JUDGMENT [ENTITY], J.
1. Should the application for recording of changes in the constitution of a firm be submitted within a specified time-limit and should the same be submitted in person and not by post ? The aforesaid question has arisen in the context of the facts narrated hereinbelow.
2. The petitioner-firm started its business some time in the year 1946. The firm got itself registered with the Registrar of Firms on March 10, 1955. Thereafter, a partner, [ENTITY], died on May 5, 1976. Thus, there was a change in the constitution of the firm. But the same was not recorded in the register of firms by the Registrar of Firms. Again, another partner, [ENTITY], retired from the firm on June 27, 1986. This change in the constitution of the firm was also not got recorded with the Registrar of Firms. However, the registration of the firm as originally recorded on March 10, 1955, continued.
3. The petitioner-firm submitted an application in June, 1986, by registered post and requested that the aforesaid changes in the constitution of the firm be noted in the relevant records of the Registrar of Firms. The application was rejected by the office of the Registrar of Firms on the ground that the application should not have been sent by post but the same should have been submitted in person. Thereafter, the petitioner submitted two separate applications dated August 4, 1986, requesting to record the change on account of the death of one of the partners, Shri [ENTITY], which took place on May 5, 1976. Another application dated October 27, 1986, was submitted for effecting the change in the constitution of the firm on account of the retirement of one of the partners, i.e., [ENTITY]. Both those applications have been rejected by the respondent on the ground that the applications for recording the change in the constitution of the firm have been submitted after a period of about 10 years in one case and in another case, the application has been submitted after a period of about 4 years and 6 months. Thus, in the opinion of the respondent, the applications were inordinately delayed and were submitted after a lapse of unreasonably long time. The respondent also held that in the application for recording change, the applicant is required to make the following declaration :
"I/We also declare that up to the date of submission of this application, there has no been any change in any of the particulars previously intimated save and except the change notified above."
4. In view of the aforesaid declaration required to be made in the application, the respondent held that the application for recording a change in the constitution of the firm should be submitted before another change in the constitution of the firm takes place. According to the respondent, if an application is submitted for recording two changes in the constitution of the firm simultaneously by one application only, then in that case, the aforesaid declaration will become meaningless. Hence, the respondent authority held that the length of reasonable time would be any time before another change in the constitution of the firm takes place. Therefore, before another change takes place, the application should be made. The respondent held that registration of firm is voluntary and once the firm is registered, all the provisions of law are applicable to such firm and hence when the application is not made within reasonable time, the same was required to be rejected. The petitioner-firm has challenged the legality and validity of the aforesaid order.
5. It may be noted that there is no provision in the [ACT], which makes it obligatory on the part of a firm to get itself registered with the Registrar of Firms. The registration of a partnership firm is optional. [SECTION], [SECTION], [SECTION] and [SECTION] of the [ACT] are the relevant provisions which are required to be read together. [SECTION] of the Act provides that registration of a firm may be effected at any time by sending by post or delivery to the Registrar of Firms an application in the prescribed form together with the details mentioned in the section. After the receipt of the application, when the Registrar is satisfied that the provisions of [SECTION] of the Act have been duly complied with, he shall record an entry of the statement in the register called "register of firms" and shall file the statement. This is so provided under [SECTION] of the Act. [SECTION] of the Act deals with recording of changes in the constitution of the firm and recording of changes pursuant to the dissolution of the firm. Here also it may be noted that the language used by the Legislature is not mandatory. [SECTION] of the Act provides that any incoming, continuing or outgoing partner may give notice of the change to the Registrar of Firms. Similarly, in the case of dissolution of a firm, any person who was a partner immediately before the dissolution of the firm may give notice to the Registrar of Firms in respect of such dissolution. Similarly, [SECTION] of the Act provides for recording of changes on account of a minor attaining majority and electing to become a partner of the firm. [SECTION] of the Act provides for consequences of non-registration of firm. The provisions of [SECTION] of the Act are mandatory in character. This section puts a firm and also its partners under certain disabilities, if the firm is not registered. There is no direct compulsion for getting a firm registered. However, no member of an unregistered firm can enforce his right under the [ACT], against either the firm or any present or past member of the firm nor can the firm sue its customers on their contracts. The firm remains liable to be sued by any person outside them and cannot plead set off.
