No member of an unregistered firm can enforce his rights under the partnership contract

against either the firm or any present or past member of it, nor can the firm sue its customers
on their contracts. The firm remains liable to be sued by persons outside it, and cannot plead
a set-off. Only suits for dissolution of
the firm, and the powers of official assignees under the Insolvency Acts, are exempt from the
prohibition.
Scope of Section 69(1)
Two conditions are necessary to enable a partner to sue his co-partners or the- firm
First, the firm should be registered and,
Second, the name of the partner suing must figure in registration.
The scope of the sub-section was examined by the Bombay High Court in
S.H.Patel v. Husseinbhai Mohd
A case where the action was between two former partners to enforce an agreement restraining
the outgoing partner from carrying on in some area
any business similar to that of the firm and the court had to examine whether such suit was
maintainable the firm being unregistered.

Where any agreement is made or a cause arises between the partners during the subsistence
of the firm, what should be the position. If the matter in question is purely
personal between the partners
or has nothing to do with contract of partnership or Partnership Act, forexample, a tort or
tenancy action, between partners, it will be clearly outside the scope of the section.

Moreover, there is considerable ambiguity in Section 69(2) as to what is meant by the

words'arising out of a contract. Purpose behind Section 69(2) was to impose a disability on
theunregistered firm or its partners to enforce rights arising out of contracts entered into by
the plaintiff firm with the third-
party defendants in the course of the firm's business transactions.Moreover, the contract by
the unregistered firm referred to in Section 69(2) must not only be oneentered into by the firm
with the third-party defendants but must also be one entered into by
the plaintiff firm in the course of the business dealings of the plaintiff firm with such third-
partydefendants.