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Registration of firms and effects of non-registration under Indian Partnership Act, 1932

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Chapter 7th [Section 56-71] deals with the registration of partnership firms under the Act. However, the Act doesn’t register any firm partnership mandatory in India, nor does the Act impose any penalties in non-registration. However, specific disabilities are provided in section 69 of the Act for any unregistered firm and partners. The procedure for registration of any firm is effortless, and the disadvantages of nonregistration are so significant that generally, the partners of any firm would like to get registered. 

A partnership is defined as the relationship between persons who have agreed to share a business’s profits carried on by all or any one of them acting for all. Essential of Partnership: According to section 4 of the Act, there are the following essentials of any valid partnership

1. There should be an agreement between the persons who want to be partners. 

2. The purpose of creating a partnership should be carrying on a business. 

3. The motive for the creation of any partnership should be earning and sharing the profits. 

4. The firm’s business should be carried on by all of them, acting for all, mutual agency. 

PROCEDURE FOR REGISTRATION: 

Section 58 and 59 of the Act deals with the registration process. The firm’s registration may be affected by submitting to the Registrar of firms a statement in the prescribed format and accompanied by the fees. 

The state government has been authorized to make the rules for prescribing the practices and fees, but the same shall not exceed the maximum fees specified in schedule 1, which is Rs 3/- for the purpose. The application must state the following

1. The firm name; 

2. The place or principal place of business of the firm; 

3. The names of any other places where the firm carries on business; 

4. The date when each partner joined the firm; 

5. The names in full and permanent addresses of the partner; 

6. The duration of the firm. 

The assertion will be endorsed by all the accomplices or by their agents, exceptionally authorized for his benefit. A firm might be got enlisted whenever after the production of the organization. It shouldn’t be enrolled at the hour of development, as it were. It is relevant to note here that Act doesn’t set out any time limit under which the firm should be enrolled. In this manner, there is no time of constraint either for the first enlistment or recording resulting changes as considered in section 63 of the Act. The Registrar of firms can’t dismiss an application for recording changes in the company’s constitution on the ground of unreasonable deferral in applying. 

NO SEPARATE REGISTRATION NECESSARY: 

The Kerala H.C. ruled that no separate registration in case of reconstitution of the firm; what is required is only an intimation to the Registrar of the firms about change as provided under sections 60-67 of the Act. 

DISSOLUTION OF PARTNERSHIP DUE TO RETIREMENT OF PARTNERS: 

The retired partner had denied his signatures on a letter of retirement and the dissolution deed’s execution. He sought quashing of changes recorded by the Registrar based on said dissolution deed. Retired partners were, however, said to have admitted his signatures before the arbitrator. Hence the dispute referred to the arbitrator was also pending. As the petition raises the highly disputed question of facts, Held said facts being under adjudication, the petitioner was not entitled to writ prayed for. 

PENALTY FOR FURNISHING FALSE PARTICULARS: 

Information given to the Registrar through various documents filled with him in connection with the firm’s registration serves to make the third parties conversant with the firm and partners so that third parties dealing with the firm are not misled. Correct & complete information should be available with the Registrar. Section 70 imposes a penalty for making any false declaration in any document filed with the Registrar. 

According to section 70: Any person who signs any statement, amending statement notice or intimation under this chapter containing any particular which he knows to be false or does not believe to be accurate, or having an individual which he knows to be incomplete, shall be punishable with the imprisonment which may be extended to three months, or fine, or with both. Hence it is pertinent to note that The Indian Partnership Act,1932 provides the necessary provision for the penalty if any wrong information is furnished by the partners while registering their firms. 

POWER TO MAKE RULES: 

Section 71 grants power to the state government to make rules prescribing the fees payable, statements submitted, regulating the procedure to be specified by the Registrar when dispute rise filling of documents, an inspection of documents, and with regard carrying out the purpose of chapter 7th concerning the registration of the firm. 

SALEM CHIT FUNDS V. STATE OF TAMILNADU: 

It has been held by the madras H.C. that rule 3A of the T.N. Partnership Rules, 1932, requiring each enlisted firm to record with the Registrar a presentation such that enrolled firm had been carrying on its business or has been inactivity during the monetary year is intra vires rules making power. Therefore, the requirement of the filing of the return every year was held to be valid. 

