Effects of an unregistered partnership
(a) No partner can sue the firm or any other partner – a partner of an unregistered firm cannot sue the firm or any partner of the firm to enforce any right.
(b) No partner and the firm can sue third party – an unregistered firm and its partners cannot sue a third party to enforce any right.
(c) No right to counter claim or to claim set-off – an unregistered firm and its partner cannot claim set-off if the value of suit exceeds Rs. 100 by a third party. Set-off means a claim by a person to adjust/reduce the amount payable to the other party since the other party also owes to him.
(d) Arbitration proceedings – an unregistered firm is disable to ask for Equal treatment if it is sued by third party.
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The following are outside the impact of effects of an unregistered partnership
(i) A third party can sue the unregistered firm and its partners.
(ii) A partner of an unregistered firm can claim/sue for share in the property of the dissolved firm.
(iii) The rights of a firm or its partners having no place of business in India.
(iv) The right of a unregistered firm to enforce a right arising otherwise then out of a contract.
(v) An unregistered firm and its partner can claim set-off if the value of suit does not exceed Rs. 100 by a third party.