The Evidentiary Value of Entries in the Register of Firms: An Analysis of Section 68 of the Indian Partnership Act, 1932

Introduction

The Indian Partnership Act, 1932 (hereinafter "the Act") governs the formation, operation, and dissolution of partnership firms in India. While registration of firms is not mandatory under the Act, Chapter VII provides for it, and non-registration carries significant disabilities, primarily enumerated in Section 69. Central to the scheme of registration is Section 68, which delineates the evidentiary value of statements, intimations, and notices recorded in the Register of Firms. This article seeks to provide a comprehensive analysis of Section 68, drawing upon statutory provisions and judicial interpretations from the provided reference materials, to elucidate its scope, implications, and the nature of proof it contemplates.

Statutory Framework: Section 68 of the Indian Partnership Act, 1932

Section 68 of the Act, titled "Rules of evidence," is pivotal in understanding how information recorded with the Registrar of Firms is treated in legal proceedings. It reads as follows:

68. Rules of evidence.—

(1) Any statement, intimation or notice recorded or noted in the Register of Firms shall, as against any person by whom or on whose behalf such statement, intimation or notice was signed, be conclusive proof of any fact therein stated.

(2) A certified copy of an entry relating to a firm in the Register of Firms may be produced in proof of the fact of the registration of such firm, and of the contents of any statement, intimation or notice recorded or noted therein.

This section thus lays down two distinct rules: sub-section (1) deals with the conclusive nature of recorded statements against the signatories, and sub-section (2) pertains to the admissibility of certified copies as proof of registration and the contents of recorded documents.

Judicial Interpretation of Section 68(1): Conclusive Proof

Sub-section (1) of Section 68 is the more potent part of the provision, attributing the quality of "conclusive proof" to recorded statements under specific conditions.

Scope and Ambit of "Conclusive Proof"

The term "conclusive proof" signifies a high evidentiary standard. As observed by the Supreme Court in Smt. Somawanti v. The State of Punjab (A.I.R 1963 Supreme Court 151), when a fact is declared by law to be conclusive proof of another, the court shall, on proof of the one fact, regard the other as proved, and shall not allow evidence to be given for the purpose of disproving it. This principle was relied upon by the Bombay High Court in Smt. Rasilaben Kantilal Kansara v. Amratlal Babubhai Kocha And Others (1987 SCC ONLINE BOM 339) (hereinafter *Rasilaben Kansara (1987)*) while interpreting Section 68 of the Partnership Act.

Against Whom is Proof Conclusive?

Section 68(1) explicitly states that the conclusive proof operates "as against any person by whom or on whose behalf such statement, intimation or notice was signed." This limitation is critical. The conclusiveness is personal to the signatory or the person on whose behalf it was signed. The Gujarat High Court, in an unreported judgment referenced in Surat Jilla Kharid Vechan Sangh Ltd. v. M/S. Karshandas Lalbhai Nariyalwala (2017 SCC ONLINE GUJ 2406), observed: "If one reads Section 68(1) it only speaks regarding the statements or intimations or notices which are noted in the Register of Firms as it is also laid down that the statements made, intimations sent or notices signed would be considered as conclusive proof of any fact therein stated, but the conclusive proof would be against the persons by whom or on whose behalf notices were signed. The third parties would have nothing to do." This interpretation underscores that Section 68(1) primarily binds the partners who have made the declarations to the Registrar.

In *Rasilaben Kansara (1987)*, the Bombay High Court rejected a submission that Section 68 should be limited in its application to third parties and not considered while examining the rights of partners *inter se*. The Court held, "It is not possible to read such restriction in the section as that would amount to adding a rider to the statutory provisions." This means that statements made by partners are conclusive against them, even in disputes among themselves, if they were signatories to such statements filed with the Registrar.

Nature of Facts Covered

The conclusiveness applies to "any fact therein stated." In *Rasilaben Kansara (1987)*, the partners had stated in their application for registration (a statement under Section 58 of the Act) that the partnership was "at will." One of the defendants later sought to rely on a clause in the partnership deed suggesting a prohibition against dissolution, contrary to the "at will" nature. The Bombay High Court held that the statement regarding the duration of the firm (i.e., being "at will") made to the Registrar was a statement of fact. The Court opined: "Now, whether a partnership is at will or not is also a fact on which statement was required to be made by a partner while registering the firm and, therefore, it is futile to suggest that whatever may be the statement made before the Registrar, it is open for the defendant to ignore it and call upon the Court to determine the nature of the partnership by reference to the deed of partnership."

