The Limited Liability Partnership Act, 2008

(b)(i) Compliance Regarding Designated Partners: According to section 7 and 9 of the Limited Liability Partnership Act, 2008, every limited liability partnership shall have at least two designated partners who are individuals and at least one of them shall be a resident in India.

According to section 9, a limited liability partnership may appoint a designated partner within thirty days of a vacancy arising for any reason and provisions of sub-section (4) and sub-section (5) of section 7 shall apply in respect of such new designated partner.

Provided that if no designated partner is appointed, or if at any time there is only one designated partner, each partner shall be deemed to be a designated partner.

In the given question, the vacancy occurred on 1st January, 2026,

upon Bharat's resignation. The 30 days’ time period closed on 31st January, 2026. As the LLP delayed in filling this vacancy until 20th

February, 2026 (which is more than 30 days’ time period), it contravened the legal timeline.

Therefore, ABC Professionals LLP did not comply with the statutory provisions regarding the appointment of designated partners.

(ii)Responsibility for Ensuring Compliance: According to section 8 of the Limited Liability of Partnership Act, 2008, a designated partner shall be responsible for the doing of all acts, matters and things as are required to be done by the limited liability partnership in respect of compliance of the provisions of this Act including filing of any document, return, statement and the like report pursuant to the provisions of this Act and as may be specified in the limited liability partnership agreement; and liable to all penalties imposed on the limited liability partnership for any contravention of those provisions.

Thus, in view of section 8 and provisio to section 9,

From 1st January to 31st January, Amit is fully liable as the remaining designated partner.

From 1st February to 20th February (after the 30 days’ time period

expired), both Amit and Charu are deemed designated partners and are jointly responsible for the compliance failures during that period.

Therefore, the Designated Partners bear the primary statutory obligation for ensuring compliance and Amit's defence is legally invalid.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2026, 4(b) (New Scheme).

(b)As per section 63 of the Limited Liability Partnership Act, 2008, the winding up of a LLP may be either voluntary or by the Tribunal and LLP, so wound up may be dissolved.

In the given question, the fact that two partners want to discontinue the business can provide the basis for voluntary winding up, subject to the applicable LLP agreement and statutory procedure.

As per section 64, a LLP may be wound up by the Tribunal:

(a)if the LLP decides that LLP be wound up by the Tribunal;

(b)if, for a period of more than six months, the number of partners of the LLP is reduced below two;

(c)if the LLP has acted against the interests of the sovereignty and integrity of India, the security of the State or public order;

(d)if the LLP has made a default in filing with the Registrar the Statement of Account and Solvency or annual return for any five consecutive financial years; or

(e)if the Tribunal is of the opinion that it is just and equitable that the LLP be wound up.

In the given facts, the disagreement among the partners may be relevant to the ground that it is just and equitable to wind up the LLP, depending upon the circumstances and evidence before the Tribunal.

Further, section 64 does not specifically provide for a winding-up petition filed by a creditor on the ground of inability to pay debts, therefore the creditor will not succeed in the given case.

Yes, as per section 63 dissolution would follow after winding up.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2026, 5(b) (New Scheme).

(b)(i) As per section 27 of the Limited Liability Partnership Act, 2008,

(1)A LLP, 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 LLP in doing a particular act; and

(b)the person knows that he has no authority or does not know or believe him to be a partner of the LLP.

In the given question, though the LLP agreement contained restrictions that only V and S were authorised to enter into contracts on behalf of the LLP and that any act beyond consultancy services required unanimous consent, N entered into a loan agreement with Quick Bank for expansion into real estate advisory without informing V and S. Although N had no authority under the LLP agreement to enter into such transaction, Quick Bank was unaware of the internal restrictions and believed N to be a partner of the LLP.

Therefore, VSN Consulting LLP shall be bound by the loan agreement entered into by N with Quick Bank.

(ii)According to section 24 of the Limited Liability Partnership Act, 2008,

(1)Where a person has ceased to be a partner of a limited liability partnership (hereinafter referred to as former partner), the former partner is to be regarded (in relation to any person dealing with the limited liability partnership) as still being a partner of the limited liability partnership unless:

(a)the person has notice that the former partner has ceased to be a partner of the limited liability partnership; or

(b)notice that the former partner has ceased to be a partner of the limited liability partnership has been delivered to the Registrar.

(2)The cessation of a partner from the limited liability partnership does not by itself discharge the partner from any obligation to the limited liability partnership or to the other partners or to any other person which he incurred while being a partner.

