs in the suit.34 The words " as if " are significant and it must
be noted that the suit will proceed and have the consequences not as
a suit by all the partners in their individual names but as if it were a
suit by disclosed partners in the name of the firm. It is, therefore,
submitted that all the partners need not be regarded as "the persons
suing " for the purpose of Section 69(2) of the Partnership Act and
those words can be given a restricted interpretation in consonance
with the intention of the framers of the partnership Act to mean only
those partners who institute the suit in the firm name under O. 30, r. 1,
C.P.C., and in particular the partner or partners who sign and verify
the plaint on behalf of the firm. If it is remembered that any partner
can institute a suit in the name of the firm even without the consent
of the other partners, it will be obvious that the words "persons suing"
can have only reference to him and not to the others who do not join
him in the suit.

29. See f. n. 21 ante .

30. Hari Singh v. Firm Koran Chand (1928) 8 Lahore 1.
31. Seal and Edgelow v. Kingston (1908) 2 K.B. 579 (G.A.) Bhadreswar Coal Supply
Co. v. Satis Chandra JSfandi 6- Co., A.I.R. 1936 Cal. 353 (Chose & Mitter, TT.).
32. O. 30, r. 9, G.P.C., but leave of court is necessary to levy execution in such
suits. The dictum of Gopalakrishnan Nair, J., in DinaNath v. Firm Metro Hotel , A.I.R.
1963 J. &. K. 19, that a suit by one of two partners in the firm name against the other
partner to enforce a right arising from the partnership agreement is not maintainable
under O. 30, C.P.G., does not seem to be cbrrect, though the decision itself is right, as
the firm was an unregistered firm.
33. O. 30, r. 2(1), C.P.C.
34. O. 30, r. 2, OP.C.

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62 REGISTRATION OF FIRMS

Besides, the interpretation of the words "th

mean all the partners of the firm at the date of t
seems to be erroneous for another reason. Ord
O. 48A of the (English) Rules of the Supreme
Indian Order is modelled, do not incorporate th
name when used in any action, is merely a conv
sing the names of those who constituted the firm
accrued ,"36 When a change has occurred in the
between the time when the cause of action accrued and the suit to
enforce it is instituted, the suit must be by persons who were partners
at the time when the cause of action accrued, except in the case where
the contractual rights of the original firm have been assigned to the
reconstituted firm37. Thus an incoming partner cannot sue a third
party to enforce a contract made with the third party before he
joined the partnership, unless there is an agreement between him
and the third party entitling him to sue on the contract.38 Therefore,
it is submitted, that the words "persons suing" will not necessarily
mean in all cases the partners of the firm at the time of the institu-
tion of the suit. It is regrettable that the judgments in both the
Punjab and Patna decisions do not throw light upon the crucial
question whether the cause of action accrued before or after the
change occurred in the constitution of the firm.
In conclusion it is submitted that when a suit is instituted in the
mercantile name of a firm under O. 30, r. 1, G.P.G., "the persons
suing " are the partners instituting that suit. If they are registered
partners and the firm is a registered firm, there could be no bar to the
maintainability of the suit on the ground that there are other partners
whose names do not appear on the Register of Firms.
If this view is right, the effect of Section 69 (1) and (2) will be :
(i) an unregistered firm cannot sue a third party to enforce a
right arising from a contract ;

35. The English Rules are given as Appendix II to Lindley's Law of Partner-
ship, Edn. 12 (1962).
36. Lindley, op. cit., 302 ; Sohanlal Pachisia & Co. v. Bilasray , A.I.R. 1954
Gal. 179.

37. It is equally true that when a third party sues a firm in the firm name, he
sues those who were partners of the firm when the cause of action accrued and not
those who entered the firm subsequently : See, Lindley, p. 302. Even if the firm is
dissolved after the cause of action had accrued, the third party can sue the partners
in the firm name ; See, In re Wenham Ex parte Baitams [1900] 2 Q,.B. 698 (C.A.).
38. Lindley, op.cit., 323.

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 K. PONNUSWAMI 63

(ii) a partner of an unregistered firm

or on behalf of the firm sue any th
right arising from a contract ;
(iii) an unregistered partner of a regist
the name or on behalf of the firm any
a right arising from a contract ;
(iv) a partner of an unregistered firm
his co-partners to enforce a right ari
conferred by the Partnership Act ; a
(v) similarly, an unregistered partn
cannot sue the firm or his co-partne
arising from contract or conferred b
In the Patna case, the firm was register
two partners suing were borne on the Re
three other unregistered partners, the cou
ing in the Partnership Act to indicate tha
suit shall fail."39 In the Punjab case, simila
and the partner suing was a registered pa
ing the judgment of the Bench, neverthe
the time of its institution suffered from
partners of the firm, who had been a par
not at the time of the institution of the su
of firms as a partner ;...and so the suits ha
This view, it is respectfully submitte
between the registration of a firm which
partners at the time should join and the r
constitution of a registered firm which ca
giving notice. Section 69 provides as c
institution of suits that (1) the firm shou
(2) the names of the persons suing should
Register of Firms as partners in the firm
enlarge the meaning of the second condit
of the partners suing as well as every other par

