Dear Sir,
You need to discuss in detail if any written agreement or terms or conditions are there for your assignment.
Getting notice from a vendor after resignation from LLP
Dear Sir, I have resigned in March 2019 from a LLP partnership, Now I have got a Court notice for Non Payment of one business purchase from a vendor with 2 years of interest. Purchase was made in Dec 2017( I was in the Partnership). I have resigned as I could not continue as we both were not getting anything since 8-9 months. Business was not good we were unable to get payments from some of our customers. I did not have the money to invest. so i proffered to move out. My partner has decided to put in some money and continue the business. I did not take any thing while resigning. But I did not have anything in written assurance from my partner about the liabilities part. Now please suggest what should i do now. Am I liable to pay... How should i proceed with court. Regards
Asked 4 years ago in Business Law
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15 Answers
As the same is limited liability partnership you will only liable to pay the liability mutually. If you have resigned ans the liability is of earlier period you need to answer the same. Just contest the same and reply the notice through lawyer
You are liable for payment of dues during period you were partner of LLP
you have resigned in 2019 but dues are of December 2017
1. Take a back-dated Letter from LLP, that you have resigned from co. and that you will not be liable for any type of pending liabilities or assets of the LLP and that the LLP shall continue and take care of all pending liabilities etc....
2. Use the above letter & your resignation letter, in court to absolve yourself of the claims filed by Vendor or whosoever.
What is the status of LLP ?
LLP cannot survive with one partner. And if for a period of more than six months, the number of partners of the LLP is reduced below two - Compulsory Winding up.
Well, partner is responsible for the doing of all acts of LLP but partner shall not be personally liable for the wrongful act or omission of any other partner.
Now what was the purchase, who dealt with it, and status. ?
We were mutually agreed to separate I without claiming any asset of company, Although Company has some machine which can be sold to fulfill the pending payments. Partner chosen to go alone by adding his wife as partner. At the time of financial crunch I have asked him to sell of some machines to payoff the vendor pending payments but he did not agreed. I could not survive without any money so I opted out. There has been some other disputes between us. That's why all this has not been in written as Mr Hemant has suggested. Still it can not be done. Purchase is done by My partner at that time for Electrical switch gears, We have not received about 16Lac payment for our supply whereas notice is of 5.9lac and interest. Total Purchase of 45lac was made. Company was formed in 2016 and still running with 2 partners. Some payments from our customers are pending since 2017. that is why we could not payoff our vendors. After my resignation, Our customers had paid off some payments but my partner has not paid the pending payments of our vendors resulting this case. As I have understood, Most of you have told me that I am liable 50% of the company debt then can I claim the payments of the same tenure business and the assets now after resignation. Regards
Asked 4 years ago
You can claim 50% in profit of your claim and LLP is different from partnership firm. You are not responsible for partners act.
You can issue notice to your partner to claim your share in the assets of LlLP as on date of your resignation as partner
in case of winding up LLP business after resignation of the partner Assets and liabilities of the partnership form has to be evaluated to fulfill the obligation of the firm as the business has been acquired in 2017 during the period you are the partner so the responsibility of you as a partner exist in case there is any shortfall in completion of the liabilities of the form from the of the firm.
The winding up process of the LLP by the court will only be completed when all the liabilities of the firm is to be made out by the Assets and the contribution of the partners in the form of their liability as per the agreement
- As per section 32 of the Partnership Act, A retiring partner continues to be liable to third parties even if the liability is taken over by the remaining partners.
- Since, at the time of resigning from the firm , there is no written assurance from the continuing partner/s, then legally you are held responsible yourself for the liability arises during your tenure in the said firm.
- Further, you have received the Court notice from the case filed by a Vendor , and not by your continuing partner.
- You should submit a written statement before the Court , after mentioning that you are not responsible for the payment made by the partner , and further the continuing partner should make the payment after selling the machine etc , as it was decided at the time of resignation .
- Further in the absence of any written agreement , you can file a separate suit against the continuing partner , for claiming the benefit of the firm for period of partnership. However, you should go through Partnership deed , if any was executed amongst the partners .
Just contest the same once you get the notice or any case is filed against you.
Ans:
Yes you are liable to the extent of your share in the Partnership.
The transactions taken place at the time when you were the partner in the firm are your liabilities too.
Resignation from a LLP will not automatically discharge the liabilities of the Partner with respect to the LLP. The partner can be held responsible for his actions and liabilities prior to resignation – even after the date of resignation.
Section 28 of the Indian Partnership Act; speaks about that whether a person can be held liable as a partner even if he is not a partner
This section states that a person is held liable as a partner by holding out if such conditions are fulfilled:
- He represented himself or knowingly allowed himself to be represented as a partner.
- Such representation may be by spoken or written words, by conduct or by knowingly permitting others to make such representation by words or conduct.
- The other party on the faith of such representation gave credit to the firm.
A partner by holding out is liable to the person giving credit, to make good the loss which any third party may suffer. However, he does not acquire any claim over the firm, and doesn’t become a ‘real’ partner, but he does become liable for compensation to the third party whom he induced as a partner by holding out and caused him suffer loss or injury due to such representation.
The voluntary representation by the person who is depicting himself as a partner of the firm should have been made, though it is not necessary that the representation must be express, it can be implied too.
In case of Bevan v. National Bank Ltd.,[1] where Mr. MW was the manager of one Mr. B’s business. The business was carried on in the name and style of MW and Co. The Plaintiff who had supplied the goods sued MW to recover his money as one of the partners of the firm, but B contended that he should not be held liable because the style of the firm carried the name only of MW. Court held that he was liable and laid down that where a person carries a business in the name of an individual with the addition of the words “and Co.” and employ that individual as manager of the business to whom the entire management of the business is left, that doesn’t amount to holding out that person as sole owner of the business, it may amount to holding out that he is partner in the business. MW was also liable because by permitting his name to be used in the title of the firm he made a representation that he was a partner and responsible to those who had given credit to the firm on the faith of that representation.
To charge the defendant with liability as a partner on the ground of representation of himself as a partner, it must be proved either that he has represented himself as a partner to the plaintiff or has made such a public representation of himself in a character as to lead the court to conclude that the plaintiff knowing of the representation and believing that the defendant to be a partner gave him credit under that belief.
1. If you have resigned from LLp and the purchase was done for business purpose in name of firm from which you resigned then you are not liable to pay the amount to vendor.
2. You should appear before court and submit your written statement that you have resigned from company and now you are not liable to pay the amount as company is still doing business.
