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Commencement of winding up by [Tribunal]

Commencement of winding up by [Tribunal] :

441. (1) Where, before the presentation of a petition for the winding up of a [limited liability partnership] by the [Tribunal], a resolution has been passed by the [limited liability partnership] for voluntary winding up, the winding up of the [limited liability partnership] shall be deemed to have commenced at the time of the passing of the resolution, and unless the [Tribunal], on proof of fraud or mistake, thinks fit to direct otherwise, all proceedings taken in the voluntary winding up shall be deemed to have been validly taken.

(2) In any other case, the winding up of a [limited liability partnership] by the [Tribunal] shall be deemed to commence at the time of the presentation of the petition for the winding up.

Powers of [Tribunal] on hearing petition.

443. [(1) On hearing a winding up petition, the Tribunal may within ninety days from the date of presentation of the petition

(a) dismiss it, with or without costs;
(b) make any interim order as it thinks fit;
(c) direct the action for revival or rehabilitation of the limited liability partnership in accordance with procedure laid down in sections 60 to 62 of the Limited Liability Partnership Act, 2008;
(d) appoint a “Liquidator” as provisional liquidator of the limited liability partnership till the making of a winding up order;
(e) make an order for the winding up of the limited liability partnership with or without costs; or
(f) any other orders or orders as may be considered fit:

Provided that the Tribunal shall not refuse to make a winding up order on the ground only that the assets of the limited liability partnership have been mortgaged for an amount equal to or in excess of those assets, or that the limited liability partnership has no assets.]

(2) Where the petition is presented on the ground that it is just and equitable that the [limited liability partnership] should be wound up, the [Tribunal] may refuse to make an order of winding up, if it is of opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the [limited liability partnership] wound up instead of pursuing that other remedy.

(3) [***]

Copy of winding up order to be filed with Registrar.

445. [(1) On the making of a winding up order, it shall be the duty of the petitioner in the winding up proceedings and of the limited liability partnership to file with the Registrar a certified copy of the order, within fifteen days from the date of the making of the order.

If default is made in complying with the foregoing provision, the petitioner, or as the case may require, the limited liability partnership, and the designated partners of the limited liability partnership shall be punishable with fine which may extend to one thousand rupees for each day during which the default continues.]

(1A) In computing the period of [fifteen] days from the date of the making of a winding up order under sub-section (1), the time requisite for obtaining a certified copy of the order shall be excluded.

(2) On the filing of a certified copy of the winding up order, the Registrar shall make a minute thereof in his books relating to the [limited liability partnership], and shall notify in the Official Gazette that such an order has been made.

(3) Such order shall be deemed to be notice of discharge to the officers and employees of the [limited liability partnership], except when the business of the [limited liability partnership] is continued.

Suits stayed on winding up order.

446. (1) When a winding up order has been made or the [liquidator] has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the [limited liability partnership], except by leave of the [Tribunal] and subject to such terms as the [Tribunal] may impose.

(2) The [Tribunal] shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of

(a) any suit or proceeding by or against the [limited liability partnership];
(b) any claim made by or against the [limited liability partnership] (including claims by or against any of its branches in India);
(c) any application made under [section 60] by or in respect of the [limited liability partnership];
(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the [limited liability partnership];

whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the [limited liability partnership], [***].

(3) Any suit or proceeding by or against the [limited liability partnership] which is pending in any [Tribunal] other than that in which the winding up of the [limited liability partnership] is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that [Tribunal].

(4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.

Official Liquidators

Appointment of Official Liquidator.

448. [(1) For the purposes of winding up of a limited liability partnership by the Tribunal or for the purpose of appointment of provisional liquidator, there shall be a “liquidator” who may be either an Official Liquidator or a Liquidator appointed by an order of the Tribunal from the panel of such professionals, firms or bodies corporates consisting of such professionals as may be prescribed, which the Central Government shall constitute for that purpose in such manner as may be prescribed. In the absence of any such order the Official Liquidator shall become or act as “liquidator”.]

(1A) [***]

(2) [***]

Appointment and powers of provisional liquidator.

450. [(1) At any time after the presentation of a winding up petition and before the making of a winding up order, the Tribunal may appoint the Liquidator to be liquidator provisionally.]

(2) Before appointing a provisional liquidator, the [Tribunal] shall give notice to the [limited liability partnership] and give a reasonable opportunity to it to make its representations, if any, unless, for special reasons to be recorded in writing, the [Tribunal] thinks fit to dispense with such notice.

(3) Where a provisional liquidator is appointed by the [Tribunal], the [Tribunal] may limit and restrict his powers by the order appointing him or by a subsequent order; but otherwise he shall have the same powers as a liquidator.

[(4) The liquidator shall cease to hold office as provisional liquidator, and shall become the liquidator, of the limited liability partnership, on a winding up order being made.]

General provisions as to liquidators.

451. (1) The liquidator shall conduct the proceedings in winding up the [limited liability partnership] and perform such duties in reference thereto as the [Tribunal] may impose.

(2) Where the Official Liquidator becomes or acts as liquidator, there shall be paid to the Central Government out of the assets of the [limited liability partnership] such fees as may be prescribed.

(3) The acts of a liquidator shall be valid, notwithstanding any defect that may afterwards be discovered in his appointment or qualification :

Provided that nothing in this sub-section shall be deemed to give validity to acts done by a liquidator after his appointment has been shown to be invalid.

Receiver not to be appointed of assets with liquidator.

453. A receiver shall not be appointed of assets in the hands of a liquidator except by, or with the leave of, the [Tribunal].

Statement of affairs to be made to Official Liquidator.

454. [(1)(i) Every limited liability partnership shall file with the Tribunal a statement of its affairs in such form as may be prescribed along with the petition for winding up;

(ii) Where a limited liability partnership opposes a petition for its winding up, it shall file with the Tribunal a statement of its affairs in such form as may be prescribed within such time as may be specified by the Tribunal;

(iii) Where the Tribunal has made a winding up order or appointed the Liquidator as provisional liquidator, unless the Tribunal in its discretion otherwise orders, there shall be made out and submitted to the Liquidator a statement as to the affairs of the limited liability partnership in such form and containing such particulars as may be prescribed;

(iv) The designated partners and other officers of the limited liability partnership in respect of which a petition for winding up is made, shall ensure that the accounts of the limited liability partnership are completed and audited in accordance with Limited Liability Partnership Rules, 2009 up to the date of the order and submitted to the Tribunal at the cost of the limited liability partnership within 60 days of the date of the winding up order or within such period as may be allowed by the Tribunal.]

(2) [***]

[(3) The statement under clause (iii) of sub-section (1) shall be submitted within twenty-one days from relevant date or within such extended time not exceeding two months (including the period of twenty one days) from the date as the Liquidator or the provisional liquidator or the Tribunal may, for special reasons appoint.]

(4) [***]

(5) If any person, without reasonable excuse, makes default in complying with any of the requirements of this section, he shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to one thousand rupees for every day during which the default continues, or with both.

