Registration act, 1908 for certain partnership deeds
Chinmay Kamat
(Querist) 28 October 2012
This query is : Resolved
Hi,
In most states, registration of partnerships deeds is not compulsory because the partnership act does not mandate it (although it confers certain benefits once it is registered).
My question is, suppose the deed specifies that the partners bring into the firm as capital any immovable property valued over Rs 100, then does the deed need to be registered compulsorily under the Registration Act, 1908.
S 17(1)(b) makes it compulsory for any "non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees, and upwards, to or in immovable property" to be compulsorily registered.
Please advice.
Devajyoti Barman
(Expert) 28 October 2012
Under section 69 of the Partnership Act, registration of Partnership is optional.
Adv.R.P.Chugh
(Expert) 28 October 2012
No a Partnership deed is not required to be registered even if a partner brings any amount of capital, this if for the simple reason that partnership firm is not a different person from the partners - if a partner is bringing capital it is not that it is being vested in a different entity, it remains in him and other partners.
Although Registration of the partnership is a practical necessity, and registration fee varies as per capital brought in.
Good Luck !
Bharat Chugh
Advocate Supreme Court of India
Chinmay Kamat
(Querist) 28 October 2012
Hi, as i understand, the vesting of property that you are talking about is on account of Section 14 of the Partnership Act.
Section14
THE PROPERTY OF THE FIRM.
Subject to contract between the partners, the property of the firm includes all property and rights and interest in property originally brought into the stock of the firm, or acquired, by purchase or otherwise, by or for the firm for the purposes and in the course of the business of the firm, and includes also the goodwill of the business.
Unless the contrary intention appears, property and rights and interest in property acquired with money belonging to the firm are deemed to have been acquired for the firm.
But registration act is a separate act, and has its own effect of non registration.
49. Effect of non-registration of documents required to be registered
No document required by section 17 or by any provision of the Transfer of Property Act, 1882 to be registered shall-
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered.
So how does one resolve this???
Chinmay Kamat
(Querist) 29 October 2012
Why so? What's your line of reasoning?
V R SHROFF
(Expert) 29 October 2012
Though Prt ship Regn not compulsory,
It is advisable to Register it
There are lots of Advantages, by Regn.
No disadvantages.
If u do not Register, u cannot claim any dues in Court, U r not entitled to file Civil Suit etc.
Better Register.
Devajyoti Barman
(Expert) 29 October 2012
Mr Kamat, please read section 69. It would clear all your doubts.
Chinmay Kamat
(Querist) 29 October 2012
Hi, I've read S. 69
So as per 69(1), i would say that a partner is precluded from suing the firm with regards to any immovable property of the firm, unless the firm is registered.
Similarly, as per 69(2), no suit can be instituted by the firm against any third party with regard to any immovable property, unless the firm is registered.
And on top of that, we have seen above the effect of non-registration under the registration act for documents mentioned in S 17(1)(b)
So how can you still say that any immovable property brought in the firm as capital, through an unregistered deed, actually belongs to the firm?
And more importantly, I HAVE BEEN TALKING ABOUT REGISTRATION UNDER THE REGISTRATION ACT. NOT UNDER THE PARTNERSHIP ACT.
Devajyoti Barman
(Expert) 29 October 2012
Partnership is registered under Regitration Act only.
Chinmay Kamat
(Querist) 29 October 2012
Please try and understand the question. Does registration of the deed under the registration act become mandatory, only because the partners are bringing in land as capital?
I am pointing towards S 17(1)(b) of the registration act, which makes registration of certain documents compulsory. If there is failure, then consequences u/s 49 would follow.
As answers, I have received only opinions so far, and benefits of registration u/s 69 of the partnership act. But I have not received a simple yes or no answer yet with reference to S 17(1)(b) and S 49 of the registration act. Till that time, the query should remain open.
Thanks
Yogesh Anand
(Expert) 29 October 2012
Merely bringing immovable property into the partnership, by a partner as his share, does not create any right in favour of other partners of the firm or the firm as such, because Partnership is a group of persons but not an independent legal entity. The transfer of property in favour of separate legal entity would require registration and the issue is well addressed by stamp act (Pl. refer article 44(3) of Bombay Stamp Act), which provides that when, on dissolution of the firm, the immovable property is transferred to the partner other than who brought it in the partnership firm as his share then it is required to be stamped as conveyance deed. There is no provision in Stamp Act/ Registration Act to get the bringing of immovable property by a partner into partnership firm as his share, stamped/registered.
Chinmay Kamat
(Querist) 29 October 2012
Thanks Mr Anand and Mr Barman.
Vinod kashyap
(Expert) 30 October 2012
Mr. Anand rightly said, Section 17 (1) (b) of registration act envisage about only title, right or interest to or in immovable property having value more then hundred rupees but in partnership deed no immovable property involve therein. So this section not made compulsory registration of PD.
Section 69 of partnership act envisage about registration of firm before registrar of firms which is different from registration of partnership deed before sub registrar as per registration act.
Registration of firm does not required registered partnership deed, it can be done on behalf of signed PD.
Devajyoti Barman
(Expert) 30 October 2012
The answer all along the same , only the thread continued for more and more.
