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CS Executive · Setting Up of Business, Industrial and Labour Laws · Limited Liability Partnership

Vikram Sethi LLP incurs a debt of Rs 12 lakh to a lender and cannot pay it in full from the LLP's assets of Rs 8 lakh. Partner Vikram has not committed any wrongful act. Which statement is correct?

The debt is the LLP's own obligation and is met out of LLP property. Vikram, having done no wrongful act, is not personally liable for the Rs 4 lakh shortfall merely because he is a partner. Partners are not jointly and severally liable for LLP obligations.

  1. AVikram must personally pay the shortfall of Rs 4 lakh as a partner
  2. BThe liability is met out of the LLP's property, and Vikram is not personally liable solely for being a partnerCorrect
  3. CAll partners are jointly and severally liable for the whole Rs 12 lakh
  4. DThe lender can recover the Rs 4 lakh shortfall from any partner's personal assets

Explanation

An obligation of the LLP, in contract or otherwise, is solely the LLP's obligation, and its liabilities are met out of LLP property. A partner is not personally liable for it solely by reason of being a partner. Since Vikram committed no wrongful act, the Rs 4 lakh shortfall cannot be recovered from him personally.

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