(5A) The Court [having jurisdiction under this Act], may take cognizance of an offence under sub-section (5) upon receiving a complaint of facts constituting such an offence and trying the offence itself in accordance with the procedure laid down in the Code of Criminal Procedure, 1898 (5 of 1898), for the trial of summons cases by magistrates.

(6) Any person stating himself in writing to be a creditor or [partner] of the [limited liability partnership] shall be entitled, by himself or by his agent, at all reasonable times, on payment of the prescribed fee, to inspect the statement submitted in pursuance of this section, and to a copy thereof or extract therefrom.

(7) Any person untruthfully so stating himself to be a creditor or [partner] shall be guilty of an offence under section 182 of the Indian Penal Code (45 of 1860); and shall, on the application of the [liquidator], be punishable accordingly.

(8) In this section, the expression “the relevant date” means, in a case where a provisional liquidator is appointed, the date of his appointment, and in a case where no such appointment is made, the date of the winding up order.

Report by [liquidator].

455. [(1) Where the Tribunal has made a winding up order, the liquidator shall, within sixty days from the winding up order, submit to the Tribunal, a report containing such particulars as may be prescribed.]

(2) The [liquidator] may also, if he thinks fit, make a further report, or further reports, stating the manner in which the [limited liability partnership] was promoted or formed and whether in his opinion any fraud has been committed by any person in its promotion or formation, or by any officer of the [limited liability partnership] in relation to the [limited liability partnership] since the formation thereof, and any other matters which, in his opinion, it is desirable to bring to the notice of the [Tribunal].

(3) If the [liquidator] states in any such further report that in his opinion a fraud has been committed as aforesaid, the [Tribunal] shall have the further powers provided in section 478.

Custody of [limited liability partnership’s] property.

456. (1) Where a winding up order has been made or where a provisional liquidator has been appointed, the liquidator or the provisional liquidator, as the case may be, shall take into his custody or under his control, all the property, effects and actionable claims to which the [limited liability partnership] is or appears to be entitled.

(1A) For the purpose of enabling the liquidator or the provisional liquidator, as the case may be, to take into his custody or under his control, any property, effects or actionable claims to which the [limited liability partnership] is or appears to be entitled, the liquidator or the provisional liquidator, as the case may be, may by writing request the Chief Presidency Magistrate or the District Magistrate within whose jurisdiction such property, effects or actionable claims or any books of account or other documents of the [limited liability partnership] may be found, to take possession thereof, and the Chief Presidency Magistrate or the District Magistrate may thereupon after such notice as he may think fit to give to any party, take possession of such property, effects, actionable claims, books of account or other documents and deliver possession thereof to the liquidator or the provisional liquidator.

(1B) For the purpose of securing compliance with the provisions of sub-section (1A), the Chief Presidency Magistrate or the District Magistrate may take or cause to be taken such steps and use or cause to be used such force as may in his opinion be necessary.

(2) All the property and effects of the [limited liability partnership] shall be deemed to be in the custody of the [Tribunal] as from the date of the order for the winding up of the [limited liability partnership].

Powers of liquidator.

457. (1) The liquidator in a winding up by the [Tribunal] shall have power, with the sanction of the [Tribunal],

(a) to institute or defend any suit, prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the [limited liability partnership];
(b) to carry on the business of the [limited liability partnership] so far as may be necessary for the beneficial winding up of the [limited liability partnership];
(c) to sell the immovable and movable property and actionable claims of the [limited liability partnership] by public auction or private contract, with power to transfer the whole thereof to any person or body corporate, or to sell the same in parcels;
[(ca) to sell whole of the undertaking of the limited liability partnership as a going concern;]
(d) to raise on the security of the assets of the [limited liability partnership] any money requisite;
(e) to do all such other things as may be necessary for winding up the affairs of the [limited liability partnership] and distributing its assets.

(2) The liquidator in a winding up by the [Tribunal] shall have power

(i) to do all acts and to execute, in the name and on behalf of the [limited liability partnership], all deeds, receipts, and other documents, and for that purpose to use, when necessary, the [limited liability partnership’s seal];
(ia) to inspect the records and returns of the [limited liability partnership] on the files of the Registrar without payment of any fee;
(ii) to prove, rank and claim in the insolvency of any [partner], for any balance against his estate, and to receive dividends in the insolvency, in respect of that balance, as a separate debt due from the insolvent, and rateably with the other separate creditors;
(iii) to draw, accept, make and endorse any bill of exchange, hundi or promissory note in the name and on behalf of the [limited liability partnership], with the same effect with respect to the liability of the [limited liability partnership] as if the bill, hundi, or note had been drawn, accepted, made or endorsed by or on behalf of the [limited liability partnership] in the course of its business;
(iv) to take out, in his official name, letters of administration to any deceased [partner], and to do in his official name any other act necessary for obtaining payment of any money due from a [partner] or his estate which cannot be conveniently done in the name of the [limited liability partnership], and in all such cases, the money due shall, for the purpose of enabling the liquidator to take out the letters of administration or recover the money, be deemed to be due to the liquidator himself :
Provided that nothing herein empowered shall be deemed to affect the rights, duties and privileges of any Administrator-General;
(v) to appoint an agent to do any business which the liquidator is unable to do himself.

(3) The exercise by the liquidator in a winding up by the [Tribunal] of the powers conferred by this section shall be subject to the control of the [Tribunal]; and any creditor or [partner] may apply to the [Tribunal] with respect to the exercise or proposed exercise of any of the powers conferred by this section.

Discretion of liquidator.

458. The [Tribunal] may, by order, provide that the liquidator may exercise any of the powers referred to in sub-section (1) of section 457 without the sanction or intervention of the [Tribunal] :

Provided always that the exercise by the liquidator of such powers shall be subject to the control of the [Tribunal].

Exclusion of certain time in computing periods of limitation.

458A. Notwithstanding anything in the Indian Limitation Act, 1908 (9 of 1908) or in any other law for the time being in force, in computing the period of limitation prescribed for any suit or application in the name and on behalf of a [limited liability partnership] which is being wound up by the [Tribunal], the period from the date of commencement of the winding up of the [limited liability partnership] to the date on which the winding up order is made (both inclusive) and a period of one year immediately following the date of the winding up order shall be excluded.

Exercise and control of liquidator’s powers.

460. (1) Subject to the provisions of [Limited Liability Partnership Act], the liquidator shall, in the administration of the assets of the [limited liability partnership] and the distribution thereof among its creditors, have regard to any directions which may be given by resolution of the creditors or [partners] at any [meeting] or by the committee of inspection.

(2) Any directions given by the creditors or [partners] at any [meeting] shall, in case of conflict, be deemed to override any directions given by the committee of inspection.

(3) The liquidator

(a) may summon [meetings] of the creditors or [partners], whenever he thinks fit, for the purpose of ascertaining their wishes;
(b) shall summon such meetings at such times, as the creditors or [partners], as the case may be, may, by resolution, direct, or whenever requested in writing to do so by not less than one-tenth in value of the creditors or [partners], as the case may be.

(4) The liquidator may apply to the [Tribunal] in the manner prescribed, if any, for directions in relation to any particular matter arising in the winding up.