Irrebuttability by Signatories

The Bombay High Court in *Rasilaben Kansara (1987)* strongly affirmed the irrebuttable nature of such statements against the signatories. The Court considered and expressly disagreed with the view of the Oudh High Court in Firm Hat Ram Padam Chand v. Firm Subhag Chand Rikhab Das (A.I.R 1941 Oudh 376), which had suggested that Section 68 is subject to a rule of rebuttal. The Bombay High Court stated, "We are afraid we cannot accede to the submission and we do not accept the correctness of the observation made by Oudh High Court." Further, it was held that "it is difficult to construe provisions of section 68 of the Indian Partnership Act as merely a rule of evidence which is rebuttable." This was reiterated in Prabhakar Gajanan Naik v. South Konkan Distilleries, & Ors. (Bombay High Court, 1996), which relied on *Rasilaben Kansara (1987)* to assert that "there arises presumption of conclusive proof in respect of the statements made therein."

Judicial Interpretation of Section 68(2): Proof of Registration and Contents

Sub-section (2) of Section 68 serves a different, albeit related, evidentiary purpose.

Admissibility of Certified Copies

Section 68(2) provides that "A certified copy of an entry relating to a firm in the Register of Firms may be produced in proof of the fact of the registration of such firm, and of the contents of any statement, intimation or notice recorded or noted therein." This sub-section facilitates the proof of two things: first, the fact that the firm is registered, and second, the contents of the documents filed with the Registrar. The Supreme Court in Commissioner Of Income Tax, Andhra Pradesh, Hyderabad v. Jayalakshmi Rice And Oil Mills Contractor Co. (1971 SCC 1 280), while dealing with registration for income tax purposes, noted the date of filing the statement under Section 58 of the Partnership Act as the date the firm was considered registered. Section 68(2) would be the mechanism to prove such registration and the particulars submitted.

Distinction from Conclusive Proof under Section 68(1)

It is important to note that Section 68(2) makes the certified copy "proof" of registration and contents, but it does not, by itself, make those contents "conclusive proof" against all persons in the manner Section 68(1) does against signatories. The Gujarat High Court's observations in the unreported judgment cited in Surat Jilla Kharid Vechan Sangh Ltd. (2017) clarify this: "Section 68(2) states that a certified copy of an entry relating to a firm in the Register of Firms may be produced in proof of the fact of the registration of such firm, and of the contents of the statement, intimation or notice recorded or noted therein. Now this is regarding how the entries in the Register of Firms are required to be produced. They are not made conclusive against any of the other persons and it does not speak of any presumption as contemplated by the Indian Evidence Act." Thus, while a certified copy proves what was recorded, the "conclusive" nature of those recorded facts primarily binds the signatories as per Section 68(1).

Section 68: A Non-Exclusive Mode of Proof

The Andhra Pradesh High Court in V. Anjaneya Setty v. M.G Brothers (Andhra Pradesh High Court, 1981) provided a crucial clarification on the scope of Section 68. The Court held that Section 68 does not prohibit establishing facts, such as the existence of a partnership or who the partners are, by independent evidence. It observed: "What Section 68 contemplates is that the contents in the Register of Firms shall be conclusive proof. But, we do not find anywhere in the provisions of the section any prohibition on establishing by independent evidence otherwise than by producing the extract of Register of Firms, that a particular person is a partner in the firm. In our undoubted view, Sec. 68 postulates only one of the modes -- which no doubt is conclusive - by which a statement, intimation or notice said to have been signed by or on behalf of a person in the Register of Firms, could be proved by producing an extract of the Register of Firms. We will not, therefore, read... Sec.68 for the position that it excludes any mode otherwise than producing the extract of Register of Firms, by which a person could be established to be a partner of the firm." This means that while entries in the Register are conclusive against signatories for facts stated therein, Section 68 does not bar other forms of evidence to prove partnership details, especially concerning parties not bound by the "conclusive proof" doctrine of Section 68(1).

