LIMITED LIABILITY PARTNERSHIP PART-XXXXVI - Offences and Miscellaneous Provisions

[Dr. Sanjiv Agarwal]

Offence of limited liability partnerships [Section 76]

The statutorily provisions of section 76 of LLP Act, 2008 read as under -

Where an offence under this Act committed by a limited liability partnership is proved

(a)      to have been committed with the consent or connivance of a partner or partners or designated partner or designated partners of the limited liability partnership; or

(b)      to be attributable to any neglect on the part of the partner or partners or designated partner or designated partners of that limited liability partnership, the partner or partners or designated partner or designated partners of the limited liability partnership, as the case may be, as well as that limited liability partnership shall be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

Section 76 of LLP Act, 2008 seeks to provide that where an offence under this Act committed by an LLP is proved to have been committed with the consent or connivance of a partner or designated partner of the LLP or is attributable to any neglect on the part of the partner or designated partner of that LLP, the partner or designated partner of the LLP as well as that LLP shall be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

This section provides for prosecution and punishment in case where offence committed by a LLP is  proved. The punishment shall be awarded to LLP itself, its partners and designated partners .

Accordingly, following shall be held guilty and shall be liable to be proceeded against and punished –

a)      partner or partners

b)      designated partner or partners

c)      concerned LLP

The aforesaid persons shall be held guilty and punished if  any of the following two is proved in relation to the acts of LLP-

(a)                     such acts of LLP have been committed with the consent or connivance of partner (s) or designated partner (s) of LLP, or

(b)                     such acts of LLP are attributable to negligence on the part of partner (s) or designated partner (s) of LLP.

Thus, it appears that for partners and designated partners to hold guilty and to punish them, it will have to be proved that they had consented for or connived in the offence or that they acted negligently, ie, presence of culpable mind or mens rea which may be difficult to prove.

The prosecution has to prove ‘mens rea’ or guilty knowledge. The onus is on the prosecution to show that the default has been committed knowingly and once this onus is discharged the burden shifts on the person  to prove that the default was due to circumstances beyond his control.

Jurisdiction of the court [Section 77}

Section 77 of LLP Act, 2008 provides that  not withstanding any provision to the contrary in any Act for the time being in force, the Judicial Magistrate of the first class or, as the case may be, the Metropolitan Magistrate shall have jurisdiction or try any offence under this Act and shall have power to impose punishment in respect of said  offence.

section 77seeks to provide that notwithstanding any provision to the contrary in any Act, the Judicial Magistrate of the first class or the Metropolitan Magistrate shall have jurisdiction to try any offence under the provisions of this Act and shall have power to impose punishment in respect of the said offence.

Section 77 provides the jurisdiction of courts over LLP for the purpose of trying offences under the Act. The jurisdiction of court shall be as follows-

(a) First class judicial magistrate having jurisdiction over LLP, or

(b)  Metropolitan magistrate having jurisdiction

 The courts as aforesaid shall have power to-

(a)  Try any offence under the provisions of LLP Act, and

(b) Impose punishment in respect of offence committed under the provisions of LLP Act

The LLP Act does not prescribe trial of offences under or by any special courts.

The term ‘offence’ has been defined in section 40 of Indian Penal Code to denote a thing made punishable by Indian Penal Code. It is also mentioned in section 40 that in respect of certain sections mentioned therein, the word ‘offence’ denotes a thing punishable under the Indian Penal Code or under any special or local law. In section 3(38) of the General Clauses Act, the word ‘offence’ means any act or omission made punishable by any law for the time being in force.