In the given question, S retired from the LLP on 30th September, 2025.

However, T Ltd. entered into a consultancy contract with the LLP on 5th October, 2025 believing S to still be a partner, since it had no

notice of his retirement.

Therefore, in relation to T Ltd., S shall still be regarded as a partner of the LLP and will be held liable for obligations arising from the contract entered into after his retirement.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2026, 4(b) (New Scheme).

(b)According to section 60 of the Limited Liability Partnership Act, 2008,

(1)Where a compromise or arrangement is proposed:

(a)between a limited liability partnership and its creditors; or

(b)between a limited liability partnership and its partners,

the Tribunal may, on the application of the limited liability partnership or of any creditor or partner of the limited liability partnership, or, in the case of a limited liability partnership which is being wound up, of the liquidator, order a meeting of the creditors or of the partners, as the case may be, to be called, held and conducted in such manner as may be prescribed or as the Tribunal directs.

(2)If a majority representing three-fourths in value of the creditors, or partners, as the case may be, at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Tribunal, by order be binding on all the creditors or all the partners, as the case may be, and also on the limited liability partnership, or in the case of a limited liability partnership which is being wound up, on the liquidator and contributories of the limited liability partnership.

Provided that no order sanctioning any compromise or arrangement shall be made by the Tribunal unless the Tribunal is satisfied that the limited liability partnership or any other person by whom an application has been made under sub-section (1) has disclosed to the Tribunal, by affidavit or otherwise, all material facts relating to the limited liability partnership, including the latest financial position of the limited liability partnership and the pendency of any investigation proceedings in relation to the limited liability partnership.

(3)An order made by the Tribunal under sub-section (2) shall be filed by the limited liability partnership with the Registrar within thirty days after making such an order and shall have effect only after it is so filed.

(4)If default is made in complying with the provisions of sub-section (3), the LLP and its every designated partner shall be liable to a penalty of ₹ 10,000 and in case of continuing default, with further penalty of ₹ 100 for each day after the first during which such default continues, subject to maximum ₹ 1,00,000 for LLP and ₹ 50,000 for every

designated partner.

In the given question, the compromise or arrangement is approved by creditors representing 80% (exceeding the required three-fourths) and sanctioned by the NCLT after due disclosures, hence the arrangement is valid.

Effect of failure to file the Tribunal’s order with the Registrar by ABC LLP

As per the provision of sub-section (3) and sub-section (4) of Section 60 stated above, the order of the Tribunal will be effective only after it is filed with the Registrar and therefore, the non-filing of the same renders the order non-effective and the LLP as well as the every designated partner shall face the penal consequences stated in sub-section (4).

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2026, 4(b) (New Scheme).

(b)According to section 25 of the Limited Liability Partnership Act, 2008,

(1)Every partner shall inform the LLP of any change in his name or address within a period of 15 days of such change.

(2)A LLP shall:

(a)where a person becomes or ceases to be a partner, file a notice with the Registrar within 30 days from the date he becomes or ceases to be a partner; and

(b)where there is any change in the name or address of a partner, file a notice with the Registrar within 30 days of such change.

(3)A notice filed with the Registrar under sub-section (2):

(a)shall be in such form and accompanied by such fees as may be prescribed;

(b)shall be signed by the designated partner of the LLP and authenticated in a manner as may be prescribed; and

(c)if it relates to an incoming partner, shall contain a statement by such partner that he consents to becoming a partner, signed by him and authenticated in the manner as may be prescribed.

(i)Priya’s Address Change: as per the provision, Priya was required to inform XYZ LLP of her address change within 15 days of the move. Therefore, there was contravention on the part of Ms. Priya.

Following that, XYZ LLP was required to file a notice with the RoC within 30 days of being notified of Priya's new address. As Priya did not inform the LLP about change of address and consequently LLP did not file a notice regarding the change in address of Priya with the Registrar, XYZ LLP is not in compliance with the required timeline.

(ii)Ramesh’s Admission as a Partner: For new partners, XYZ LLP must file a notice with the RoC within 30 days of a person becoming a partner. This notice should include Ramesh’s consent statement, signed by him and authenticated as prescribed. As XYZ LLP did not comply with the prescribed 30-day requirement, it constitutes a non-compliance under Section 25(2).

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2026, 5(b) (New Scheme).

