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

Priya and Sandeep set up Greenleaf Foods LLP. They say that, as the LLP is a separate legal entity, it can hold property in its own name. Later, Sandeep claims that a warehouse bought with LLP funds belongs to him personally because he signed the sale deed as partner. Which statement is correct?

The warehouse belongs to the LLP. Because an LLP is a separate legal entity, property acquired by it is its own property and not the partners' personal property. Sandeep signed only as the LLP's agent, so he gains no personal ownership.

  1. AThe warehouse is the LLP's property, because property acquired by the LLP is held by it and not by the partners personallyCorrect
  2. BThe warehouse belongs to Sandeep, because he signed the deed
  3. CThe warehouse belongs to Priya and Sandeep jointly in their personal capacity
  4. DThe warehouse belongs to the Registrar of Companies until the LLP is wound up

Explanation

Property acquired by the LLP is the property of the LLP, not of the partners individually, since the LLP is a separate legal entity. Signing the deed as a partner on behalf of the LLP does not make Sandeep the owner. Joint personal ownership is a partnership-firm style idea and does not apply here.

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