Skip to content

CA Foundation · Business Laws · The Indian Partnership Act, 1932

Mahesh and Nalini run a tailoring firm in Indore. The firm has never been registered. A customer, Ojas, defaults on payment of Rs 20,000 for supplies. What is the legal position if the firm wishes to sue Ojas for recovery?

The firm cannot sue Ojas. An unregistered firm, or its partners suing on its behalf, cannot file a suit against a third party to enforce a contractual right. Registration is a precondition for such a suit, and no exception applies to this Rs 20,000 claim.

  1. AThe suit is barred because the firm is unregistered and the persons suing are not shown in the Register of FirmsCorrect
  2. BThe suit is allowed only if the claim is below Rs 10,000
  3. CThe suit is allowed because registration is compulsory only for firms with more than 10 partners
  4. DThe suit is allowed only after the court registers the firm

Explanation

Under the Partnership Act, a suit to enforce a right arising from a contract against a third party cannot be filed by or on behalf of an unregistered firm, nor by persons suing as its partners. The Rs 20,000 claim is above the small-claim limit of Rs 100 for set-off type exceptions, so no exception applies. The other options invent rules that do not exist.

Did you get it right without looking?

One question tells you little. A timed set on The Indian Partnership Act, 1932 shows your real accuracy, how long you take and where you lose marks.

Practise The Indian Partnership Act, 1932Free diagnostic mock

More The Indian Partnership Act, 1932 questions