LIMITED LIABILITY PARTNERSHIP-PART-XVIII - Enforcement of Provisions

[Dr. Sanjiv Agarwal]

Statutory Provision

Section 41 of LLP Act, 2008 deals with enforcement of duty to make returns, etc and provide as under -

(1) If any limited liability partnership is in default in complying with—

(a) any provisions of this Act or of any other law which requires the filing in any manner with the Registrar of any return, account or other document or the giving of notice to him of any matter; or

(b) any request of the Registrar to amend or complete and resubmit any document or to submit a fresh document, and fails to make good the default within fourteen days after the service on the limited liability partnership of a notice requiring it to be done, the Tribunal may, on application by the Registrar, make an order directing that limited liability partnership or its designated partners or its partners to make good the default within such time as specified in the order.

(2) Any such order may provide that all the costs of and incidental to the application shall be borne by that limited liability partnership.

(3) Nothing in this section shall limit the operation of any other provision of this Act or any other law imposing penalties in respect of any default referred to in this section on that limited liability partnership.

Section 41 seeks to provide that in case any LLP is in default in complying with the provisions relating to filing with the Registrar of any return, account or other document or giving of any notice to him, the Registrar may make an application before the Tribunal for making an order for directions in order to make good the default within a time frame.

Section 41 empowers a Registrar to enforce an LLP to comply with its duties in relation to filing requirements, which may be:

(1) The filing in any manner with the Registrar of any return, account or other document or the giving of notice to him of any matter; or

(2) Filing in response to any request of the Registrar to amend or complete and re-submit any document or to submit a fresh document In any of the above case, if an LLP fails to file requisite papers with the Registrar, the latter should give a 14 days' notice to the LLP to make good the default.

In case of further default, the Registrar can get an order from the Tribunal directing the LLP to make good such default. The order may provide that the costs of seeking order shall be provided by the LLP.

The above power of the Registrar is in addition to the penalties prescribed under the Act for the respective offences. Thus, the LLP making default on account of any filing would in any case be subject to the penalty prescribed for such default.

Section 614 of the Companies Act 1956 contains the similar provision in context whereof it was held that the procedure prescribed by this section has to be followed for compelling a company to make good its default in filing documents for registration of charges under section 125 of the Companies Act 1956.

Penalty

Specific penalties have been prescribed for contravention of different provisions under section 34, 35 and 37. Section 34 relates to the maintenance of books and accounts and filing of the Statement of Accounts and Solvency and also prescribes audit requirements failing which both LLP and designated partners can be fined. An LLP can be fined a minimum of twenty-five thousand rupees but which may extend to five lakh rupees and every designated partner can be fined with a minimum of ten thousand rupees but which may extend to one lakh rupees. Section 35 relates to the filing of Annual return by LLP, failing which both LLP and designated partners can be fined in the similar manner as in case of contravention of section 34. Section 37 provides for a penalty for any person who makes a false statement/omits a material statement - penalty consists of imprisonment for a term which may extend to two years and also a fine of minimum of one lakh rupees extendable to five lakh rupees.