(5) Subject to the provisions of [Limited Liability Partnership Act], the liquidator shall use his own discretion in the administration of the assets of the [limited liability partnership] and in the distribution thereof among the creditors.

(6) Any person aggrieved by any act or decision of the liquidator may apply to the [Tribunal]; and the [Tribunal] may confirm, reverse or modify the act or decision complained of, and make such further order as it thinks just in the circumstances.

Control of Central Government over liquidators.

463. (1) The Central Government shall take cognizance of the conduct of liquidators of [limited liability partnerships] which are being wound up by the [Tribunal], and, if a liquidator does not faithfully perform his duties and duly observe all the requirements imposed on him by [Limited Liability Partnership Act], [***], the rules thereunder, or otherwise, with respect to the performance of his duties, or if any complaint is made to the Central Government by any creditor or [partner] in regard thereto, the Central Government shall inquire into the matter, and take such action thereon as it may think expedient :

[***]

(2) The Central Government may at any time require any liquidator of a [limited liability partnership] which is being wound up by the [Tribunal] to answer any inquiry in relation to any winding up in which he is engaged, and may, if the Central Government thinks fit, apply to the [Tribunal] to examine him or any other person on oath concerning the winding up.

(3) The Central Government may also direct a local investigation to be made of the books and vouchers of the liquidators.

Committee of inspection

Appointment and composition of committee of inspection.

464. [(1) The Tribunal may, at the time of making an order for the winding up of a limited liability partnership or at any time thereafter, direct that there shall be appointed a committee of inspection to act with the liquidator.]

(2) [***]

(3) [***]

Constitution and proceedings of committee of inspection.

465. [(1)(i) A committee of inspection appointed in pursuance of section 464 shall consist of such number of members not exceeding twelve, as the Tribunal may order, being creditors and partners of the limited liability partnership or persons holding general or special powers of attorney from creditors or partners, in such proportions as may be agreed on by the meeting of creditors and partners or in case of difference of opinion between the meetings, as may be determined by the Tribunal.

(ii) The procedure to be adopted by the committee shall be as may be prescribed.]

(2) to (5) [***]

(6) A [partner] of the committee may resign by notice in writing signed by him and delivered to the liquidator.

(7) If a [partner] of the committee is adjudged an insolvent, or compounds or arranges with his creditors, or is absent from five consecutive meetings of the committee without the leave of those [partners] who, together with himself, represent the creditors or [partners], as the case may be, his office shall become vacant.

(8) A [partner] of the committee may be removed at a meeting of creditors if he represents creditors, or at a meeting of [partners] if he represents [partners], by a [resolution] of which seven days’ notice has been given, stating the object of the meeting.

(9) On a vacancy occurring in the committee, the liquidator shall forthwith summon a meeting of creditors or of [partners], as the case may require, to fill the vacancy; and the meeting may, by resolution, reappoint the same, or appoint another, creditor or [partner] to fill the vacancy:

Provided that if the liquidator, having regard to the position in the winding up, is of the opinion that it is unnecessary for the vacancy to be filled, he may apply to the [Tribunal] and the [Tribunal] may make an order that the vacancy shall not be filled, or shall not be filled except in such circumstances as may be specified in the order.

(10) The continuing [partners] of the committee, if not less than two, may act notwithstanding any vacancy in the committee.

General powers of [Tribunal] in case of winding up by [Tribunal]

Power of [Tribunal] to stay winding up.

466. (1) The [Tribunal] may at any time after making a winding up order, on the application either of the [liquidator] or of any creditor or [partner], and on proof to the satisfaction of the [Tribunal] that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and conditions as the [Tribunal] thinks fit.

(2) On any application under this section, the [Tribunal] may, before making an order, require the [liquidator] to furnish to the [Tribunal] a report with respect to any facts or matters which are in his opinion relevant to the application.

(3) A copy of every order made under this section shall forthwith be forwarded by the [limited liability partnership], or otherwise as may be prescribed, to the Registrar, who shall make a minute of the order in his books relating to the [limited liability partnership].

Settlement of list of [partner] and application of assets.

467. (1) As soon as may be after making a winding up order, the [Tribunal] shall settle a list of [partner], [in such manner as may be prescribed] and shall cause the assets of the [limited liability partnership] to be collected and applied in discharge of its liabilities :

[***]

(2) [***]

Delivery of property to liquidator.

468. The [Tribunal] may, at any time after making a winding up order, require any [partner] for the time being on the list of [partners], and any trustee, receiver, banker, agent, officer or other employee of the [limited liability partnership], to pay, deliver, surrender or transfer forthwith, or within such time as the [Tribunal] directs, to the liquidator, any money, property or books and papers in his custody or under his control to which the [limited liability partnership] is prima facie entitled.

Payment into bank of moneys due to [limited liability partnership].

471. (1) The [Tribunal] may order any [partner], purchaser or other person from whom any money is due to the [limited liability partnership] to pay the money into the public account of India in the Reserve Bank of India instead of to the liquidator.

(2) Any such order may be enforced in the same manner as if the [Tribunal] had directed payment to the liquidator.

Power to exclude creditors not proving in time.

474. The [Tribunal] may fix a time or times within which creditors are to prove their debts or claims, or to be excluded from the benefit of any distribution made before those debts or claims are proved.

Power to order costs.

476. The [Tribunal] may, in the event of the assets being insufficient to satisfy the liabilities, make an order for the payment out of the assets, of the costs, charges and expenses incurred in the winding up, in such order of priority inter se as the [Tribunal] thinks just.

Power to summon persons suspected of having property of [limited liability partnership], etc.

477. (1) The [Tribunal] may, at any time after the appointment of a provisional liquidator or the making of a winding up order, summon before it any officer of the [limited liability partnership] or person known or suspected to have in his possession any property or books or papers, of the [limited liability partnership], or known or suspected to be indebted to the [limited liability partnership], or any person whom the [Tribunal] deems capable of giving information concerning the promotion, formation, trade, dealings, property, books or papers, or affairs of the [limited liability partnership].

(2) The [Tribunal] may examine any officer or person so summoned on oath concerning the matters aforesaid, either by word of mouth or on written interrogatories; and may, in the former case, reduce his answers to writing and require him to sign them.

(3) The [Tribunal] may require any officer or person so summoned to produce any books and papers in his custody or power relating to the [limited liability partnership]; but, where he claims any lien on books or papers produced by him, the production shall be without prejudice to that lien, and the [Tribunal] shall have jurisdiction in the winding up to determine all questions relating to that lien.

(4) If any officer or person so summoned, after being paid or tendered a reasonable sum for his expenses, fails to appear before the [Tribunal] at the time appointed, not having a lawful impediment (made known to the [Tribunal] at the time of its sitting and allowed by it), the [Tribunal] may cause him to be apprehended and brought before the [Tribunal] for examination.

(5) If, on his examination, any officer or person so summoned admits that he is indebted to the [limited liability partnership], the [Tribunal] may order him to pay to the provisional liquidator or, as the case may be, the liquidator at such time and in such manner as to the [Tribunal] may seem just, the amount in which he is indebted, or any part thereof, either in full discharge of the whole amount or not, as the [Tribunal] thinks fit, with or without costs of the examination.

