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CS Professional · Corporate Restructuring, Valuation and Insolvency · Winding-up by Tribunal under the Companies Act, 2013

Lakshmi & Sons LLP, with 12 partners, has ceased to carry on business. Creditor Rao Metals is owed ₹4,50,000 and served a written demand at the LLP's principal place of business. After three weeks the LLP has not paid, secured or compounded the sum. Which conclusion follows under section 375 of the Companies Act, 2013?

The LLP counts as an unregistered company under section 375. The creditor is owed ₹4,50,000, above one lakh rupees, and the demand went unpaid for three weeks, so the LLP is deemed unable to pay its debts. It can be wound up under the Act, but never voluntarily.

  1. AThe LLP is a registered company and can only be wound up under the ordinary provisions
  2. BThe LLP, being an unregistered company, is deemed unable to pay its debts and may be wound up, but not voluntarilyCorrect
  3. CThe LLP can be wound up voluntarily by its partners under section 375
  4. DThe LLP is deemed unable to pay its debts only if the debt exceeds ₹10 lakh

Explanation

The Explanation to section 375 includes a limited liability partnership within unregistered company. A creditor owed more than one lakh rupees who serves a demand and waits three weeks without payment makes the company deemed unable to pay debts. ₹4,50,000 exceeds ₹1 lakh. Section 375(2) bars voluntary winding up of an unregistered company.

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