39. Per Ramratna Singh, J., A.I.R. 1962 Pat. 2

are cited.
40. A.I.R. 1956 Punj. 24, 26.
41. The case of Sar dar Singar Singh v. Sikri Bro
goes to the other extreme in holding that once a
registered partners, a suit under 0. 30, G.P.G
unregistered partner.

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64 REGISTRATION OF FIRMS

the institution of the suit should appear on the R

tion 69 is a disabling section and should be co
submitted that the Patna view is in consonance with the intention of
the framers of the Partnership Act and that it should be preferred to
the view taken by the Punjab Bench.
But the Patna decision gives rise to another problem which may
be incidentally considered in this context. The learned Judges, while
taking the view that the suit was maintainable, held that though the
decree should be passed in favour of the firm, " the advantage thereof
will go only to the partners named in the registration certificate,"42
and that " when a suit is instituted in the name of a registered firm,
only those persons who are registered as partners of the firm can get
the benefit of a decree in favour of the firm or "shall be liable for a
decree against the firm." 42 This, it is respectfully submitted, is
erroneous and flows from the mistaken assumption of their lordships
that only those persons " who are registered in the registration certifi-
cate shall be deemed to be partners of the plaintiff firm."42 The rights
and liabilities of partners do not depend upon registration, but the
enforcement of such rights by a suit is possible only if the firm is
registered and the partner suing is a registered partner. When a suit
is instituted in the mercantile name of a firm and a decree is passed in
favour of the firm in its mercantile name, such a decree is a joint decree
within the meaning of O. 21, r. 15, C.P.C., in favour of all persons who
were partners of the firm at the time when the cause of action accru-
ed.43 It is submitted that there is no warrant for the view that the
registered partners alone can have the benefit of such a decree. As
was rightly observed by their Lordships in Muthusamy v. Narasimha ,44
"the description of the decreeholder as the firm tantamounts to a
decree being given in the names of those who are partners of the firm.
That description is only a compendious way of mentioning all those
who are really the partners of that firm."45 In other words, it is joint
decree in favour of all the partners and not the registered partners
only. Any one or more of the partners can take out execution of the
decree for the benefit of all the partners under o. 21, r. 15, C.P.C.46

42. A.I.R. 1962 Patna 25, 27.

43. Mulla's C.P.C., edn. 12 (1953), p. 770.
44. (1933) 47 Mad. 696 (Sundaram Chetti and Pakenham Walsh, JJ.).
45. Ibid.. at p. 698, see the authorities cited at p. 699.
46. As to the duty of the court in such a case to protect the other joint decree-
holders, see 0. 21, r. 15, C.P.G.

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 K. PONNUSWAMI 65

Similarly, the view that only the reg

for a decree against the firm is miscon
its mercantile name and a decree is obt
mercantile name, the decree can always
nership property,47 even though some
appeared in the suit. With the leave o
executed even against a partner on who
the suit and if he disputes his liabil
whether he was a partner or held him
firm.48 Therefore, it is evident that ev
is or is not borne on the Register of F
against the firm in its mercantile nam
summons of the suit, the court will
course, but if such summons had not b
court which passed the decree will hav
decree against such partner.49
Yet another problem is posed by a re
High Court in Hansraj Manot v. M/s. G
The facts of the case were : Gorak N
themselves into a partnership firm b
Pande. One of the two partners died an
the partnership business with the heir
firm name. The names of the heirs w
the Register of Firms. The court fo
agreement between the two original par
be dissolved , by the death of either
with the heirs of the deceased.
A suit was brought by the surviving registered partner in the
name of the firm for ejectment of the defendant who was a tenant of
the firm.51 The defendant demanded a disclosure of the partners in
the firm and in compliance the names of the unregistered partners
were declared.

The defendant contended that: (1) the partnership between the

surviving partner and the heirs of the deceased partner was a new

47. Mulla's C.P.C, cdn. 12 (1953), p. 1021.

48. Ibid., p. 831.
49. Ibid., 830-831 ; C.P.C., O. 21, r. 50(2).
50. (1961-62), 66 Cal. W.N. 262. (Purushottam Chattcrjee, J.)
51. Whether such a suit is one to enforce a right arising out of a contract is not
discussed in this article.

