Question 3 (b)

Circumstances in which an LLP may be wound up by the Tribunal

9 marks

Time to write
About 18 minutes

From an older CBCS paper

Question

Question 3 (b) · 9 marks

State the circumstances in which the court can wind up a Limited Liability Partnership (LLP).

Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

18 minfor 9 marks

Read from the question

  • StateShort and exact: no long explanation.

What the paper leaves open

This older-course question examines the winding up of an LLP, which the current UGCF Business Laws syllabus does not name; it is answered as printed.

Write it in this order

  1. Read; underline the asks; jot your points 1 min
  2. 1 Sections 63 and 64: winding up by the Tribunal 2 marks 3 min
  3. 2 The circumstances in section 64 6 marks 11 min
  4. 3 The Tribunal and the court 1 mark 2 min
  5. Check: every ask answered, key terms underlined 1 min

Short on time? Trim steps 1 and 2 evenly rather than skip one: each is capped at its own marks. End with step 3 in a line or two.

Try it first. About 18 minutes for 9 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Provision. The LLP Act, 2008 allows an LLP to be wound up in two ways, voluntarily or by the Tribunal, and an LLP that has been wound up may then be dissolved (s. 63). Section 64 lists when the Tribunal may order it.

Circumstances (section 64). The grounds can be grouped:

  1. The LLP asks for it: the LLP itself decides to be wound up by the Tribunal.
  2. It no longer meets the basic legal requirements: it has had fewer than two partners for more than six months, or it has not filed its Statement of Account and Solvency or annual return for five financial years in a row.
  3. It is a danger to the public: it has acted against India's sovereignty and integrity, the security of the State or public order.
  4. Fairness demands it: the Tribunal considers it just and equitable, for example where the partners are locked in a dispute that makes the business unworkable.

The former ground of inability to pay debts, clause (c), was omitted by the Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016) with effect from 15 November 2016.

Note on "court". The Act speaks of the Tribunal; the question's "court" is read as the Tribunal.

Conclusion. The Tribunal may wind up an LLP on the LLP's own decision, on a shortfall of partners for over six months, for acts against the State, for five years' default in filing, or on just and equitable grounds.

Where the 9 marks sit

#ComponentMarks
1Sections 63 and 64: winding up by the Tribunal2
2The circumstances in section 646
3The Tribunal and the court1
Total9
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