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CSEET · Business Laws and Management · Elements of Law relating to Partnership and Limited Liability Partnership

Nisha, Omkar and Pooja are partners of an LLP. Their LLP agreement is silent on the mutual rights and duties of the partners regarding one particular matter. Under Section 23 of the LLP Act, 2008, how will that matter be decided?

Where the LLP agreement does not cover a matter, the mutual rights and duties are determined by the provisions on that matter set out in the First Schedule to the LLP Act, 2008, as Section 23(4) provides, not by the Registrar or the Partnership Act.

  1. ABy the provisions on that matter set out in the First ScheduleCorrect
  2. BBy the Indian Partnership Act, 1932 automatically
  3. CBy a vote of the designated partners alone
  4. DBy the Registrar, who must frame the terms

Explanation

Section 23(4) says that in the absence of agreement on any matter, the mutual rights and duties of the partners, and of the LLP and its partners, are determined by the provisions on that matter in the First Schedule. The Partnership Act, designated partner vote or Registrar are not the stated route.

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