6. From a perusal of the aforesaid provisions of the Act, it becomes clear that registration of a firm is not obligatory. If one does not get the firm registered, the firm and its partners suffer. They are put to some disabilities. Moreover, the registration of a firm takes effect from the date when the necessary entry is made in the register of firms by the Registrar of Firms. Similarly, even under [SECTION] of the [ACT], which deals with the effect of non-registration, the registration of a firm subsequent to the filing of a suit does not cure the defect. In the case of [PRECEDENT], the Supreme Court has held that the registration of a firm is effected only when the entry of the statement is recorded in the register of firms and the statement is filed by the Registrar of Firms as provided in [SECTION] of the Act.
7. In view of the aforesaid settled legal position, if a firm or its partners do not choose to get the firm registered or do not choose to get the changes in the constitution of the firm recorded in the register of firms, they stand to suffer. Since there is no question of giving retrospective effect to the registration or to the recording of the changes in the constitution of the firm, the circumstance as to when the application is made pales into insignificance. The Legislature has not provided for any period of limitation during which the firm should be registered or during which the changes as contemplated by [SECTION] of the Act should be recorded. Therefore, the concept of any period of limitation or the concept of "within reasonable time" cannot be introduced. The scheme of the Act shows that the application either for the registration of the firm or for effecting changes as contemplated by [SECTION] of the Act can be made at any time. Till the registration is not effected or until the changes in the constitution of the firm is not recorded, the consequences are to be suffered by the firm and its partners and not by others. Therefore, if there is delay in submitting an application for recording changes in the constitution of the firm, the respondent cannot take any exception to it. On this ground, i.e., on the ground of delay, the application cannot be rejected.
8. Reference may be made to the case of [PRECEDENT]. The Andhra Pradesh Government framed rules as [ACT]. [SECTION] thereof provided that the application for recording changes in the constitution of the firm as provided under [SECTION] of the Act should be submitted within a period of 15 days. This rule was framed under the provisions of [SECTION] of the Act. The validity of the rule was challenged before the Andhra Pradesh High Court and the Andhra Pradesh High Court held that the statute itself does not provide for any limitation with reference to a particular matter and the delegation of power to make rules is conferred by a section of the Act which does not expressly or impliedly relate to the power to prescribe time. Therefore, the rule-making authority, i.e., the State Government, could not have prescribed a rigid time-limit with respect to notice or intimation to be submitted for changes in the constitution of a firm. The rule provided that [SECTION], [SECTION], [SECTION] or [SECTION] of the Act should be filed within 15 days from the date of occurrence of the event referred to in the statement, intimation or notice. This rule has been held to be ultra virus the powers of the State Government. However, in para 8 of the judgment, after referring to [SECTION] of the Act, it is observed as follows (p. 234) :
"The section itself does not prescribe any limitation as to the period within which notice should be filed. Notice should, however, be given within a reasonable time. The section which is designed to give relief to the partners of the firm as well as the public should be construed more benevolently."
9. A similar question arose in the case of [PRECEDENT]. The Kerala Government had also framed rules prescribing a time-limit for filing a statement, intimation or notice in connection with the events referred to in [SECTION], [SECTION], [SECTION], [SECTION] or [SECTION]. The Kerala High Court, following the judgment of the Andhra Pradesh High Court, also struck down the rules by which the time-limit had been fixed.