EFFECTS OF NON REGISTRATION: 

[SECTION 69] Section 69 contains the provisions describing the effects of non-registration of any partnership firm. 1. No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Registrar of firms as a partner in a firm. 

MAHENDRA SINGH CHAUDHARY V TEJ RAM SINGH: 

One of the firms, i.e., A, brought an action for the injunction requiring that the cheques for payment to the form should not be paid singly to the other partner B but should be paid in the joint account of A and B so that money could reach the coffers of the firm. The said company was unregistered. It was held that the suit brought by A was for the benefit of the firm, and the firm being unregistered, the case was not viable under area 69. 

SAPNA GANGLANI V. M/S R.S. ENTERPRISE: 

In the instant case, it was seeking that enforcement of any contract by the partnership firm, the plaint filed by an authorized signatory of firm who was not a partner but the authorizations were given to him by the partners of the said firm, was held to have authority even if signed by only one of the partners of the firm. No suit to enforce a right arising from a contract shall be instituted in any court by or on behalf of a firm against any third party unless the firm is registered. The person suing is to have been shown in the register of firms as partners in the firm. 

MUTHU KUMARASWAMI V KUMAR TEXTILES: 

It has been held that the provisions contained in section 69[2] are mandatory, and registration of the firm is a condition precedent to its right to institute a suit. Even if the defendant does not object, the provision contained in 69 cannot be flouted. 

The trial court is to find if the plaintiff firm is registered, and for that purpose, the court should enable the parties to adduce evidence to that effect. 3. The provisions of subsections 1 and 2 shall also apply to claim of set-off or other proceedings to enforce a right arising from a contract. It may be noted that the partnership act neither makes the registration of a firm compulsory nor does it impose any penalties for non-registration. However, it provides specific disabilities for an unregistered firm and such a firm’s partner or the partners whose names have not been shown as registered partners even though the firm is registered. 

• According to section 69 of the Indian partnership act, 1932, registration is optional, but registration is mandatory for the suit. 

• It is pertinent to note here that it would not affect the pending suit in case of any subsequent registration of any firm.

 • A partner of an unregistered firm cannot sue the firm or his present or past co-partners to enforce any right. 

• Any unregistered firm’s action is liable to be dismissed and cannot be rectified by subsequent registration. 

• The prohibition contained in section 69(3) does not apply to the proceedings before an arbitrator. 

CLAIM UNDER SECTION 65, INDIAN CONTRACT ACT ALSO BARRED:

In Brijenda Prasad v. Duleshwari Devi, a partnership firm enacted on 3-07- 1954 was not registered. The firm consisted of the plaintiffs and three minors, now defendants, whereby the three minor sons were given a share of profits under their father’s guardianship. The question arose whether an action could be brought against these minors to return the benefit received by them under section 65 of the Indian Contract Act, 1872. 

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Legally Speaking

‘The crime committed has to be considered in the remission or premature policy of the state’

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The Supreme Court in the case Radheshyam Bhagwandas Shah, Lala Vakil vs State of Gujarat observed that where the crime was committed has to be considered in the remission which is applicable in the State and the pre­mature release in terms of the policy

The Court noted while hearing the writ petition that in terms of the policy which is applicable in the State of Gujarat where the crime was committed and not the State where the trial stands transferred and concluded for exceptional reasons under the orders of this Court once the crime was committed in the State of Gujarat, after the trial been concluded and judgment of conviction came to be passed, all further proceedings have to be 6 considered including remission or pre­mature release, as the case may be, in the instance case. under Section 432(7) CrPC, there cannot be a concurrent jurisdiction of two State Governments, can be either the Central or the State Government of the appropriate government.

in terms of Section 432(7) CrPC, the trial was to be concluded in the same State and ordinarily in the State of Gujrat the crime in the instant case was admittedly committed. by an order 06.08.2004., the case was transferred in exceptional circumstances by this Court for limited purpose for trial and disposal to the neighbouring State i.e., the State of Maharashtra, observed by the bench of Apex Court.