Interplay with Other Provisions and Statutes

Purpose in Relation to Section 69

The evidentiary rules in Section 68 are intrinsically linked to the consequences of non-registration or incorrect registration detailed in Section 69 of the Act. Section 69 imposes significant disabilities on unregistered firms, such as barring suits by the firm against third parties (Section 69(2)) or by partners against the firm or other partners (Section 69(1)), to enforce rights arising from a contract or conferred by the Act. Cases like Shreeram Finance Corporation v. Yasin Khan And Others (1989 SCC 3 476) illustrate the dismissal of suits due to non-compliance with Section 69(2). The conclusive proof afforded by Section 68(1) and the method of proof under Section 68(2) are essential for determining whether a firm is duly registered and who its partners are for the purposes of Section 69. The Bombay High Court in *Rasilaben Kansara (1987)* noted that "the conclusiveness of the entries is only for the purposes to be gathered from section 69 of the Act." The objective of registration, as highlighted in Kuljinder Singh Ahluwalia v. Smt. Sandeep Kaur Ahluwalia (Bombay High Court, 2009), includes protecting third parties and providing conclusive proof of partnership facts, an objective facilitated by Section 68.

Distinction from Fiscal Enactments

It is crucial to distinguish Section 68 of the Partnership Act from similarly numbered sections in other statutes, particularly fiscal laws like the Income Tax Act, 1961. The Bombay High Court in *Rasilaben Kansara (1987)*, referencing N.R Wadia and Co. v. Commissioner of Income-tax, Bombay City I (39 Income Tax Reports, 754), emphasized that "the provisions of section 68 of the Act are not determinative of any question as to the existence of a partnership which may arise under the Income tax Act and certainly not conclusive of the existence of a partnership as a matter of law in any matter to be dealt with under fiscal enactment." Therefore, reference materials such as Commissioner of Income-tax v. Shiv Shakti Timbers (Income Tax Appellate Tribunal, 1996), Shanta Devi v. Commissioner Of Income Tax (1987 SCC ONLINE P&H 870), and Anand Ram Raitani v. Commissioner Of Income-Tax (1996 SCC ONLINE GAU 124), which deal with Section 68 of the Income Tax Act, 1961 (concerning cash credits), are not pertinent to the interpretation of Section 68 of the Partnership Act, 1932. Similarly, cases like Subhash Chand Jain v. The Chairman, M.P Electricity Board And Others (2000 SCC ONLINE MP 329) (on court fees) and Prabhu Dayal Sesma v. State Of Rajasthan And Another (1986 SCC 4 59) (on age determination) are outside the purview of this analysis.

Rectification under Section 64

Section 64 of the Act empowers the Registrar to rectify any mistake in the Register of Firms. However, the existence of this power does not dilute the conclusive nature of an unrectified entry under Section 68(1) against a signatory. As reasoned in *Rasilaben Kansara (1987)*, the mere fact that the Registrar can rectify mistakes does not make the existing entries rebuttable at the will of a party in court; until rectified, the entry remains conclusive proof of the facts stated therein against the signatory.

Conclusion

Section 68 of the Indian Partnership Act, 1932, plays a crucial role in the evidentiary framework surrounding registered partnership firms. Section 68(1) establishes a stringent rule of "conclusive proof" regarding facts stated in documents filed with the Registrar, binding the signatories to those statements. This promotes certainty and holds partners to their declarations. Section 68(2) provides a convenient method for proving the fact of registration and the contents of filed documents through certified copies. Judicial interpretations, particularly from the Bombay High Court in *Rasilaben Kansara (1987)* and the Andhra Pradesh High Court in *V. Anjaneya Setty (1981)*, have clarified that while Section 68(1) creates an irrebuttable presumption against signatories, Section 68 as a whole does not exclude other modes of proving partnership details. The provisions of Section 68 are vital for the effective operation of Section 69 and for ensuring that the registration process serves its intended purpose of providing reliable information about the constitution of partnership firms, thereby protecting both the partners and third parties dealing with them. A clear understanding of Section 68 is thus essential for legal practitioners and businesses operating as partnerships in India.