(6) If, on his examination, any such officer or person admits that he has in his possession any property belonging to the [limited liability partnership], the [Tribunal] may order him to deliver to the provisional liquidator or, as the case may be, the liquidator, that property or any part thereof, at such time, in such manner and on such terms as to the [Tribunal] may seem just.

(7) Orders made under sub-sections (5) and (6) shall be executed in the same manner as decrees for the payment of money or for the delivery of property under the Code of Civil Procedure, 1908 (5 of 1908), respectively.

(8) Any person making any payment or delivery in pursuance of an order made under sub-section (5) or sub-section (6) shall by such payment or delivery be, unless otherwise directed by such order, discharged from all liability whatsoever in respect of such debt or property.

Power to order public examination of [partners], [designated partners], etc.

478. (1) When an order has been made for winding up a [limited liability partnership] by the [Tribunal], and the [liquidator] has made a report to the [Tribunal] under [Limited Liability Partnership Act], stating that in his opinion a fraud has been committed by any person in the promotion or formation of the [limited liability partnership], or by any officer of the [limited liability partnership] in relation to the [limited liability partnership] since its formation, the [Tribunal] may, after considering the report, direct that that person or officer shall attend before the [Tribunal] on a day appointed by it for that purpose, and be publicly examined as to the promotion or formation or the conduct of the business of the [limited liability partnership], or as to his conduct and dealings as an officer thereof.

(2) The [liquidator] shall take part in the examination, and for that purpose may, if specially authorized by the [Tribunal] in that behalf, employ such legal assistance as may be sanctioned by the [Tribunal].

[(3) Any creditor or partner may also take part in the examination either personally or by any chartered accountants or company secretaries or cost accountants or legal practitioners entitled to appear before the Tribunal.]

(4) The [Tribunal] may put such questions to the person examined as it thinks fit.

(5) The person examined shall be examined on oath, and shall answer all such questions as the [Tribunal] may put, or allow to be put, to him.

(6) A person ordered to be examined under this section

(a) shall, before his examination, be furnished at his own cost with a copy of the [liquidator’s report]; and
(b) [***]

(7)(a) If any such person applies to the [Tribunal] to be exculpated from any charges made or suggested against him, it shall be the duty of the [liquidator] to appear on the hearing of the application and call the attention of the [Tribunal] to any matters which appear to the [liquidator] to be relevant.

(b) If the [Tribunal], after hearing any evidence given or witnesses called by the [liquidator], grants the application, the [Tribunal] may allow the applicant such costs as it may think fit.

(8) Notes of the examination shall be taken down in writing, and shall be read over to or by, and signed by, the person examined; and may thereafter be used in evidence against him, and shall be open to the inspection of any creditor or [partner] at all reasonable times.

(9) The [Tribunal] may, if it thinks fit, adjourn the examination from time to time.

[(10) An examination under this section may, if the Tribunal so directs, be held before any authority or person authorized by the Tribunal].

(11) The powers of the [Tribunal] under this section as to the conduct of the examination, but not as to costs, may be exercised by the [authority or person] before whom the examination is held in pursuance of sub-section (10).

Power to arrest absconding [partner].

479. At any time either before or after making a winding up order, the [Tribunal] may, on proof of probable cause for believing that a [partner] is about to quit India or otherwise to abscond, or is about to remove or conceal any of his property, for the purpose of evading payment of calls or of avoiding examination respecting the affairs of the [limited liability partnership], cause

(a) the [partner] to be arrested and safely kept until such time as the [Tribunal] may order; and
(b) his books and papers and movable property to be seized and safely kept until such time as the [Tribunal] may order.

Dissolution of [limited liability partnership].

481. (1) When the affairs of a [limited liability partnership] have been completely wound up or when the [Tribunal] is of the opinion that the liquidator cannot proceed with the winding up of a [limited liability partnership] for want of funds and assets or for any other reason whatsoever and it is just and reasonable in the circumstances of the case that an order of dissolution of the [limited liability partnership] should be made, the [Tribunal] shall make an order that the [limited liability partnership] be dissolved from the date of the order, and the [limited liability partnership] shall be dissolved accordingly.

(2) A copy of the order shall, within thirty days from the date thereof, be forwarded by the liquidator to the Registrar who shall make in his books a minute of the dissolution of the [limited liability partnership].

(3) If the liquidator makes default in forwarding a copy as aforesaid, he shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues.

Enforcement of and appeal from orders

Order made in any Court to be enforced by other Courts.

482. Any order made by a Court for, or in the course of, winding up a [limited liability partnership] shall be enforceable at any place in India, other than that over which such Court has jurisdiction, by the Court which would have had jurisdiction in respect of the [limited liability partnership] if its registered office had been situate at such other place, and in the same manner in all respects as if the order had been made by that Court.

Appeals from orders.

483. Appeals from any order made, or decision given in the matter of the winding up of a [limited liability partnership] by the Court shall lie to the same Court to which, in the same manner in which, and subject to the same conditions under which, appeals lie from any order or decision of the Court in cases within its ordinary jurisdiction.

Circumstances in which [limited liability partnership] may be wound up voluntarily.

484. [(1) Any limited liability partnership may be wound up voluntarily if the limited liability partnership passes a resolution to wind up the limited liability partnership with approval of at least three-fourths of total number of its partners:

Provided that if the limited liability partnership has creditors, whether secured or unsecured, then such winding up shall not take place unless approval of such creditors takes place in such manner as may be prescribed.]

(2) [***]

Commencement of voluntary winding up.

486. A voluntary winding up shall be deemed to commence at the time when the resolution for voluntary winding up is passed.

Consequences of voluntary winding up

Effect of voluntary winding up on status of [limited liability partnership].

487. In the case of a voluntary winding up, the [limited liability partnership] shall, from the commencement of the winding up, cease to carry on its business, except so far as may be required for the beneficial winding up of such business :

Provided that [status of the limited liability partnership and its powers] shall continue until it is dissolved.

Declaration of solvency

Declaration of solvency in case of proposal to wind up voluntarily.

488. [(1) Where it is proposed to wind up a limited liability partnership voluntarily, the majority of its designated partners (being not less than two) shall make a declaration in such form and manner and within such time as may be prescribed to the effect that the limited liability partnership has no debt or that it will be able to pay its debts in full within such period not exceeding one year from the commencement of the winding up as may be specified in the declaration.]

(2) [***]

(3) Any [designated partner] of a [limited liability partnership] making a declaration under this section without having reasonable grounds for the opinion that the [limited liability partnership] will be able to pay its debts in full within the period specified in the declaration, shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to fifty thousand rupees, or with both.

(4) If the [limited liability partnership] is wound up in pursuance of a resolution passed within the period [prescribed in sub-section (1)] after the making of the declaration, but its debts are not paid or provided for in full within the period specified in the declaration, it shall be presumed, until the contrary is shown, that the [designated partner] did not have reasonable grounds for his opinion.

(5) [***].