(b)(i) As per section 2(1)(l) of the LLP Act, 2008, “Financial year”, in relation to a LLP, means the period ending on the 31st day of March every year;

Provided that in the case of a limited liability partnership incorporated on or after the 1st day of October of a year, the financial year may end on the 31st day of March of the following year.

In terms of the above provision, advice of Sulagna for maintaining the accounts on January to December basis is not valid.

(ii)Section 5 of the Limited Liability Partnership Act, 2008 provides that any individual or body corporate can be a partner in LLP. However, it has been clarified vide MCA General Circular No. 13/2013 dated 29th July, 2013 read with MCA General Circular No. 2/16 dated 15th January, 2016 that a HUF cannot be treated as a body corporate for the purposes of LLP Act, 2008.

Therefore, a HUF or its Karta cannot become a partner or designated partner in LLP.

Hence, Dilip cannot be inducted as a partner to the LLP.

(iii)The answer would be the same as a trust is not a body corporate in India. A trust is a legal arrangement for managing property for the benefit of another person, called the beneficiary. The person who manages the property is called the trustee. Hence, in that case too such Charitable Trust could not be inducted as a partner to the LLP.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2025, 5(b) (New Scheme).

(b)(i) As per Section 29(2) of the Limited Liability Partnership Act, 2008, where after a partner’s death the business is continued in the same LLP name, the continued use of that name or of the deceased partner’s name as a part thereof shall not by itself make his legal representative or his estate liable for any act of the LLP done after his death.

In the instant case, Mr. K’s share cannot be used to repay the firm’s debts after his death as the firm continued its operations after his death without dissolving the firm and the losses were incurred after his death.

(ii)As per Section 42 of the Limited Liability Partnership Act, 2008,

(1)The rights of a partner to a share of the profits and losses of the limited liability partnership and to receive distributions in accordance with the limited liability partnership agreement are transferable either wholly or in part.

(2)The transfer of any right by any partner pursuant to sub-section

(1)does not by itself cause the disassociation of the partner or a

dissolution and winding up of the limited liability partnership.

(3)The transfer of right pursuant to this section does not, by itself, entitle the transferee or assignee to participate in the management or conduct of the activities of the limited liability partnership, or access information concerning the transactions of the limited liability partnership.

In the instant case, Mr. W can transfer his share in the limited liability partnership to his son, however, transfer of share does not, by itself, entitle M to participate in the management or conduct of the activities of the firm. Hence, the remaining partners of Sun Roofings LLP can forbid M to take part in the business.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2025, 4(b) (New Scheme).

(b)Section 31 of the Limited Liability Partnership Act, 2008 provides that:

(1)The Court or Tribunal may reduce or waive any penalty leviable against any partner or employee of a LLP, if it is satisfied that:

-such partner or employee of an LLP has provided useful information during investigation of such LLP; or when any information given by any partner

or

-when any information given by any partner or employee (whether or not during investigation) leads to LLP or any partner or employee of such LLP being convicted under this Act or any other Act.

On the basis of the above provisions, the question can be answered as under:

(i)Whether the Tribunal can waive off or reduce the penalty imposed by it on Mr. J?

Yes, the Tribunal has the power to waive or reduce the penalty of ₹ 1,25,000 being imposed on Mr. J as he has provided useful

information that is helpful towards investigations in the case of fraud by the LLP.

(ii)Can the LLP suspend Mr. J?

Section 31(2) of the LLP Act, 2008 further provides that:

No partner or employee of any limited liability partnership may be discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against the terms and conditions of his limited liability partnership or employment merely because of his providing information or causing information to be provided pursuant to sub-section (1). Hence, Mr. J cannot be suspended from the job by the LLP on the grounds of having provided vital information regarding the fraud to the Tribunal.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2025, 4(b) (New Scheme).

(b)Circumstances in which Limited Liability Partnership may be wound up by Tribunal (Section 64 of the Limited Liability Partnership Act, 2008):

A limited liability partnership may be wound up by the Tribunal:

(a)if the limited liability partnership decides that limited liability partnership be wound up by the Tribunal;

(b)if, for a period of more than six months, the number of partners of the limited liability partnership is reduced below two;

(c)if the limited liability partnership is unable to pay its debts;

(d)if the limited liability partnership has acted against the interests of the sovereignty and integrity of India, the security of the State or public order;

(e)if the limited liability partnership has made a default in filing with the Registrar the Statement of Account and Solvency or annual return for any five consecutive financial years; or

(f)if the Tribunal is of the opinion that it is just and equitable that the limited liability partnership be wound up.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2025, 5(b) (New Scheme).