As mentioned by the petitioner in the plea that by judgment impugned dated 17.07.2019., the application for pre­mature release has to be filed in the State of Maharashtra and not in the State of Gujarat and His petition filed in the High Court of Gujarat was dismissed taking note of Section 432(7) CrPC on the premise that since the trial has been concluded in the State of Maharashtra. under Sections 433 and 433A of the Code of Criminal Procedure, 1973, the petition was filled by the petitioner for premature release further the petitioner stated that that he had undergone under the custody of more than 15 years 4 months.

Section 302, 376(2) (e) (g) and reading it with Section 149 IPC, Shah was found guilty for the offence, the offence committed by him in the State of Gujrat.

The bench comprising of Justice Ajay Rastogi and the justice Vikram Nath observed that under Section 432(7) CrPC can be either the Central or the State Government but there cannot be a concurrent jurisdiction of two State Governments of that appropriate government.

The bench comprising of Justice Ajay Rastogi and the justice Vikram Nath observed that under Section 432(7) CrPC can be either the Central or the State Government but there cannot be a concurrent jurisdiction of two State Governments of that appropriate government.

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Seeking reduction of qualifying the percentile for admission in ayurveda course: A plea in Supreme Court

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The Supreme Court in the Case Amit Kumar v UOI & Or’s observed in Ayurveda course in view of large number of vacancies and for seeking reduction of qualifying percentile for admission, an ayurveda aspirant who appeared in NEET 2021 has approached the Court.

the court had observed that lowering the minimum marks and reducing the percentile for admission to first year BDS Course would not amount to lowing the standards of Education and further the Court directed to lower the percentile mark by 10 percentiles for admission in first year of BDS Course for academic year 2020-2021, with regards to substantive the contentions made by the petitioner by referring the judgement passed in the case in Harshit Agarwal & Or’s v Union of India.

the percentile may also be reduced for Ayurveda programme enabling the Petitioner to take admissions then If percentile is being reduced/considered for reduction for BDS course was further stated by the petitioner in the plea, while referring to an order dated 04.29.2022. Thereafter the top Court had asked Centre to consider lowering the percentile for BDS Courses.

Seeking the Centre’s response in a plea by filing a counter affidavit, noted by the Top Court specifying the above-mentioned information:

after deducting the admission granted for MBBS Courses (BDS Courses), the total number of Candidates.

in All India Quota and State Quota, the totals number of vacant seats.

in government colleges on one hand & private/deemed colleges on the other hand, the number of seats which are remaining.

the petition was filed through AOR Neeraj Shekhar and for the petitioner Advocate Shivam Singh appeared.

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Bank case rejected by Supreme Court against farmer

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The Supreme Court in the case Bank of Maharashtra & Or’s v Mohanlal Patidar observed an order given by the High Courts of directing the bank the OTS proposal given by a farmer who had availed a loan from the bank, the court further pulled up the Bank of Maharashtra for challenging the order.

The Bank shall complete remaining formalities and provide all consequential benefits flowing therefrom to the petitioners, the court further stated that it is needless to emphasize The OTS proposal given by the petitioners in both the cases shall be accepted by the Bank and ‘sanction letters’ be issued forthwith, the court allowed the petitioner plea.

The petitioner not only promptly challenged the said order, it is noteworthy that petitioner never acceded to the unilateral decision dated 25th August 2021 and even otherwise the letter dated 25th August 2021 is held to be illegal by us, clause-7 of policy cannot take away the fruits of OTS benefits, within two months from the date of issuance of order dated 22th September 2021, the petitioner filled the instant petition and further the court directed we are unable to give stamp of approval to the impugned orders and action of the Bank, observed by the bench comprising of Justice Sujoy Paul and the justice Dwarka Dhish Bansal while setting aside the impugned orders of the bank.

In an order dated 03.09.2021 it was stated and it showed that the petitioner was required to pay minimum 10% of the OTS amount within stipulated time and that he had deposited Rs.35,00,000/- out of Rs.36,50,000/- within the stipulated time, it was argued before the court by the counsel.