Power of liquidator to accept shares, etc., as consideration for sale of property of [limited liability partnership].

494. [(1) Where a limited liability partnership (the transferor limited liability partnership) is proposed to be, or is in the course of being, wound up voluntarily and the whole or any part of its business or property is proposed to be transferred or sold to any limited liability partnership (the transferee limited liability partnership), the LLP Liquidator of the transferor limited liability partnership may, with the sanction of a resolution of the transferor limited liability partnership passed by at least three-fourths of total number of partners conferring on LLP liquidator either a general authority or an authority in respect of any particular arrangement,

(a) receive, by way of compensation wholly or in part for the transfer or sale, cash, securities, policies, or other like interests in the transferee limited liability partnership, for distribution among the partners of the transferor limited liability partnership; or
(b) enter into any other arrangement whereby the partners of the transferor limited liability partnership may, in lieu of receiving cash, securities, policies or other like interest or in addition thereto, participate in the profits of, or receive any other benefit from, the transferee limited liability partnership:
Provided that no such arrangement shall be entered into without the consent of the secured creditors, if any.]

[(2) Any transfer, sale or other arrangement in pursuance of this section shall be binding on all the partners of the transferor limited liability partnership.]

[(3) Any partner of the transferor limited liability partnership who did not vote in favour of the resolution and expressed his dissent therefrom in writing addressed to the LLP Liquidator and left at the registered office of the limited liability partnership within seven days after the passing of the resolution, may require the LLP Liquidator to purchase his interest at a price to be determined by agreement or the registered valuer.]

[(4) If the LLP Liquidator decides to purchase such partner’s interest, the purchase money, raised by him in such manner as may be determined by a resolution passed by three-fourths of total number of partners, shall be paid before the limited liability partnership is dissolved.]

(5) & (6) [***]

Final meeting and dissolution.

497. [(1) As soon as the affairs of a limited liability partnership are fully wound up, the LLP Liquidator shall prepare final winding up accounts, explanations and a report on the conduct of affairs of the limited liability partnership during winding up in such form and manner as may be prescribed, showing how the property and assets of the limited liability partnership have been disposed of and its debt fully discharged or discharged to the satisfaction of the creditors and thereafter seek approval of the partners or the creditors of the limited liability partnership, as the case may be, on the said report and the final winding up accounts and explanation in the meeting of partners or creditors:

Provided that no such meeting of creditors is required if there were no creditors before commencement of voluntary winding up or creditors are paid their dues in such manner as may be prescribed.]

(2) [***]

[(3) Within two weeks after the meeting of partners and of creditors, if required, the LLP liquidator shall

(a) send to the Registrar a copy of the final winding up accounts, explanation and report; and
(b) file an application with the Tribunal along with a copy of the final winding up accounts, explanations and report, for passing an order of dissolution of the limited liability partnership.

If the copy is not so sent or application not so made, the LLP Liquidator shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues.]

(4) & (5) [***]

[(6) If the Tribunal is satisfied, after considering the application, final winding up accounts, explanations and report of the LLP Liquidator, that the process of winding up has been duly followed, the Tribunal may pass an order, within sixty days of the receipt of such application, accounts, explanations and report, that the limited liability partnership shall stand dissolved.]

(6A), (6B) & (7) [***]

Distribution of property of [limited liability partnership].

511. Subject to the provisions of [Limited Liability Partnership Act] as to preferential payments, the assets of a [limited liability partnership] shall, on its winding up, be applied in satisfaction of its liabilities pari passu and, subject to such application, shall, unless the [limited liability partnership agreement] otherwise provide, be distributed among the [partners] according to their rights and interests in the [limited liability partnership].

Application of section 454 to voluntary winding up.

511A. The provisions of section 454 shall, so far as may be, apply to every voluntary winding up as they apply to the winding up by the [Tribunal] except that references to

(a) the [Tribunal] shall be omitted;
(b) the [***] Liquidator or the provisional liquidator shall be construed as references to the liquidator; and
(c) the “relevant date” shall be construed as references to the date of commencement of the winding up.

Powers and duties of liquidator in voluntary winding up.

512. [(1) The LLP Liquidator may, with the sanction of a resolution by three-fourths of total number of partners of the limited liability partnership, and prior approval of the Tribunal in the case of a voluntary winding up,

(i) pay any class of creditors in full;
(ii) make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, against the limited liability partnership, or whereby the limited liability partnership may be rendered liable; or
(iii) compromise any money due from partners including outstanding, unrealized or unrecovered contribution, debt, and liability capable of resulting in a debt, and any claim, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or alleged to subsist between the limited liability partnership and a partner or alleged partner or other debtor or person apprehending liability to the limited liability partnership, and all questions in any way relating to or affecting the assets or liabilities or the winding up of the limited liability partnership, on such terms as may be agreed, and take any security for the discharge of any such debt, liability or claim, and give a complete discharge in respect thereof.]

[(2) Any creditor or partner may apply in the manner prescribed to the Tribunal with respect to any exercise or proposed exercise of powers by the LLP Liquidator under this sub-section, and the Tribunal shall after giving a reasonable opportunity to such applicant and the LLP Liquidator, pass such orders as it may think fit.]

(3) The [LLP liquidator] shall pay the debts of the [limited liability partnership] and shall adjust the rights of the [partners] among themselves.

(4) When several [LLP liquidators] are appointed, any power given by [Limited Liability Partnership Act] may be exercised by such one or more of them as may be determined at the time of their appointment, or, in default of such determination, by any number of them not being less than two.

Corrupt inducement affecting appointment as liquidator.

514. Any person who gives, or agrees or offers to give, to any [partner] or creditor of a [limited liability partnership] any gratification whatever with a view to

(a) securing his own appointment or nomination as the [limited liability partnership’s LLP liquidator] ; or
(b) securing or preventing the appointment or nomination of some person other than himself, as the [limited liability partnership’s LLP liquidator];

shall be punishable with fine which may extend to ten thousand rupees.

Power of [Tribunal] to appoint and remove liquidator in voluntary winding up.

515. [(1) If from any cause whatever, there is no LLP liquidator acting, the Tribunal may appoint any person from the panel as a LLP liquidator on such fees as may be determined by it.]

[(2) The Tribunal may, on cause shown remove a LLP liquidator and appoint any other person from the panel, as a LLP liquidator in place of the removed LLP liquidator.]

[(3) The Tribunal may also appoint or remove a LLP liquidator on the application made by the Registrar in this behalf.]

(4) [***]

Arrangement when binding on [limited liability partnership] and creditors.

517. (1) Any arrangement entered into between a [limited liability partnership] about to be, or in the course of being, wound up and its creditors shall, subject to the right of appeal under this section, be binding on the [limited liability partnership] and on the creditors if it is sanctioned by a [resolution passed by three-fourth of total number of partners] of the [limited liability partnership] and acceded to by three-fourths in number and value of the creditors.

(2) Any creditor or [partner] may, within three weeks from the completion of the arrangement, appeal to the [Tribunal] against it and the [Tribunal] may thereupon, as it thinks just, amend, vary, confirm or set aside the arrangement.

