The registration of a partnership firm is optional, and the signature of outgoing partners is not required for reconstitution, as per Section 63(1) and Rule 4.

This writ petition is filed challenging the order of the third respondent the Inspector General of Registration, Chennai dated 26.06.2007, in which the third respondent has refused to record the reconstitution of the registered partnership firm, which was filed in Form No.V bearing the signature of all the existing partners of the reconstituted firm, on the basis that Form No.V should also contain the signature of the partners who have retired in order to avoid any litigation in future between the partners.

2. The partnership firm was originally constituted with 5 partners namely Jamnadas Hansraj Asher, Bhupan T.Asher, Mihir Pratap Asher, Mrs.Vasant P Asher and Mr.Tricumsee Hansraj Asher and the said partnership firm was registered on the file of the Registrar of Firms and District Registrar, ChennaiNorth with S.No.2328 of 1948. Subsequently two of the partners namely Mihir Pratap Asher and Mrs.Vasant P. Asher have submitted their letters of retirement from the partnership firm on 06.08.2004. In these circumstances, the three remaining partners namely Jamnadas Hansraj Asher, Bhupan T.Asher and Tricumsee Hansraj Asher have reconstituted the firm in the same name and as per Section 63(1) of the Indian Partnership Act, 1932 have filed an application in Form No.V as prescribed under Rule 4 of the Rules made under Madras Partnership (Registration of Firms) Rules, 1951. The third respondent has refused to enter the Form No.V in the Register on the basis that the retired partners has not signed in the Form No.V.

3. The learned counsel appearing for the petitioner would submit that as per Section 63 of the Indian Partnership Act, when once the change occurs in the constitution of a registered partnership firm, any incoming, continuing or outgoing partner or any other person authorised by them may intimate the same to the Registrar in the prescribed form i.e. Form No.V as per Rule 4 of the Madras Partnership (Registration of Firms) Rules, 1951. It is only in cases where there is dissolution of partnership firm, which is a registered firm, the partner who goes out of the partnership firm or his authorised representative is expected to sign Form V. Further, the learned counsel appearing for the petitioner would refer to Form No.V provided under Rule 4 of the said Rules. The said Form V consists of two parts, the first part relates to the change in the constitution of the partnership firm and the second part deals with the dissolution of the firm. When change occurs in the constitution of a registered firm on the retirement of the partners in which case the signature of the partners incoming, continuing or outgoing partner is required. In the present case the three partners are continuing as partners. Since Form No.V provides for signature of either the incoming, continuing or outgoing partner and it does not specifically state that the outgoing partners should sign Form V, which is prescribed under Rule 4 of the said rules. Further Section 63(1) of the Act does not insist the signature of the outgoing partners.

4. On the other hand the learned Additional Government Pleader would submit that the purpose of passing of the impugned order is to avoid any litigation in further between the partners. Further according to him the impugned order is not illegal or irregular and it is passed only in the interest of the partners and in order to avoid future litigation.

5. Heard the learned counsel appearing for the petitioner and the learned Additional Government Pleader appearing for the respondents.

6. It is well settled that as far as the partnership firm is concerned, Registration of the firm is only optional and accordingly the registration of a firm do not confer any legal status to the partnership firm. It is equally same in respect of registration of the partnership deed also. It is not in dispute that originally the partnership firm consisted of five partners and subsequently on 6.08.04 two of the five partners retired from