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66 REGISTRATION OF FIRMS

firm requiring fresh registration, as section 42 w

the partnership is formed by only two persons, a
of one partner of the firm, the heirs of the
into the firm because the heirs had no firm t
even if the firm is a reconstituted firm, the suit
the names of the heirs, the new partners, had n
the Register. The learned Judge rejected the
upheld the second.
The first contention raises important question
registration and of the entries on the Registe
with the effect of non-registration and not regis
only effect of registration mentioned in the Act
the Register are conclusive proof against the
whose statement, intimation or notice they wer
the Register.53 However, it is certain that regis
corporate the firm.538 Nor do the registration p
affect the well-settled principles of partnership l
Difficult questions arise where a registered firm c
partners and the contract between them provides
be dissolved by the death or insolvency of eithe
prevent the dissolution of the firm and will sec
make any difference that on the death or insolv
contract provides that the other partner should
in partnership with a third party? Section 41
the case of the insolvency of all, or all but on
case the firm is compulsorily dissolved and no co
can save the firm. The same should be the conse
of all partners, or all but one, as in such a case t
of the partnership between all the partners as c
tion 39, and it is submitted that no contract
prevent the dissolution of the firm and that any
self be contrary to law and hence void. The wide
should be interpreted in the context of the gene
tion 39. In Sughra v. Babu5i the Allahabad High
<c In the case of a partnership consisting of o

52. 66 C.W.N. 262, 264.

53. Sec. 68(1).
53a. "The Bill

view that a firm is not a legal person". Special Com

54. A.I.R. 1952 All. 506 (Sapru and Agarwala, JJ

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 K. PONNUSWAMI 67

partnership remains on the death of on

contradiction in terms to say that the
partners to the effect that on the dea
ship will not be dissolved but will cont
ed by bringing in the heirs of a decea
partner cannot, by his own contract,
heirs or legal representatives. Partner
it is a matter .of contract."05 This vie
Their lordships disagreed with an ea
the same High Court.56 In a recent
judge has opined that the decision in
acceptable one." The position will in
are more than two partners and the d
in the number being reduced below tw
of the firm can be averted by a contr
when the number is reduced below tw
firm by operation of law.
In the Calcutta decision under con
took a different view. According to
contract between Gorak Nath and Cha
registered firm, "the heirs became
partners died."00 This concept of pe
matically without their consent, it is s
ship may be created by contract or
automatically. This concept of autom
received further extension in the ver
Paras Ram Ram Sarup v. Firm Baldev Ò
and his son S registered themselves in
F died in 1954 and on the very day of
notice to the Registrar that he had bec
place of F. The court held that the or

55. Ibid., p. 507.

56. Lala Ram Kumar v. KishortLal , I.L.R. 1
Sinha, J.).
57. Narayanan v. Umayal, A.I.R. 1959 Madras 283, 284 (Ramachandra Iyer, J.).
58. 66 G.W.N. 264. This writer has found it difficult to understand the follow-
ing passage in the judgment : " As soon as there is the death, the heirs become the
partners automatically without any agreement between the original partners by virtue
of the original agreement between the partners while they were surviving "
59. A.I.R. 1963 Punj. 215. (Shamsher Bahadur, J.}.

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68 REGISTRATION OF FIRMS

and that there was a mere change in the co

rity of this case is that no contract between F
on the death of either the firm shall not be dissolved is mentioned in
the judgment. It is submitted that these decisions which tantamount
to regarding registration as equivalent to incorporation of the firm are
erroneous.

The second contention upheld by the learned judge in

decision adverts to the first problem discussed above. A
ing to construe Section 69, his lordship arrived at the
as in Bahal v. Kapur & Co .60 and held that the unregis
(the heirs) whose names were disclosed on a demand by
were " persons suing " within the meaning of those
tion 69(2) and that therefore the suit was not mai
view, as already submitted, does not seem to be sound
contrary to the intention of the legislature in enactin
the Partnership Act.
The Law Commission in its Report61 on the Partner
suggested the introduction of compulsory registration o
at will and partnerships to last for six-months or more
where the capital of the partnership is less than Rs. 50
legislature decide that the time is not yet ripe to introd
registration, it would be necessary to enact amendmen
tration provisions of the Act to clear the difficulties d
numerous decisions of the High Courts. It is to be regr
Law Commission did not consider it necessary to make a
as an alternative to the suggestion for compulsory regist
Section 69 of the Partnership Act needs to be mad
Order 30 of the Civil Procedure Code needs to be prope
to the substantive law in the Partnership Act.

60. A.I.R. 1956 Punj. 24.

61. Seventh Rep. (1957), Dr Sen Gupta dissenting.

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