Power to apply to [Tribunal] to have questions determined or powers exercised.

518. (1) The [LLP liquidator] or any [partner] or creditor may apply to the [Tribunal]

(a) to determine any question arising in the winding up of a [limited liability partnership]; or
(b) to exercise, as respects [enforcing realization of outstanding contribution], the staying of proceedings or any other matter, all or any of the powers which the [Tribunal] might exercise if the [limited liability partnership] were being wound up by the [Tribunal].

(2) The [LLP liquidator] or any creditor or [partner] may apply to the [Tribunal] [***] for an order setting aside any attachment, distress or execution put into force against the estate or effects of the [limited liability partnership] after the commencement of the winding up.

(3) [***]

(4) The [Tribunal], if satisfied on an application under sub-section (1) or (2) that the determination of the question or the required exercise of power or the order applied for will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit, or may make such other order on the application as it thinks just.

(5) A copy of an order staying the proceedings in the winding up, made by virtue of this section, shall forthwith be forwarded by the [limited liability partnership], or otherwise as may be prescribed, to the Registrar,who shall make a minute of the order in his books relating to the [limited liability partnership].

Application of liquidator to [Tribunal] for public examination of [partners], [designated partners], etc.

519. (1) The [LLP liquidator] may make a report to the [Tribunal] stating that in his opinion a fraud has been committed by any person in the promotion or formation of the [limited liability partnership] or by any officer of the [limited liability partnership] in relation to the [limited liability partnership] since its formation; and the [Tribunal] may, after considering the report, direct that that person or officer shall attend before the [Tribunal] on a day appointed by it for that purpose, and be publicly examined as to the promotion or formation or the conduct of the business of the [limited liability partnership], or as to his conduct and dealings as officer thereof.

[(2) The provisions of section 478 as applicable to winding up of limited liability partnerships by Tribunal shall apply in relation to any examination directed under sub-section (1).]

Debts of all descriptions to be admitted to proof.

528. In every winding up (subject, in the case of [insolvent limited liability partnerships], to the application in accordance with the provisions of this Act of the law of insolvency), all debts payable on a contingency, and all claims against the [limited liability partnership], present or future, certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the [limited liability partnership], a just estimate being made, so far as possible, of the value of such debts or claims as may be subject to any contingency, or may sound only in damages, or for some other reason may not bear a certain value.

Application of insolvency rules in winding up of insolvent [limited liability partnerships].

529. (1) In the winding up of an insolvent [limited liability partnership], the same rules shall prevail and be observed with regard to

(a) debts provable;
(b) the valuation of annuities and future and contingent liabilities; and
(c) the respective rights of secured and unsecured creditors;

as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent :

Provided that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favour of the workmen to the extent of the workmen’s portion therein, and, where a secured creditor, instead of relinquishing his security and proving his debt, opts to realise his security,

(a) the [liquidator or LLP liquidator] shall be entitled to represent the workmen and enforce such charge;
(b) any amount realised by the [liquidator or LLP liquidator] by way of enforcement of such charge shall be applied rateably for the discharge of workmen’s dues; and
(c) so much of the debt due to such secured creditor as could not be realised by him by virtue of the foregoing provisions of this proviso or the amount of the workmen’s portion in his security, whichever is less, shall rank pari passu with the workmen’s dues for the purposes of section 529A.

(2) All persons who in any such case would be entitled to prove for and receive dividends out of the assets of the [limited liability partnership], may come in under the winding up, and make such claims against the [limited liability partnership] as they respectively are entitled to make by virtue of this section :

Provided that if a secured creditor instead of relinquishing his security and proving for his debt proceeds to realise his security, he shall be liable to pay his portion of the expenses incurred by the [liquidator or LLP liquidator] (including a provisional [liquidator or LLP liquidator], if any) for the preservation of the security before its realization by the secured creditor.

Explanation : For the purposes of this proviso, the portion of expenses incurred by the [liquidator or LLP liquidator] for the preservation of a security which the secured creditor shall be liable to pay shall be the whole of the expenses less an amount which bears to such expenses the same proportion as the workmen’s portion in relation to the security bears to the value of the security.

(3) For the purposes of this section, section 529A and section 530,

(a) “workmen”, in relation to a [limited liability partnership], means the employees of the [limited liability partnership], being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947);
(b) “workmen’s dues”, in relation to a [limited liability partnership], means the aggregate of the following sums due from the [limited liability partnership] to its workmen, namely :
(i) all wages or salary including wages payable for time or piece work and salary earned wholly or in part by way of commission of any workman, in respect of services rendered to the [limited liability partnership] and any compensation payable to any workman under any of the provisions of the Industrial Disputes Act, 1947 (14 of 1947);
(ii) all accrued holiday remuneration becoming payable to any workman, or in the case of his death to any other person in his right, on the termination of his employment before, or by the effect of, the winding up order or resolution;
(iii) unless the [limited liability partnership] is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another [limited liability partnership], or unless the [limited liability partnership] has, at the commencement of the winding up, under such a contract with insurers as is mentioned in section 14 of the Workmen’s Compensation Act, 1923 (8 of 1923), rights capable of being transferred to and vested in the workman, all amounts due in respect of any compensation or liability for compensation under the said Act in respect of the death or disablement of any workman of the [limited liability partnership];
(iv) all sums due to any workman from a provident fund, a pension fund, a gratuity fund or any other fund for the welfare of the workmen, maintained by the [limited liability partnership];
(c) “workmen’s portion”, in relation to the security of any secured creditor of a [limited liability partnership], means the amount which bears to the value of the security the same proportion as the amount of the workmen’s dues bears to the aggregate of
(i) the amount of workmen’s dues; and
(ii) the amounts of the debts due to the secured creditors.

Illustration

The value of the security of a secured creditor of a [limited liability partnership] is Rs. 1,00,000. The total amount of the workmen’s dues is Rs. 1,00,000. The amount of the debts due from the [limited liability partnership] to its secured creditors is Rs. 3,00,000. The aggregate of the amount of workmen’s dues and of the amounts of debts due to secured creditors is Rs. 4,00,000. The workmen’s portion of the security is, therefore, one-fourth of the value of the security, that is Rs. 25,000.

Overriding preferential payments.

529A. (1) Notwithstanding anything contained in any other provision of [Limited Liability Partnership Act] or any other law for the time being in force, in the winding up of a [limited liability partnership]

(a) workmen’s dues; and
(b) debts due to secured creditors to the extent such debts rank under clause (c) of the proviso to sub-section (1) of section 529 pari passu with such dues,

shall be paid in priority to all other debts.

(2) The debts payable under clause (a) and clause (b) of sub-section (1) shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions.

Preferential payments.

