Electrical resistivity and magnetoresistance(MR) in polyaniline(PANI) with carbon nanotube(CNT) and functionalized carbon nanotube(fCNT) composites have been studied for different weight percentages down to the temperature 4.2 K and up to magnetic field 5 T. Resistivity increases significantly in composite at low temperature due to functionalization of CNT compared to only CNT. Interestingly a transition from negative to positive magnetoresistance has been observed when the filler is changed from pure CNT to functionalized CNT after a certain percentage (10wt%) as the effect of more disorder in fCNT/PANI composite. This result depicts that the MR has strong dependency on disorder in the composite system. The transition of MR has been explained on the basis of polaron-bipolaron model. The long range Coulomb interaction between two polarons screened by disorder in the composite of fCNT/PANI, increases the effective on-site Coulomb repulsion energy to form bipolaron which leads to change the sign of MR from negative to positive.