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

Ravi and Sameer run a grocery store together and share profits equally. They have no written agreement and have never registered the firm. A supplier, Mehta Traders, wants to sue the firm for unpaid dues. Which statement is correct?

The suit by Mehta Traders is maintainable. Non-registration only restricts the firm and its partners from suing outsiders to enforce contractual rights; it does not stop a third party from suing the unregistered firm for its dues.

  1. AThe suit is barred because the firm is unregistered
  2. BThe suit is maintainable because non-registration does not bar a third party from suing the firmCorrect
  3. CThe suit is maintainable only if Mehta Traders is also a registered firm
  4. DThe suit is maintainable only after the firm gets registered with the Registrar

Explanation

Registration of a firm is not compulsory under the Act. The bar on suits applies to the firm or partners suing third parties to enforce contractual rights, not to third parties suing the firm. Hence Mehta Traders can sue even though the firm is unregistered.

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