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FACULTY OF LAW
PROJECT ASSIGNMENT
ROLL NO - 21BALLB36
SUBMITTED TO -
DR. MOHAMMAD NASIR
ASSISTANT PROFESSOR
DEPARTMENT OF LAW
ALIGARH.
ACKNOWLEDGEMENT
Firstly, I am thankful to ALLAH ALMIGHTY, who bless me sound
health, abilities and gives courage to me to complete my project in
successful manner.
UNZALA NOOR
21BALLB-36.
INTRODUCTION
Before understanding the need of Decriminalization of certain offences under LLP
(Amendment) Bill, 2021, we should understand some basics as well. LLP stands for
limited liability Act. It covers the business aspect not only in India but all over the world.
The version of LLP in India has come into effect in 2008 by Limited Liability Partnership
Act, 2008.The Parliament of India introduce and sanction through legal process the
concept of LLP in India. If we look into general partnership in India contrary to this,
LLPs have perpetual succession, are bodies corporate and separate from their partners,
and any change in the partners has no bearing on the LLP's existence, rights, and
obligations.
Business in form of partners is very noticeable. According to the Partnership Act 1890
defines partnership as the “the relation which subsists between person carrying on a
business in a common with a view of profit”1 and Partnership Act 1932, explains under
section 44 (d) “Partnership is the relation between persons who have agreed to share the
profits of a business carried on by all or any of them acting for all.2’’ Partnership is the
activity where one person agreed to do business with the other and in such a case they
decide to do work with unlimited terms and condition. Now , here the main question
arises and the hour of the need was to limit the liability of the partners in business
because a wider sense of doing anything is not beneficial .for example- If you want to
become successful for that you are opting two subjects it is same like limitless ocean you
will be a wanderer only . I want to convey that Partnership cannot be advantageous
unless there is rule imposed on Partners. This is the beginning of LLP. In case of LLP,
Transaction are entered by LLP itself. It has separate legal existence in the eyes of law.
Partners are not responsible for transaction entered by LLP unless it is fraudulent in
nature. However, in traditional Partnership Partner have unlimited liability. So, for that
1 Elspeth Deards, Solicitor and senior lecturer in law ,Partnership law 01 (1999)
2 "Justice K Chandru answers questions posed by readers", The New Indian Express, 23 January 2017
there is introduction of Limited Liability Act, 2008 which contain 81 sections and 4
schedules.
2- Limited Liability
3- Allows its partners the flexibility of organising their internal structure as partnerships.
(v) Naresh Chandra Committee Report in 2003 highlighted the grave need to
introduce LLPs in the service industry, which finally succeeded in launching the
concepts of LLPs in India;
(vi) J.J. Irani Expert Committee on Company Law in 2005 recommended to enact a
separate legislation for LLPs in India, and also to extend the scope of LLPs to the
small enterprises.4
4 Ministry of Corporate Affairs, Government of India, FAQs on Applicability of the LLP Act.
the President approved the bill, which then became the Limited Liability
Partnership Act (Amendment), 2021, also known as the "LLP Amendment Act."
The ‘LLP Amendment Bill, 2021 with a Total of 29 Amendments to the LLP Act,
2008" has been approved by the Cabinet.The LLP Amendment Act was essentially
created to support the government's programme "Ease of Doing Business" by
lending a helpful hand to Indian start-ups. As well by decriminalise of provision
makes things doing well and easier for legal businesses .
The Company Law Committee (CLC) has recommended that 12 offences under limited
Liability Partnership Act 2008 be decriminalised and that the LLPs be allowed to issue
Non - Convertible Debentures (NCDs) to raise funds. This committee has been set up by
the Ministry of Corporates Affairs in 2019, was headed by the Corporate Affairs
Secretary Rajesh Verma. The recommendation goal is to provide ease of doing business
for LLP firms. Before Amendment there were 24 penal provision and 21 are
compoundable offences while 3 are non compundable offences. With the amendment to
LLP(Amendment ) Bill , the total number of provision under LLP Act reduced to 22 ,
cpmpindable offences will be 7 , non compoundable offences will be 3 and through In-
House Adjudication mechansim (IAM) will be only 12. The recommendation came for
decriminalisation of several offences that came in front for issues related to timely filings
such as annual report and istituting a chargee on changes in Partnership status of the LLP
because these are unrelated to fraud. The committee has recommended that companies be
required to pay penalities and not the fines for non compliance which is imposed when
partner or LLP is found guity by the courts. The provision recommended by amendment
does not have provided prison terms as possible punishment. For the purpose of levying
penalties for not obeying the rules of LLP Act , the Registrar of Companies have
authority. He is appointed through section 609 of the Companies Act . His main duty is to
register companies and LLPs in respective states and the Union Territories.
