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CA Foundation · Business Laws · The Limited Liability Partnership Act, 2008

Pioneer Tech LLP has two partners, Dev and Esha. Esha dies and Dev continues to carry on the business alone for over six months, knowing that the LLP has only one partner. A creditor claims dues of Rs 8 lakh incurred during that period. Which statement is correct?

Dev is personally liable for obligations incurred after the six-month period, because he knowingly carried on the LLP's business with fewer than two partners. The LLP's separate legal status does not protect him in that situation, and Esha's death does not dissolve the LLP.

  1. ADev is not liable because an LLP is a separate legal entity in all circumstances
  2. BThe LLP is dissolved automatically on Esha's death and no liability remains
  3. CDev is personally liable for the LLP's obligations incurred during the period after six months when the LLP carried on business with only one partnerCorrect
  4. DEsha's legal heirs become liable automatically as partners for the full amount

Explanation

If an LLP carries on business with fewer than two partners for more than six months and the person knows this, that person is personally liable for the LLP's obligations arising after the six-month period. Separate entity status does not shield him here. Death of a partner does not dissolve the LLP, and heirs do not become partners automatically.

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