530. (1) In a winding up, subject to the provisions of section 529A, there shall be paid in priority to all other debts

(a) all revenues, taxes, cesses and rates due from the [limited liability partnership] to the Central or a State Government or to a local authority at the relevant date as defined in clause (c) of sub-section (8), and having become due and payable within the twelve months next before that date;
(b) all wages or salary (including wages payable for time or piece work and salary earned wholly or in part by way of commission) of any employee, in respect of services rendered to the [limited liability partnership] and due for a period not exceeding four months within the twelve months next before the relevant date, subject to the limit specified in sub-section (2);
(c) all accrued holiday remuneration becoming payable to any employee, or in the case of his death to any other person in his right, on the termination of his employment before, or by the effect of, the winding up order or resolution;
(d) unless the [limited liability partnership] is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another [limited liability partnership], all amounts due, in respect of contributions payable during the twelve months next before the relevant date, by the [limited liability partnership] as the employer of any persons, under the Employees’ State Insurance Act, 1948 (34 of 1948), or any other law for the time being in force;
(e) unless the [limited liability partnership] is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another [limited liability partnership], or unless the [limited liability partnership] has, at the commencement of the winding up, under such a contract with insurers as is mentioned in section 14 of the Workmen’s Compensation Act, 1923 (8 of 1923), rights capable of being transferred to and vested in the workman, all amounts due in respect of any compensation or liability for compensation under the said Act in respect of the death or disablement of any employee of the [limited liability partnership];
(f) all sums due to any employee from a provident fund, a pension fund, a gratuity fund or any other fund for the welfare of the employees, maintained by the [limited liability partnership]; and
(g) the expenses of any investigation held in pursuance of [section 43], in so far as they are payable by the [limited liability partnership].

(2) The sum to which priority is to be given under clause (b) of sub-section (1), shall not, in the case of any one claimant, exceed such sum as may be notified by the Central Government in the Official Gazette.

(3) Where any compensation under the Workmen’s Compensation Act, 1923 (8 of 1923) is a weekly payment, the amount due in respect thereof shall, for the purposes of clause (e) of sub-section (1), be taken to be the amount of the lump sum for which the weekly payment could, if redeemable, be redeemed if the employer made an application for that purpose under the said Act.

(4) Where any payment has been made to any employee of a [limited liability partnership],

(i) on account of wages or salary; or
(ii) to him, or in the case of his death, to any other person in his right, on account of accrued holiday remuneration,

out of money advanced by some person for that purpose, the person by whom the money was advanced shall, in a winding up, have a right of priority in respect of the money so advanced and paid, up to the amount by which the sum in respect of which the employee or other person in his right, would have been entitled to priority in the winding up has been diminished by reason of the payment having been made.

(5) The foregoing debts shall

(a) rank equally among themselves and be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions; and
(b) so far as the assets of the [limited liability partnership] available for payment of general creditors are insufficient to meet them, have priority over the claims of holders of debentures under any floating charge created by the [limited liability partnership], and be paid accordingly out of any property comprised in or subject to that charge.

(6) Subject to the retention of such sums as may be necessary for the costs and expenses of the winding up, the foregoing debts shall be discharged forthwith so far as the assets are sufficient to meet them, and in the case of the debts to which priority is given by clause (d) of sub-section (1), formal proof thereof shall not be required except in so far as may be otherwise prescribed.

(7) In the event of a landlord or other person distraining or having distrained on any goods or effects of the [limited liability partnership] within three months next before the date of a winding up order, the debts to which priority is given by this section shall be a first charge on the goods or effects so distrained on, or the proceeds of the sale thereof :

Provided that, in respect of any money paid under any such charge, the landlord or other person shall have the same rights of priority as the person to whom the payment is made.

(8) For the purposes of this section

(a) any remuneration in respect of a period of holiday or of absence from work through sickness or other good cause shall be deemed to be wages in respect of services rendered to the [limited liability partnership] during that period;
(b) the expression “accrued holiday remuneration” includes, in relation to any person, all sums which, by virtue either of his contract of employment or of any enactment (including any order made or direction given under any enactment), are payable on account of the remuneration which would, in the ordinary course, have become payable to him in respect of a period of holiday, had his employment with the [limited liability partnership] continued until he became entitled to be allowed the holiday;
(bb) the expression “employee” does not include a workman; and
(c) the expression “the relevant date” means
(i) in the case of a [limited liability partnership] ordered to be wound up compulsorily, the date of the appointment (or first appointment) of a provisional liquidator, or if no such appointment was made, the date of the winding up order, unless in either case the [limited liability partnership] had commenced to be wound up voluntarily before that date; and
(ii) in any case where sub-clause (i) does not apply, the date of the passing of the resolution for the voluntary winding up of the [limited liability partnership].

(9) [***]

Effect of winding up on antecedent and other transactions

Fraudulent preference.

531. (1) Any transfer of property, movable or immovable, delivery of goods, payment, execution or other act relating to property made, taken or done by or against a [limited liability partnership] within six months before the commencement of its winding up which, had it been made, taken or done by or against an individual within three months before the presentation of an insolvency petition on which he is adjudged insolvent, would be deemed in his insolvency a fraudulent preference, shall in the event of the [limited liability partnership] being wound up, be deemed a fraudulent preference of its creditors and be invalid accordingly :

[***]

(2) For the purposes of sub-section (1), the presentation of a petition for winding up in the case of a winding up by or subject to the supervision of the [Tribunal], and the passing of a resolution for winding up in the case of a voluntary winding up, shall be deemed to correspond to the act of insolvency in the case of an individual.

Avoidance of voluntary transfer.

531A. Any transfer of property, movable or immovable, or any delivery of goods, made by a [limited liability partnership], not being a transfer or delivery made in the ordinary course of its business or in favour of a purchaser or encumbrancer in good faith and for valuable consideration, if made within a period of one year before the presentation of a petition for winding up by or subject to the supervision of the [Tribunal] or the passing of a resolution for voluntary winding up of the [limited liability partnership], shall be void against the [liquidator or LLP liquidator].

Transfers for benefit of all creditors to be void.

532. Any transfer or assignment by a [limited liability partnership] of all its property to trustees for the benefit of all its creditors shall be void.

Liabilities and rights of certain fraudulently preferred persons.

533. (1) Where, in the case of a [limited liability partnership] which is being wound up, anything made, taken or done [***] is invalid under section 531 as a fraudulent preference of a person interested in property mortgaged or charged to secure the [limited liability partnership’s debt], then (without prejudice to any rights or liabilities arising apart from this provision), the person preferred shall be subject to the same liabilities, and shall have the same rights, as if he had undertaken to be personally liable as surety for the debt, to the extent of the mortgage or charge on the property or the value of his interest, whichever is less.

(2) The value of the said person’s interest shall be determined as at the date of the transaction constituting the fraudulent preference, and shall be determined as if the interest were free of all encumbrances other than those to which the mortgage or charge for the [limited liability partnership’s debt] was then subject.

(3) On any application made to the [Tribunal] with respect to any payment on the ground that the payment was a fraudulent preference of a surety or guarantor, the [Tribunal] shall have jurisdiction to determine any questions with respect to the payment arising between the person to whom the payment was made and the surety or guarantor and to grant relief in respect thereof, notwithstanding that it is not necessary so to do for the purposes of the winding up, and for that purpose may give leave to bring in the surety or guarantor as a third party as in the case of a suit for the recovery of the sum paid.

