The LLP is a hybrid Business Entity that combines and exhibits elements of both Partnership under Partnership Act, 1932 and the Company as registered under the Companies Act, 2013.

The Concept of LLP was first introduced in the UK under the Limited Liability Partnerships Act 2000.

In India, The Limited Liability Partnership Act 2008 was published in the official Gazette of India on 9 January 2009 and has been in effect since 31 March 2009.

The concept of L.L.P was evolved by merging out the advantages of Partnership and Company in one Vehicle. i.e Separate legal entity, Limited Liability, No requirement of minimum capital,  No requirement of the compulsory audit, Less Compliance, flexibility in operations easy Capital Infusion etc.  

No partner is liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful business decisions or misconduct.

An LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be any upper limit on a number of partners in an LLP, unlike an ordinary partnership firm.

The LLP Act has a mandatory requirement that one of the partners in the LLP must be an Indian.

The Registrar of Companies (RoC) shall register and control LLPs too.

In India, for all purposes of taxation (service tax or any other stipulated tax payment), an LLP is treated like any other Partnership firm.

The key difference between the LLP and  Partnership is that the  Partnership operates with an unlimited Liability, but in an LLP, each member is protected from personal liability, except to the extent of their capital contribution in the LLP.

“Compulsory Strike Off” of LLP:

Section 75 read with Rule 37(1) of the Limited Liability Partnership Rules, 2009 (“LLP Rules”)

“According to Section 75 of the Limited Liability Partnership Act, 2008 (“LLP Act”) where the registrar has the reasonable opportunity to believe that the LLP is not carrying on business or its operation in accordance with the provisions of the law, the name of the LLP may be struck off the register of LLP in such manner as may be prescribed.”

Rule 37(1) of the Limited Liability Partnership Rules, 2009 (“LLP Rules”) provides the following manner in which an LLP may be struck off the register of LLP –

1. Where the LLP is not carrying on any business or profession  for the period of 2 (two) years or more and the registrar has the reasonable cause to believe the same, the registrar can suo moto take the action and send notices to the concerned LLP and all its partners specifying his intention to strike off its name from register.

Recently various Registrar of Companies by invoking the said powers have struck off the Limited Liability Partnerships all over India through Public Notices.

Analysis:

The said Act of the Registrar can be said to be the continuation of  Government Action Plan to weed out the Defaulter and Defunct Companies and LLPs.

The Difference is Just that after the Companies, the target and the Goal Post have now shifted to the Defaulter LLPs

Remedy

That after an LLP is struck off from the Register and the said Limited Liability Partnerships stand dissolved.

Where lies the Remedy to Revive the LLPs?

It is Noteworthy that Unlike Company Revival Procedure as enumerated in Section  252 (1) and (3) there is no Corresponding provision for the revival of LLPs in the LLP Act 2008.

Resultantly one cannot move an application to the National Company Law Tribunal for the Revival of- the stuck off LLPs on the same parallel lines as that of Companies.

This Position of Stike off of LLPS Can be considered somewhat similar in case of Remedial Action as that of Disqualification of Directors u/s 164 164(2) for which there was is no way out under companies Act, 2013 for removal of Disqualification of Director except CODS.

Therefore, in the case of strike off of LLPs the ultimate remedy for revival is to file the Writ Petition before the Hon’ble High Court of Appropriate Jurisdiction.

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One Comment

  1. Ujjwal says:

    Sir,
    As you mentioned the LLP Act does not have any corresponding provision for revival like the Companies Act, and further you have also mentioned that one can approach the High Court for revival of struck down LLP, via writ petition. My query is, which provision empowers me to approach the HC?

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