Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Partnership
Keeping in mind the growth and expansion of the Indian economy a need was felt for the
introduction of a new corporate vehicle which could provide for the benefits of a partnership as
well as ensure restricted personal liability. Thus the parliament enacted the Limited Liability
In a limited liability partnership one partner is not responsible for the misconduct or negligence
of the acts caused by the other. A limited liability partnership although exhibits all the features of
a partnership in the normal course but under its special provision, the concept of limited liability
LEGAL ENTITY
In India LLP is a body corporate formed and incorporated under the LLP Act, which is a distinct
legal entity separate from that of its partners1. The act provides exhaustive features such as
competency of parties to form and draft a partnership agreement, extent of liability, penalties etc.
1
Section 3(1) LLP Act,2008
A limited liability partnership is a body corporate formed and incorporated under this act and is a
For the purposes of taxation LLP’s will be treated as a firm as defined in the Indian Partnership
Act, 19322
(for clause (23), the following clause shall be substituted with effect from the 1st day of April,
2010, namely :—
‘(23) (i) “firm” shall have the meaning assigned to it in the Indian Partnership Act, 1932 (9
of 1932), and shall include a limited liability partnership as defined in the Limited Liability
REGISTRATION
It is compulsory for a limited liability partnership to get registered as per the provisions of the
Limited Liability Partnership Act, 2008 and it is a body corporate and incorporated under this
act3
FINANCIAL DISCLOSURES
2
Section 3(c) FINANCE (NO. 2) ACT, 2009
3
Section 3(1) LLP Act,2008
It is also compulsory for a Limited Liability Partnership to file within the prescribed time the
statement of accounts pursuant to sub section (2) and sub-section (3) of section 34 of The
Section 34(2)
Every limited liability partnership shall, within a period of six months from the end of each
financial year, prepare a statement5 of account and solvency for the said financial year as at the
last day of the said financial year in such form as may be prescribed and such statement shall be
Section 34(3)
Every Limited liability partnership shall file within the prescribed time, the statement of accounts
and solvency prepared pursuant to sub section (2) of section 34 with the registrar every year in
such form and manner and accompanied by such fees as may be prescribed
The whole concept behind enacting the Limited Liability Partnership Act, was that the limited
liability partnership shall not be held liable for the unauthorized act done by any other partner in
Sections 27(1), of the limited liability act, 2008 covers the following point.
S.27 (1)
A limited liability partnership is not bound by anything done by a partner in dealing with a
person if-
a) The partner in fact has no authority to act for the limited liability partnership in doing a
particular act
b) The person knows that he has no authority or does not know or believe him to be a partner of
PARTNERSHIP
S.28 (1)
A partner is not personally liable, directly or indirectly for an obligation referred to in sub-
section (3) of section 27 solely by reason of being a partner of the limited liability partnership.
S.27 (3)
An obligation of the limited liability partnership whether arising in contract or otherwise, shall
S.28 (2)
The provision of sub-section (3) of section 27 and sub section(1) of this section shall not affect
the personal liability of a partner for his own wrongful act or omission but a partner shall not
be personally liable for the wrongful act or omission of any other partner of the limited
liability partnership
Partnership
“Partnership” is the relation between persons who have agreed to share the profits of a
LEGAL ENTITY
A partnership firm under the Indian Partnership Act, 1932 is not a distinct legal entity apart from
the partners constituting it and equally in law the firm as such has no separate rights of its own in
the partnership assets and when one talks of the firm's property or firm's assets all that is meant is
property in which all partners have a joint or common interest. 4Even registration of a partnership
For tax law, income-tax as well as sales tax, partnership firm is a legal entity.6
REGISTRATION
Registration of partnership is not compulsory7 in India as the law is silent on the fact and the
Indian partnership Act, 1932 provides for a section which deals with the effects of non-
registration.
4
Bhagwanji Morarji Goculdas v. Alembic Chemical Works Co. Ltd. and Ors., AIR 1948 PC 100;
5
V. Subhramaniam vs Rajesh Raghuvandra Rao,2009 SC
6
CIT v. A W Figgies - AIR 1953 SC 455
7
V.Subramaniam vs Rajesh Raghuvandra Rao,2009 SC
Section 69
EFFECT OF NON-REGISTRATION.
(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in
any Court by or on a behalf of any persons suing as a partner in a firm against the firm or any
person alleged to be or to have been a partner in the firm unless the firm is registered and the
person suing is or has been shown in the Register of Firms as a partner in the firm : Provided that
the requirement of registration of firm under this sub-section shall not apply to the suits or
proceedings instituted by the heirs or legal representatives of the deceased partner of a firm for
(2) No suit to enforce a right arising from a contract shall be instituted in any court by or on
behalf of a firm against any third party unless the firm is registered and the persons suing are or
FINANCIAL DISCLOSURES
Financial disclosures are not required to be done by partnership firms as the law is silent
EXTENT OF LIABILITY
The extent of liability of the firm as well as other partners is pointed out in the following sections
Section 25
Every partner is liable jointly with all the other partners and also severally, for all acts of the
Section 26
Where, by the wrongful act or omission of a partner acting in the ordinary course of the business
of a firm, or with the authority of his partners, loss or injury is caused to any third party, or any
penalty is incurred, the firm is liable therefor to the same extent as the partner.
Section 27
Where –
(a) a partner acting within his apparent authority receives money or property from a third party
(b) a firm in the course of its business receives money or property from a third party, and the
money or property is misapplied by any of the partners while it is in the custody of the firm, the
Thus under the Indian Partnership Act, the concept of liability is strict and absolute and it will
cover all the partners of the firm as well as the firm itself.
Broad distinction between Partnership Firm and Limited Liability Partnership-
Partnership
1 Legal entity A partnership Firm is A limited liability
entity.
2 Liability Every partner is jointly The limited liability
Similarly any
obligation of the
Limited Liability
obligation of the
Limited Liability
Partnership Act,1932
4. Registration Registration of a Registration and
Conclusion
Hence as per the above comparisons it is best to say that a limited liability partnership not
only renders protection to the partners but also retains all the benefits of a partnership.
Although the traditional partnership holds one advantage that it is not compulsory for a
partnership to get registered before any statutory authority while on the other hand a
Limited Liability Partnership has to get registered under the Limited Liability Act, 2008,
the process of which may be cumbersome. Still in my opinion the balance is tilted in the