(b)According to section 63 of the Limited Liability Partnership Act, 2008, the winding up of a LLP may be either voluntary or by the Tribunal and LLP, so wound up, may be dissolved.

As per section 64 of the Limited Liability Partnership Act, 2008, a LLP may be wound up by the Tribunal, if the LLP has made a default in filing with the Registrar the Statement of Account and Solvency or Annual Return for any 5 consecutive financial years.

In the present case, M/s Strong Steels LLP did not file its Annual Returns from 2020-21. In the financial year 2024-25, the default in filing of annual return has not continued for 5 consecutive years. In view of the facts of the question and provisions of the Act, the Tribunal cannot pass an order to wind up M/s Strong Steels LLP.

The objection of remaining partners is correct.

Annual Return [Section 35]

(1)Every LLP shall file an annual return duly authenticated with the Registrar within 60 days of closure of its financial year in such form and manner and accompanied by such fee as may be prescribed.

(2)Penalty for non-filing of annual return:

LLP- ₹ 100 per day subject to maximum ₹ 1,00,000

Every Designated Partners - ₹ 100 per day subject to maximum ₹ 50,000.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2024, 4(b) (New Scheme).

(b)Whether X has any remedy against the denial?

According to section 42 of the Limited Liability Partnership Act, 2008, the rights of a partner to a share of the profits and losses of the limited liability partnership and to receive distributions in accordance with the limited liability partnership agreement are transferable either wholly or in part.

The transfer of right pursuant to this section does not, by itself, entitle the transferee or assignee to participate in the management or conduct of the activities of the limited liability partnership, or access information concerning the transactions of the limited liability partnership.

In the given question, the partners of Alpha LLP are correct in denying access of information about trading transactions to X (daughter of A).

X does not have any remedy against the denial by the partners of Alpha LLP.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2024, 5(b) (New Scheme).

(b)According to section 6 of the Limited Liability Partnership Act, 2008,

(i)Every LLP shall have at least two partners.

(ii)If at any time the number of partners of a LLP is reduced below two and the LLP carries on business for more than six months while the number is so reduced, the person, who is the only partner of the LLP during the time that it so carries on business after those six months and has the knowledge of the fact that it is carrying on business with him alone, shall be liable personally for the obligations of the LLP incurred during that period.

In the given situation, the alone partner should consider the above provisions of the Limited Liability Partnership Act, 2008, governing the LLP being operated by a single partner.

As per section 64 of the Limited Liability Partnership Act, 2008, the circumstances in which LLP may be wound up by Tribunal are:

(a)if the LLP decides that LLP be wound up by the Tribunal;

(b)if, for a period of more than 6 months, the number of partners of the LLP is reduced below two;

(c)if the LLP has acted against the interests of the sovereignty and integrity of India, the security of the state or public order;

(d)if the LLP has made a default in filling with the Registrar the Statement of Account and Solvency or annual return for any 5 consecutive financial years; or

(e)if the Tribunal is of the opinion that it is just and equitable that the LLP be wound up.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2024, 4(b) (New Scheme).

(b)(i) According to section 31 of the Limited Liability Partnership Act, 2008,

(1)The Court or Tribunal may reduce or waive any penalty leviable against any partner or employee of a LLP, if it is satisfied that:

•such partner or employee of an LLP has provided useful information during investigation of such LLP; or

•when any information given by any partner or employee (whether or not during investigation) leads to LLP or any partner or employee of such LLP being convicted under this Act or any other Act.

(2)No partner or employee of any LLP may be discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against the terms and conditions of his LLP or employment merely because of his providing information or causing information to be provided pursuant to sub-section (1).

(ii)According to section 37 of the Limited Liability Partnership Act, 2008, If in any return, statement or other document required by or for the purposes of any of the provisions of this Act, any person makes a statement:

(a)which is false in any material particular, knowing it to be false; or

(b)which omits any material fact knowing it to be material,

he shall, save as otherwise expressly provided in this Act, be punishable with imprisonment for a term which may extend to 2 years, and shall also be liable to fine which may extend to 5 lakh rupees but which shall not be less than 1 lakh rupees.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2024, 5(b) (New Scheme).

(b)Distinction Between LLP and Company

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2025, 5(b) (New Scheme).