“A type of business organization in which two or more
individuals pool money, skills, and other resources, and
share profit and loss in accordance with terms of the
partnership agreement. In absence of such agreement, a
partnership is assumed to exit where the participants in
an enterprise agree to share the associated risks and
“IN THE PARTNERSHIP ACT 1932 THERE
ARE NO SECTION RELATED FOR
COMPULSORY REGISTRATION FOR
PARTNERSHIP DEED OR FIRM BUT NON-
REGISTRATION RESTRICTS THE
PARTNERS OR THE FIRM FROM TAKING
ANY LEGAL ACTION.
EFFECT OF NON- REGISTRATION OF
PARTNERSHIP AGREEMENT & FIRM
1. No suit by a partner against other partners or firm.
2. No suit against any third party or firm.
3. The partner never claim of set-off or other
proceedings based upon on contract.
EFFECT OF REGISTRATION OF
PARTNERSHIP AGREEMENT & FIRM
1. Power to file case in the court by a partner
against to the other partners or firm.
2. Power to file case in the court by a partner or firm
against to the third party or firm.
3. Power to claim set-off.
As you know that according to the partnership act 1932
“REGISTRATION OF THE FIRM IS NOT
RESTRICTS THE PARTNERS OR THE FIRM
FROM TAKING ANY LEGAL ACTION”
Procedure to create Partnership Deed & Register a
1. Choosing a Partnership Firm Name
The partners are free to choose any name as they desire for their partnership firm subject to
the following rules:-
◉ The names must not be too identical or similar to the name of another existing firm
doing similar business so as to lead to confusion. The reason for this rule being that the
reputation or goodwill of a firm may be injured, if a new firm could adopt an allied
◉ The name must not contain words like Crown, Emperor, Empress, Empire or words
expressing or implying the sanction, approval or patronage of Govt except when the
State Govt signifies its consent in writing to the use of such words as part of the firm
name [Section 58(3)]
2.How to create a Partnership Deed?
The document in which the respective rights and obligations of the members of a partnership is
written is called the Partnership Deed.
A partnership deed agreement may be written or oral. However, practically oral agreement does
not have any value for tax purposes and therefore the partnership agreement should be written.
The following are the essential characteristics of a partnership deed:-
• Name and Address of the firm as well as all the partners
• Nature of business to be carried on
• Date of Commencement of business
• Duration of Partnership (whether for a fixed period/project)
• Capital contribution by each partner
• Profit sharing ratio among the partners
The above are the minimum essentials which are required in all partnership deeds.
The partners may also mention any additional clauses. Some of the examples of
additional clauses which may be mentioned in the partnership deed are mentioned
• Interest on Partner’s Capital, Partners’ Loan, and Interest, if any, to be charged on drawings.
• Salaries, Commissions etc, if any, payable to partners
• Method of preparing accounts and arrangement for audit
• Division of task and responsibility i.e. the duties, powers and obligations of all the partners.
• Rules to be followed in case of retirement, death and admission of a partner.
• The Partnership Deed created by the partners should be on a stamp paper in accordance with
the Indian Stamp Act and each partner should have a copy of the partnership deed. A Copy of
the Partnership Deed should also be filed with the Registrar of Firms in case the firm is being
How to register a Partnership Firm in India
Partnerships in India are governed by the Indian Partnership Act, 1932. As per the Partnership
Act, Registration of Partnership Firms is optional and is entirely at the discretion of the partners.
The Partners may or may not register their Partnership Agreement.
However, in case the partnership deed is not registered, they may not be able
to enjoy the benefits which a registered partnership firm enjoys.
Registration of Partnership Firm may be done before starting the business or anytime during the
continuance of partnership. However, where the firm intends to file a case in the court to
enforce rights arising from the contract, the registration should be done before filing the case.
The procedure for Registration of Partnership Firms in
India is fairly simple. An application and the prescribed
fees are required to be submitted to the Registrar of
Firms of the State in which the firm is situated. The
following documents are also required to be submitted
along with the application:-
1. Application for Registration of Partnership in
Form No. 1
3. Certified True Copy of
the Partnership Deed
4. Ownership proof of the
principal place of business
The application or statement must be signed by all the partners, or by
their agents especially authorised in this behalf. When the registrar is
satisfied with the points stated in the partnership deed, he shall
record an entry of the statement in a register called the Register of
Firms and issue a Certificate of Registration (Sec 59).
The Register of Firms maintained at the office of the Registrar
contains complete and up-to-date information about each registered
firm. This Register of Firms is open to inspection by any person on
payment of the prescribed fees (Sec 66).
It should however be noted that registration with the
Registrar of Firms is different from Registration with the
Income Tax Deptt. It is mandatory for all firms to apply
for Registration with the Income Tax Department and
have a PAN Card.
After obtaining a PAN Card, the Partnership Firm would
be required to open a Current Account in the name of
the Partnership Firm and operate all its operations
through this Bank Account.