As full and final settlement of the dues, he will be required to deposit Rs.50.50 lakhs as he was informed by the Asset Recovery Branch of the Bank.

Whole law comes into place when a matter of farmers come as the down payment were also accepted and it was further stated by the bench in an oral remark You don’t file cases against the ones who loot 1000s of crores.

The respondent had obtained a loan and intended to pay it in terms of a One Time Settlement which was quantified as Rs 3650000/-. in furtherance thereof the respondent had deposited Rs 35,00,000 with the bank, in the above-mentioned matter.

The bank had miserably failed to accept the same and on the contrary, decided to enhance the compromise amount to Rs.50.50 lakhs unilaterally which was contrary to the OTS scheme, contended by the counsel further the counsel stated that the bank had miserably failed to accept the same and on the contrary, decided to enhance the compromise amount to Rs.50.50 lakhs unilaterally which was contrary to the OTS scheme.

The bench comprising of Justice DY Chandrachud and the justice Surya Kant observed and remarked while dismissing the plea assailing Madhya Pradesh High Court’s order dated 02.21.2022 Such a litigation in Supreme Court will spoil the families of farmers financially, Go after bigger fish.

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In Company Law the duomatic principle is applicable even in Indian context: Supreme Court

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The Supreme Court in the case Mahima Datla vs Renuka Datla observed and stated that it will be applicable even in the Indian context, if the same is consented by all members ‘strict adherence to a statutory requirement may be dispensed with if it is demonstrated in the Duomatic Principle.

It was therefore held that G.V. Rao never seized to be a Director of the Company in view of the acquiescence by Dr. Datla and he had withdrawn his resignation prior to its acceptance, the resignation dated 6th April 2013 was clearly not accepted by Mr. G.V. Rao, as it is clearly being showed by her conduct and there is overwhelming evidence to show that Dr. Datla had accepted Mr. G.V. Rao back into the Board, in this case the court noted.

anything the members of a company can do by formal resolution in a general meeting, they can also do informally, if all of them assent to it, as stated briefly in the Duomatic Principle as derived from the decision In Re: Duomatic Ltd further the court noted the case of Salmon v. Salmon Co. Ltd, as it was held in that case if a company is bound in a matter intra vires by the unanimous agreement of its members. As In Re the court noted that the Duomatic Principle as derived from the decision.

Mr. G.V. Rao continued to carry on as the Director in view of the acquiescence by Dr. Renuka Datla? And weather can the Duomatic Principle can be invoked to state that the issue of resignation of the Director had lapsed, as one of the issues being raise in the appeal filled before the Apex Court.

The High Court of Judicature at Hyderabad for the State of Telangana and Andhra Pradesh allowed the Company appeal filed by Dr. Datla and the court further issued the various directions as this petition was dismiised by the Board as only to ensure Dr. Datla doesn’t have sufficient shareholding to maintain a petition under Sections 397 and 398 of the Companies Act, 1950, as it was being approached by Dr. Datla to the Company Law Board complaining that the holding of board meetings was illegal as an attempt was made to increase the number of members in the Company.

there is no protest by Dr. Renuka Datla regarding attendance of Mr. G.V. Rao. Dr. Renuka Datla also participated in the Board Meetings dated 22nd August 2013 and 25th September 2013, without any protest for continuation of Mr. G.V. Rao as its Director as in the resolution passed. The latter which was placed in the meeting of the Board on 9th April 2013, seeking withdrawal of his resignation as on 6th April 2013, G.V Rao submitted his resignation letter and further which it was later withdrawn by G.V Rao on 9th April 2013. As on 20th March 2013 the late Dr. Vijay Kumar Datla as the directors of the Company were Biological E. Ltd are Dr. Renuka Datla and one G.V Rao.

The bench comprising of Justice Vineet Saran and the justice JK Maheshwari clarified that the said principle is only applicable in those cases wherein bona fide transactions are involved and that ‘Fraud’ is a clear exception.