(1) For the purposes of the registration of companies under this Act, there shall be offices
at such places as the Central Government thinks fit.5
Now, we will discuss the offences which has been decriminalised through
LLP(Amendment) Bill ,2021. The Act mention how the LLPS will operate and provides
that violating these necessities will be punishable with a fine ( ranging between two
thousand rupees and five lakh rupees). These necessities includes following-
4- COMPOUNDING OF OFFENCES .
(b) is identical with or too nearly resembles the name of any other limited
the Central Government may direct such limited liability partnership to change its name,
and the limited liability partnership shall comply with the said direction within three
months after the date of the direction or such longer period as the Central Government
may allow.
(2) Any limited liability partnership which fails to comply with a direction given under sub-
section (1) shall be punishable with fine which shall not be less than ten thousand rupees
but which may extend to five lakh rupees and the designated partner of such limited
liability partnership shall be punishable with fine which shall not be less than ten thousand
rupees but which may extend to one lakh rupees.”6
6
The Limited Liability Act 2008 , s.17.
This above section got changed by the Amendment Bill of 2021 as it removes some of these
grounds and empowers the central government to allot new name to such an LLP instead of
levying a fine. The new language of the section says-
name, is registered by a name which is identical with or too nearly resembles to-
b) a registered trade mark of a proprietor under the Trade Marks Act, 1999, as is likely to be
mistaken for it, then on an application of such limited liability partnership or proprietor
referred to in clauses (a) and (b) respectively or a company, the Central Government may
direct that such limited liability partnership to change its name or new name within a
period of three monthsfrom the date of issue of such direction:
Provided that an application of the proprietor of the registered trade marks shall be
maintainable within a period of three years from the date of incorporation or registration
or change of name of the limited liability partnership under this Act.
2- Where a limited liability partnership changes its name or obtains a new name under sub
section (1), it shall within a period of fifteen days from the date of such change, give notice
of thechange to Registrar along with the order of the Central Government, who shall carry
out necessary changes in the certificate of incorporation and within thirty days of such
change in thecertificate of incorporation, such limited liability partnership shall change its
name in thelimited liability partnership agreement.
3. If the limited liability partnership is in default in complying with any direction given
under sub-section (1), the Central Government shall allot a new name to the limited
liability partnership in such manner as may be prescribed and the Registrar shall enter the
new name in the register of limited liability partnerships in place of the old name and issue
a fresh certificate of incorporation with new name, which the limited liability partnership
shall use thereafter:
Provided that nothing contained in this sub-section shall prevent a limited liability
partnershipfrom subsequently changing its name in accordance with the provisions of
section 16”.7
1. “Every LLP shall have a registered office to which all communications and notices may
3. A LLP may change the place of its registered office and file the notice of such change with
theRegistrar in such form and manner and subject to such conditions as may be prescribed and
any such change shall take effect only upon such filing.
4. If the LLP contravenes any provisions of this section, the LLP and its every partner shall be
punishable with fine which shall not be less than 2,000 but which may extend to 25,000”.8
However, through the Amendment section 13(4) got amended and all other clause remains same.
‘‘ If any default is made in complying with the requirements of this section, the limited liability
partnership and its every partner shall be liable to a penalty of five hundred rupees for each day
during which the default continues, subject to a maximum of fifty thousand rupees for the limited
liability partnership and its every partner”.9
73. “Penalty on non-compliance of any order passed by Tribunal.– Whoever fails to comply
with any order made by the Tribunal under any provision of this Act shall be punishable
with imprisonment which may extend to six months and shall also be liable to a fine which
shall not be less than fifty thousand rupees”.10
However, this section has been omitted by Limited Liability Partnership( Amendment) bill,
2021.
