TMI Blog2021 (4) TMI 749X X X X Extracts X X X X X X X X Extracts X X X X ..... Constitution of a firm or partnership between one or more persons. In this case the partnership deed was executed between an individual and an LLP which is a body corporate having a legal entity and coming within the definition of person . The individual liability of the partners of LLP would not be relevant when the LLP itself would have liability independent of the liability of the partners. Therefore, the difference in the provisions under the Partnership Act relating to liability of the firm or the individual partners would not stand in the way of constitution of a partnership with an LLP - LLP cannot have a disqualification from entering into a partnership with an individual or other persons. There shall be a direction to the respondent to reconsider the request of petitioner for registration and to take appropriate action on the same within a period of one month from the date of receipt of a copy of the judgment - Petition allowed - decided in favor of petitioner. - WP(C).No.25741 OF 2020(P) - - - Dated:- 8-4-2021 - HONOURABLE SMT. JUSTICE P.V.ASHA PETITIONER/S: BY ADV. SRI.S.MOHAMMED AL RAFI RESPONDENT/S: R1 BY GOVERNMENT PLEADER OTHER PRESENT: SMT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artner. At the same time it is stated that under Section 28 of the LLP Act, 2008 the provisions regarding the liability of the partnership firm is restricted to the contents to the LLP agreement ie. under the LLP Act, the liability of the partner is restricted only to the extent provided in the agreement; such a provision runs contrary to Section 25 and 49 of the Indian Partnership Act. It is also pointed out that under LLP foreign investment is permissible whereas it is not permissible under the Partnership Act. 5. The learned Counsel for the petitioner relied on the judgment of this Court in M.M.Pulimood vs. Registrar of Firm: 1984 KLT 420 in support of his contention that the rejection in Ext.P2 is illegal and without understanding the provisions contained in the LLP Act. 6. Relying on the judgment of the apex court in Dulichand Laxminarayanan vs. Commissioner of Income Tax, Nagpur : AIR 1956 SC 354 the learned Government Pleader argued that a firm cannot enter into a partnership with LLP. It is their case that though LLP is a kind of partnership having the nature of company the provisions in the LLP are completely frustrating the purport of Section 25 and 49 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artners and collectively a firm and the name under which their business is carried on is called the firm name . 11. It is therefore necessary to find out the definition of 'person'. 'Person' is not defined either in the Partnership Act or in the LLP Act. Section 3(42) of the General Clauses Act, 1897 reads as follows: 3. Definitions.- In this Act, and in all General Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context,- xxxxxxxxxxxxxxx (42) person shall include any company or association or body of individuals, whether incorporated or not; xxxxxxx 12. A partnership can be entered into between two persons. Such persons can be an incorporated body of individuals. LLP is a body corporate. It can be said to be a person, as defined in Section 3(42) of the General Clauses Act, 1897 in case there is no repugnancy in the subject or context. In order to examine the same it is necessary to have a look at some more provisions in both the Acts viz Partnership Act and LLP Act. 13. The definition of body corporate, LLP and LLP agreement are given under clause (d), (n) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of limited liability partnership.-( 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; and (b) the person knows that he has no authority or does not know or believe him to be a partner of the limited liability partnership. (2) The limited liability partnership is liable if a partner of a limited liability partnership is liable to any person as a result of a wrongful act or omission on his part in the course of the business of the limited liability partnership or with its authority. (3) An obligation of the limited liability partnership whether arising in contract or otherwise, shall be solely the obligation of the limited liability partnership. (4) The liabilities of the limited liability partnership shall be met out of the property of the limited liability partnership. 16. Extent of liability of a partner in an LLP is given under Section 28 as follows: 28. Extent of liability of partner.-( 1) A partner is not personally liable, directly or indirectly for an obligation referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act on the ground that the deed of partnership consisted of three firms, one Hindu undivided family business and one individual. Apex Court found that a firm cannot be treated as a person which can enter into a partnership with other firms or individuals or Hindu Undivided Family. It was held as follows: In our opinion, the word persons in Section 4 of the Indian Partnership Act, which has replaced Section 239 of the Indian Contract Act, contemplates only natural or artificial i.e. legal persons and for the reasons stated above, a firm is not a person and as such is not entitled to enter into a partnership with another firm or Hindu undivided family or individual. In this view of the matter there can arise no question of registration of a partnership purporting to be one between three firms, a Hindu undivided family business and an individual as a firm under Section 26-A of the Act. 20. Section 4 of the Partnership Act permits Constitution of a firm or partnership between one or more persons. In this case the partnership deed was executed between an individual and an LLP which is a body corporate having a legal entity and coming within the definition of per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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