The clause in terms of which this amount is being demanded from you, would have come into operation only in case 2nd party would have left this LLP within 7 months of the incorporation. In the present case, the said period of 7 months has expired long long back. Thus, this demand is misconceived and legally untenable.
Closure of LLP dispute
Hi, An LLP Rootage Consulting LLP was formed in 2012 with 1st party (90% stake) & 2nd Party (4 people - 2.5% each). There are 2 designated partners Nitin Srivastava (1st party) & Ronak Desai (2nd party). From day one it is non functional & has no bank account registered. There was a clause which both parties have signed which is if 2nd party (4 people) exit the LLP within 7 months of Incorporation then 2nd party will pay 3 Lacs to 1st party. 2nd party has never formally left the company & still being seen as partners. Now the issue is 1st party after almost 6 years is asking for the 3 Lacs from 2nd party & file a closure of the company. I am Ronak Desai 2nd Party & would like to discuss this with a lawyer that in a non functional company, is 2nd party liable to pay 3 lacs because formally no one has resigned??
Asked 8 years ago in Civil Law
9 Answers
Refuse to pay Rs 3 lakhs
2) you never left the LLP and still a partner
Question of payment of Rs 3 lakhs does not arise
Rights and Duties of Partners
Mutual rights and duties of the members are governed by the agreement between the partners or between the LLP and its partners subject to the provisions of the LLP Act 2008. The act provides flexibility to devise the agreement as per their choice. In the absence of any such agreement, the mutual rights and duties shall be governed by the provisions of proposed the LLP Act.
Liability of Partners
The LLP will be liable to the full extent of its assets, with the liability of the partners being limited to their agreed contribution in the LLP which may be of tangible or intangible nature or both tangible and intangible in nature. No partner would be liable on account of the independent or un-authorized actions of other partners or their misconduct. The liabilities of the LLP and partners who are found to have acted with intent to defraud creditors or for any fraudulent purpose shall be unlimited for all or any of the debts or other liabilities of the LLP;
Books of Accounts
The LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar every year;
Winding up of LLP
The winding up of the LLP may be either voluntary or by the Tribunal to be established under the Companies Act, 1956. Till the Tribunal is established, the power in this regard has been given to the High Court;
The tittle itself indicates that is is formed with LIMITED LIABILITY. Let him go to Court. Be assured.
Hello,
No a second party is not liable to pay any amount of money and hence the claim of the first party is bad and has no force of law.
Regards
It is a registered or not
Hi All, In continuation to the above words, I have few more queries:- PLEASE HELP WITH OUR DOUBTS 1) 1st Party's Lawyer is claiming us to give 3 Lacs as per the clause. Though 2nd party has not formally exited, 1st party is trying to prove that 2nd party alone has not worked. Hence they are saying that they are liable to pay the amount. I would like to make a clear point 1st & 2nd party came together with a business idea but it was not practically possible. Hence no one worked. Kindly let us know who is guilty?? 2) 2nd party works in prominent MNCs. 1st party's lawyer is threatening to send legal notices at respective MNCs. They are asking for a mutual settlement. We have received answers from all lawyers above that there is no legal case applicable as 2nd party is still in partnership formally. Will there be any strong legal actions against us...? 3) 2nd party at the time of registering this LLP were in their last year of College. 1st party had done many claims that this idea everyone would earn money. We all together did not take our college placements & felled under 1st party's trap. However there was no progress at all on the Business plan discussed for about an year. Hence we lost hope & trust on 1st party & moved on. Suddenly after 5 years 1st party started threatening us to pay 3 Lacs. Kindly let us know legally who is at fault..? 4) 1st party is continuously threatening that we will be continuously involved in legal battle & every we have to come to court. 5) Can we file a harassment case against 1st party...? Here is the brief Clause in the agreement:- The Capital Contribution of the LLP shall be Rs. 1, 00,000/- (Rupees One lakh only) which shall be contributed by the partners in the following proportions. First Party 90% i.e. Rs 90,000 (Rupees Ninety Thousand only) Second Party 10% i.e . Rs 10,000 (Rupees Ten Thousand only) The Second Party understands that in order to carry on the business of this LLP, an association for minimum 18 months is necessary, therefore agrees to provide a Security Deposit of Rs.1 lacs or a Bank Guarantee of Rs 2 lacs to the First party, for such commitment. It is also understood by the Second Party that in any case, where the association as mentioned in Clause 5 is discontinued for any reason whatsoever, the Security of Rs 1 lacs or the Bank Guarantee of Rs 2 lacs, as the case may be, shall be forfeited. As in special case, it has been mutually agreed and decided that Second Party has flexibility to pay the said security amount within 7 months. However, if Second Party opts for exit before 7 months, with no security deposited as per Clause 6, they are liable to repay the amount of 3 lacs within a period of 1 month of notice period. Please help with the complete scenario. 1st party type of people are there to fool innocent guys like us & get the money. Ronak
Asked 8 years ago
1) you are not guilty as you never exited the LLP
2)do not bow down to black mail tactics . however if you are an employee of MNC you cannot carry on any business on the side
3)ask 1st party to take legal proceedings if he so desires
4)you have continued as partner for more than 18 months . you have not exited the LLP before period of 7 months and hence not liable
Yours is a very big problem and it cannot be solved without personal discussions hence approach administrations of Kaanoon Website to arrange for an advocate for yourself.
You say that the 1st party is demanding Rs. 3 lakhs.
Whether he made this demand by a demand notice or in writing on his own or it was a verbal or oral demand.
If it was by a demand notice, what is the basis or clause or condition that he invoked to claim this amount/sum?
Did you verify that if the clause invoked in the demand notice demanding the sum of Rs. 3 lakhs is finding place in the articles of association?
Whether the LLP is a registered firm?
If it was just a oral demand, did you not ask him that whether the company is still functioning or non-functional and whether the party of the second part have resigned ?
Confirm the above and then revert with more questions about maintainability of the demand made by the first party.
1. If a company did not function at all then there is no question of loss or damages.
Nobody can be held responsible because both the parties have not kept up the commitment.
2. The lawyer's threats are illegal, you can give a strong reply notice against this.
The partnership company has not been dissolved and the party of the first part himself has not taken any initiative to run the company hence his demand through lawyer's notice is illegal and not maintainable in law.
3. Dont worry, nothing is maintainable, he is just trying to extort money illegally which can be challenged properly as per law.
4. Ask him to proceed, dont worry, these threats are nothing but just testing your pulse, dont give in.
5. If his tortures are intolerable, you may issue a legal notice from your side.