Appellant, Mr. Amit Kumar Basau[1], a partner of an unregistered partnership firm, challenged an assessment order pertaining to financial year 2020-21 in relation to non-admissibility of petition under the GST Act by an unregistered partnership firm due to its registration status.
Section 69 of the Indian Partnership Act, 1932: Imposes an embargo preventing unregistered firms from instituting legal proceedings to enforce rights arising from contracts. Due to firm’s status was unregistered under the Partnership Act, petition filed by the firm was not admitted.
The Delhi High Court held that an unregistered partnership firm registered under GST can maintain a writ petition to enforce statutory rights under the CGST Act, provided a partner is impleaded as petitioner. Section 69 of the Partnership Act does not bar such statutory or common law claims.
The Delhi High Court relied on following case laws:
- Haldiram Bhujiawala[2]
- In this case, an unregistered partnership firm filed a suit despite objections based on Section 69 of the Partnership Act. The question that was dealt with was whether Section 69 bars unregistered firms from suing to enforce statutory or common law rights.
- The Supreme Court held that Section 69 only bars suits enforcing contractual rights by unregistered firms. It does not bar filing suits to enforce statutory or common law rights. This means unregistered firms can go to court if they are enforcing rights given directly by law, not just rights arising from contracts.
- Raptakos Brett & Co. Ltd.[3]
- The case dealt with the extent of the bar under Section 69 of the Partnership Act for unregistered firms suing in courts. The question that was dealt with was whether an unregistered firm can enforce statutory or common law rights through litigation despite Section 69.
- The court clarified that Section 69 cannot bar an unregistered firm from enforcing statutory rights (rights granted by statutes) or common law rights. It restricts only enforcement of contractual rights.
- Shiv Developers[4]
- The case involved a question about the application of Section 69 and the rights of unregistered firms in litigation. The question that was dealt with was whether the bar under Section 69 applies when unregistered firms seek relief under statutory laws.
- The Supreme Court reaffirmed the principles laid down in Haldiram Bhujiawala and Raptakos Brett & Co. It held that Section 69(2) of the Partnership Act cannot bar an unregistered firm’s suit if that suit is based on enforcement of statutory or common law rights.
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[1] Amit Kumar Basau v. Sales tax officer Class II [2025] 179 taxmann.com 455 (Delhi)
[2] Haldiram Bhujiawala v. Anand Kumar Deepak Kumar (2000 3 SCC 250)
[3] Raptakos Brett & Co. Ltd. v. Ganesh Property (1998 7 SCC 184)
[4] Shiv Developers v. Aksharay Developers (2022 SCC OnLine SC 114)