COMPOUNDING OF OFFENCES-
When an offence is compound it means it has settled. Under the LLP Act of 2008, Section 39
deals with compounding of offences which says-
“The Central Government may compound any offence under this Act which is punishable
with fine only, by collecting from a person reasonably suspected of having committed the
offence, a sum which may extend to the amount of the maximum fine prescribed for the
offence’’.11
It was amended by Bill of 2021 which says - In accordance with Section 441 of the Companies
Act, Section 39 of the LLP Act has been modified to provide the principles for compounding of
offenses, manner, procedure, and effect of compounding on pending prosecutions in the trial
courts. The Regional Directors ("RDs") or any other officer not below the rank of an RD, duly
authorised by the Central Government, have been authorised to compound such offences for a
sum not exceeding the maximum fine prescribed for such offences and not less than the
(2) “Where any business is carried on with such intent or for such purpose as mentioned in
sub-section (1), every person who was knowingly a party to the carrying on of the business
in the manner aforesaid shall be punishable with imprisonment for a term which may
extend to two years and with fine which shall not be less than fifty thousand rupees but
which may extend to five lakh rupees”.12
This has been amended by Limited liability Partnership (Amendment) Act as the bill increases
the maximum term of Imprisonment from two years to five years.
35. (1) ‘‘ Every limited liability partnership shall file an annual return duly authenticated
with the Registrar within sixty days of closure of its financial year in such form and
manner and accompanied by such fee as may be prescribed.”
(2) ‘‘If any limited liability partnership fails to file its annual return under sub-section (1)
before the expiry of the period specified therein, such limited liability partnership and its
designated partners shall be liable to a penalty of one hundred rupees for each day during
which such failure continues, subject to a maximum of one lakh rupees for the limited
liability partnership and fifty thousand rupees for designated partners’’.13
35(2)-“ Any limited liability partnership which fails to comply with the provisions of this
section shall be punishable with fine which shall not be less than twenty-five thousand
rupees but which may extend to five lakh rupees.
(3) If the limited liability partnership contravenes the provisions of this section, the
designated partner of such limited liability partnership shall be punishable with fine which
shall not be less than ten thousand rupees but which may extend to one lakh rupees.’’14
For the statement of account and insolvency , an amendment was made and fine reduced shall
not be less that twenty five thousand rupees but which may extend to five lakh rupees for LLP
and for designated partner of such limited liability partnership shall be punishable with fine
which shall not be less than ten thousand rupees but which may extend to one lakh rupees.15
Reduction in deterrence: The aim of criminalizing offenses is to create a deterrent effect and
discourage individuals from engaging in prohibited conduct. If certain offenses are
decriminalized, individuals may perceive that there is a lower risk of punishment for committing
those offenses, which could lead to an increase in the number of offenses committed. This, in
turn, could lead to a negative impact on the integrity of the corporate sector and society as a
whole.
Reducing the scope for investor protection: Some offenses under the Limited Liability
Partnership Act are designed to protect investors, particularly small investors who may not have
the resources to conduct extensive due diligence. Decriminalizing these offenses could limit the
scope for investor protection, leaving them vulnerable to fraudulent activities by unscrupulous
Lack of accountability: Decriminalizing offenses could also create a lack of accountability for
partners and the LLP itself. If certain offenses are no longer subject to criminal sanctions,
partners may not feel as compelled to act in the best interests of the partnership or its investors.
This lack of accountability could also make it difficult to hold partners responsible for any
fraudulent or unethical behavior, which could further erode public trust in the corporate sector.
These criticisms of the decriminalization of offenses under the Limited Liability Partnership Act
are not exhaustive and may vary depending on the specific provisions of the proposed
amendments. It is important to carefully evaluate the potential benefits and drawbacks of
decriminalization and ensure that any changes to the law strike a balance between protecting
investors and encouraging entrepreneurship while also ensuring transparency, accountability,
andsimplicity in the regulatory framework.
CONCLUSION-
So, there has been done plethora of changes in Limited liability Partnership Act, 2008. We can
conclude that Decriminalisation is the main purpose of the bill so to provide most flexible form
of business and give a secured business environment to LLP and partners.This amendment
proposed with the help of Limited Liability Partnership(Amendment) act,2021 will give
immense help to large number of small and large enterprises for the ease of doing business.It is
long-awaited changes. It will provide benefits to traditional firms as well as the reforms will
encourage entrepreneurs.
BIBLIOGRAPHY
1- Analysing LLP (Amendment) Act 2021 ,available at: https://www.irccl.in/amp/analysing-llp-
amendment-act-2021-a-revolutionary-reform-in-the-start-up-era (last visited on April 9, 2023)