Limited Liability Partnership (LLP) Can Form A Partnership Firm With An Individual Or Other Persons: Kerala High Court
The Kerala High Court held that a Limited Liability Partnership can form a partnership with an individual or other persons. In this case, a partnership deed was executed between an individual and an LLP. Registrar of Firms refused registration of the partnership firm on the ground that a LLP cannot be a partner of a firm. This was challenged before the High Court contending that the LLP is liable to be treated as a person and there cannot be any objection for registering a partnership with an LLP which is a person. According to the Registrar of Firms, provisions of the Limited Liability Partnership Act 2008 are inconsistent with that of the Indian Partnership Act, 1932, pertaining to the liability. It contended that Section 25, 26 and 49 of the Indian Partnership Act makes the partners to be jointly and severally liable with all the other partners and also severally liable for the acts of the firm, of which such person is a partner. Under Section 28 of the LLP Act, the provisions regarding the liability of the partnership firm is restricted to the contents to the LLP agreement i.e. 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, Registrar stated. It was also contended that under LLP foreign investment is permissible whereas it is not permissible under the Partnership Act.