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SUPREME COURT ASKS WEST BENGAL GOVERNMENT TO LOOK INTO REPORT OF OLDER WOMEN PUSHED INTO PROSTITUTION AFTER COVID IN SOUTH 24 PARGANAS

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The Supreme Court in the case Budhadev Karmaskar v. State of West Bengal and Or’s observed that women of older age groups are being forced into prostitution after the onset of the COVID-19 pandemic and further the court ordered the State of West Bengal to look into the issue that in South 24 Parganas District of West Bengal.

The traffickers who were finding it difficult to get hold of young women due to the lockdown had shifted focus and by taking advantage of their acute poverty which was being worsened by the pandemic engaged older women from West Bengal’s costa regions in prostitution. An article was referred by the Amicus, The Article covered the plight of the women in the Sunderban Delta region of West Bengal and stated and noted that the pandemic coupled with climate change is now pushing older women and even the grandmothers into the trade, the Article was published on the website of The Print.

The pandemic that has stretched on for more than two years, it was said by the activists working in the area and this made them vulnerable to traffickers who found it difficult to procure young women and minor girls and shifted focus to middle aged women from West Bengal’s coastal regions due to their abject poverty.

No precautionary measure are taken by the State Government though the State Government is aware it further request the State Government to look upon the issue as due to the pandemic In South 24 Parganas (West Bengal), aged women are being used for this purpose for their poverty.

The Bench asked the Counsel representing the State of West Bengal to look into this issue and respond when the matter is put up for hearing on 05.17.2022., At the request of the Amicus the bench directed.

The Bench Comprising of Justice L. Nageswara Rao and the justice B.R. Gavai observed that the older women in South 24 Parganas District of West Bengal, from poor families, especially after the onset of the pandemic, are being pushed into prostitution and the Amicus further alleged though the State Government aware of the same but the State Government have not taken any precautionary measures. The Bench noted while hearing a plea seeking various benefits for sex workers across the country, Amicus Curaie, Mr. Piyush K. Roy apprised it that, as per news reports.

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Supreme Court sets aside POCSO conviction; TN custom is of marriage of girl with maternal uncle

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The Supreme Court in the case K Dhandapani vs State observed while hearing a plea that after noticing that he had married the prosecutrix and had two children, a man accused in a POCSO case, the court set aside the conviction.

The Court cannot shut its eyes to the ground reality and disturb the happy family life of the appellant and the prosecutrix. Thereafter the Court said that it has been informed of the custom in Tamil Nādu of the marriage of a girl with the maternal uncle. if the accused-appellant does not take proper care of the prosecutrix, she or the State on behalf of the prosecutrix can move for modification of this Order, further being clarified by the Court. The bench is of the considered view that the conviction and sentence of the appellant who is maternal uncle of the prosecutrix deserves to be set aside in view of the subsequent events that have been brought to the notice of this Court, while considering the facts and circumstances of the Case.

The Court observed, while allowing the appeal that the marriage between the accused and the prosecutrix is not legal and it was submitted by the state in an appeal that the prosecutrix was aged 14 years on the date of the offence and gave birth to the first child when she was 15 years and the second child was born when she was 17 years.

the prosecutrix stated that she has two children and they are being taken care of by the appellant and she is leading a happy married life, the statement given by her was being noticed by the Court. the allegations submitted by the

the appellant against him was that he had physical relations with the prosecutrix on the promise of marrying her and that he married the prosecutrix and they have two children, submitted before the Apex Court.

Section 6 of Protection of Child from Sexual Offences (POCSO) Act, 2012 and reading with the Sections 5(j)(ii) read with Section 6, 5(I) read with Section 6 and 5(n). the maternal uncle of the prosecutrix who is the accused in the said case was being convicted under the said sections and was sentenced to undergo rigorous imprisonment for a period of 10 years by the Madras High Court.

The Bench comprising of Justice L Nageswara Rao and the justice B R Gavai observed while rejecting the objection raised by the State which contended that the marriage might be only for the purpose of escaping punishment that the court have been informed about the custom in Tamil Nādu of the marriage of a girl with the maternal uncle and on the ground of reality and to disturb the happy family life of the appellant and the prosecutrix, The Court cannot shut its eyes.

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