Question

Assertion (A): It is not compulsory to register a partnership firm, as there are no penalties for non-registration.

Reason (R): An unregistered partnership firm can file a suit in any court against the firm or other partners for enforcement of any right arising from a contract or right conferred by the Partnership Act.

Choose the correct option from the options given below:

Options

• Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true, but Reason (R) is false.

• Assertion (A) is false, but Reason (R) is true.

Answer 1

Assertion (A) is true, but Reason (R) is false.

Explanation:

The Indian Partnership Act of 1932 states that a partnership firm need not be registered, and there is no penalty for non-registration. But a business that isn’t listed has legal problems. A partnership that isn’t listed can’t sue third parties, the partnership itself, or other partners to enforce its contractual rights. People other than the unregistered company can still sue it, though. This is a very important legal restriction that the Act puts in place to urge people to sign up.