10. Relying on the observation of the Andhra Pradesh High Court to the effect that notice should, however, be given within reasonable time, it may be contended that it is open to the Registrar of Firms to take into account as to whether the application has been submitted within reasonable time or not. With utmost respect, the aforesaid sentence occurring in the judgment of a Division Bench of the Andhra Pradesh High Court does not lay down any principles as regards the application to be submitted within a reasonable time or not. The aforesaid statement is mere obiterdictum. No question arose before the Andhra Pradesh High Court as to whether the application should be filed within a reasonable time or not. The question before the Andhra Pradesh High Court was as to whether the rule prescribing a time-limit was within the competence of the State Government or not. Therefore, the observation that "notice should however, be given within a reasonable time" cannot be taken as a principle laid down by the Andhra Pradesh High Court. Even assuming for a moment that any such principle is laid down by the Andhra Pradesh High Court, with utmost respect, it is difficult to agree with the same. First of all, the Legislature has not provided for any time-limit within which the application for change in the constitution of the firm may be made. The change is recorded in the register of firms by the Registrar is not to record the change with retrospective effect. As in the case of registration of firms under [SECTION] of the Act, recording of change shall also take place from the date on which the entry is recorded in the register of firms. Therefore, no one except the firm and its partners would suffer if the application for effecting registration or for recording a change in the constitution of the firm is delayed. The concept of reasonable length of time may be introduced in cases where on account of delay, the rights and interests of other parties are likely to be affected. Even in such cases, the length of time is required to be determined by the facts of the case and the nature of the order under challenge (see para 12 of the judgment in the case of State of Gujarat v. Patel Raghav Natha [19[SECTION]] 10 GLR 992). But in the case of an application to be made for recording a change in the constitution of a firm, no such question of affecting the rights of other parties would arise. Therefore, the concept of "reasonable time" cannot be introduced in matters like application or notice for recording a change in the constitution of the firm.
11. The respondent, Registrar of Firms, has gravely erred in holding that the application should be made any time before another change in the constitution of the firm takes place. If this principle is upheld, it would lead to absurdity and would also create an impossible situation in implementing the same. For instance, take an example of a firm in which partner "A" dies on the 1st of a particular month. On the 10th day there after another partner "B" retires from the firm. In such cases, two changes in the constitution of the firm take place within a period of one days. Even in such cases, as per the standard laid down by the respondent if an application is made on the 11th day, the same cannot be considered. Because, the application is made after two changes have taken place in the constitution of the firm. The declaration to be made in the prescribed form which has been referred to hereinabove in para 3 has to be reasonably. That declaration is required to be made by the parties as to ensure the accuracy and correctness of the statement made in the application. That declaration is required to be made by the parties as to ensure the accuracy and correctness of the statement made in the application. The declaration is not required to be made for the purpose of determining the length of time within which the application is to made. Therefore, the respondent has gravely erred in relying upon the contents of the declaration for determining the length of time within which the application should be made.
12. The respondent, Registrar of Firms, was clearly wrong when he rejected the application submitted by the petitioner on the ground that the application may be sent by post. [SECTION] of the Act clearly provides that the application may be sent by post. [SECTION] the Act only provides that in the event of a change in the constitution of the firm or in the event of dissolution of the firm, the person concerned "may give notice to the Registrar of such change or dissolution". There is nothing in the section enjoining a duty upon the firm or its partners to submit the application in person. The application can be submitted by post. Therefore, the respondent, Registrar of Firms, was not justified in rejecting the applications when the same were submitted by post. In the above view of the matter, it is clear that the applications submitted by the petitioner-firm for recording the change in the constitution of the firm has been rejected on irrelevant and extraneous grounds. Hence, the petition is required to be allowed.
13. For the reasons recorded in the judgment, the petition is allowed. The order produced at annexure B dated May 28/29, 1987, is quashed and set aside. The respondent is directed to decide the applications in accordance with las latest before September 30, 1987, without considering that the applications have been submitted after "unreasonable time". Rule made absolute accordingly with no order as to costs.