This sub-section shall apply, with the necessary modifications, in relation to transactions other than the payment of money as it applies in relation to payments of money.

Effect of floating charge.

534. Where a [limited liability partnership] is being wound up, a floating charge on the undertaking or property of the [limited liability partnership] created within the twelve months immediately preceding the commencement of the winding up, shall, unless it is proved that the [limited liability partnership] immediately after the creation of the charge was solvent, be invalid, except to the amount of any cash paid to the [limited liability partnership] at the time of, or subsequently to the creation of, and in consideration for, the charge, together with interest on that amount at the rate of five per cent per annum or such other rate as may for the time being be notified by the Central Government in this behalf in the Official Gazette :

[***]

Disclaimer of onerous property in case of a [limited liability partnership] which is being wound up.

535. (1) Where any part of the property of a [limited liability partnership] which is being wound up consists of

(a) land of any tenure, burdened with onerous covenants;
(b) shares or stock in [limited liability partnerships];
(c) any other property which is unsaleable or is not readily saleable, by reason of its binding the possessor thereof either to the performance of any onerous act or to the payment of any sum of money; or
(d) unprofitable contracts;

the [liquidator or LLP liquidator] of the [limited liability partnership], notwithstanding that he has endeavoured to sell or has taken possession of the property, or exercised any act of ownership in relation thereto, or done anything in pursuance of the contract, may, with the leave of the [Tribunal] and subject to the provisions of this section, by writing signed by him, at any time within twelve months after the commencement of the winding up or such extended period as may be allowed by the [Tribunal], disclaim the property :

Provided that, where any such property has not come to the knowledge of the [liquidator or LLP liquidator] within one month after the commencement of the winding up, the power of disclaiming the property may be exercised at any time within twelve months after he has become aware thereof or such extended period as may be allowed by the [Tribunal].

(2) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interest, and liabilities of the [limited liability partnership], and the property of the [limited liability partnership], in or in respect of the property disclaimed, but shall not, except so far as is necessary for the purpose of releasing the [limited liability partnership] and the property of the [limited liability partnership] from liability, affect the rights or liabilities of any other person.

(3) The [Tribunal], before or on granting leave to disclaim, may require such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such other order in the matter as the [Tribunal] thinks just.

(4) The [liquidator or LLP liquidator] shall not be entitled to disclaim any property in any case where an application in writing has been made to him by any person interested in the property requiring him to decide whether he will or will not disclaim, and the [liquidator or LLP liquidator] has not, within a period of twenty-eight days after the receipt of the application or such extended period as may be allowed by the [Tribunal], given notice to the applicant that he intends to apply to the [Tribunal] for leave to disclaim; and in case the property is a contract, if the [liquidator or LLP liquidator], after such an application as aforesaid, does not within the said period or extended period disclaim the contract, he shall be deemed to have adopted it.

(5) The [Tribunal] may, on the application of any person who is, as against the [liquidator or LLP liquidator], entitled to the benefit or subject to the burden of a contract made with the [limited liability partnership], make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise as the [Tribunal] thinks just; and any damages payable under the order to any such person may be proved by him as a debt in the winding up.

(6) The [Tribunal] may, on an application by any person who either claims any interest in any disclaimed property or is under any liability not discharged by [Limited Liability Partnership Act] in respect of any disclaimed property, and after hearing any such persons as it thinks fit, make an order for the vesting of the property in, or the delivery of the property to, any person entitled thereto or to whom it may seem just that the property should be delivered by way of compensation for such liability as aforesaid, or a trustee for him, and on such terms as the [Tribunal] thinks just; and on any such vesting order being made, the property comprised therein shall vest accordingly in the person therein named in that behalf without any conveyance or assignment for the purpose :

Provided that, where the property disclaimed is of a leasehold nature, the [Tribunal] shall not make a vesting order in favour of any person claiming under the [limited liability partnership], whether as under-lessee or as mortgagee or holder of a charge by way of demise, except upon the terms of making that person

(a) subject to the same liabilities and obligations as those to which the [limited liability partnership] was subject under the lease in respect of the property at the commencement of the winding up; or
(b) if the [Tribunal] thinks fit, subject only to the same liabilities and obligations as if the lease had been assigned to that person at that date;

and in either event (if the case so requires) as if the lease had comprised only the property comprised in the vesting order; and any mortgagee or under-lessee declining to accept a vesting order upon such terms shall be excluded from all interest in and security upon the property, and, if there is no person claiming under the [limited liability partnership] who is willing to accept an order upon such terms, the [Tribunal] shall have power to vest the estate and interest of the [limited liability partnership] in the property in any person liable, either personally or in a representative character, and either alone or jointly with the [limited liability partnership], to perform the lessee’s covenants in the lease, freed and discharged from all estates, encumbrances and interests created therein by the [limited liability partnership].

(7) Any person injured by the operation of a disclaimer under this section shall be deemed to be a creditor of the [limited liability partnership] to the amount of the compensation or damages payable in respect of the injury, and may accordingly prove the amount as a debt in the winding up.

Avoidance of transfers, etc., after commencement of winding up.

536. (1) In the case of a voluntary winding up, any transfer of [contribution] in the [limited liability partnership], not being a transfer made to or with the sanction of the [LLP liquidator], and any alteration in the status of the [partners] of the [limited liability partnership], made after the commencement of the winding up, shall be void.

(2) In the case of a winding up by [the Court], any disposition of the property (including actionable claims) of the [limited liability partnership], and any transfer of [contribution] in the [limited liability partnership] or alteration in the status of its [partners], made after the commencement of the winding up, shall, unless the [Tribunal] otherwise orders, be void.

Avoidance of certain attachments, executions, etc., in winding up by [***] [Tribunal].

537. (1) Where any [limited liability partnership] is being wound up by [***] the [Tribunal]

(a) any attachment, distress or execution put in force, without leave of the [Tribunal], against the estate or effects of the [limited liability partnership], after the commencement of the winding up; or
(b) any sale held, without leave of the [Tribunal], of any of the properties or effects of the [limited liability partnership] after such commencement;

shall be void.

(2) Nothing in this section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government.

Offences by officers of [limited liability partnerships] in liquidation.

538. (1) If any person, being a past or present officer of a [limited liability partnership] which, at the time of the commission of the alleged offence, is being wound up, whether by [***] the [Tribunal] or voluntarily, or which is subsequently ordered to be wound up by the [Tribunal] or which subsequently passes a resolution for voluntary winding up,

(a) does not, to the best of his knowledge and belief, fully and truly discover to the [liquidator or LLP liquidator] all the property, movable and immovable, of the [limited liability partnership], and how and to whom and for what consideration and when the [limited liability partnership] disposed of any part thereof, except such part as has been disposed of in the ordinary course of the business of the [limited liability partnership];
(b) does not deliver up to the [liquidator or LLP liquidator], or as he directs, all such part of the movable and immovable property of the [limited liability partnership] as is in his custody or under his control, and which he is required by law to deliver up;
(c) does not deliver up to the [liquidator or LLP liquidator], or as he directs, all such books and papers of the [limited liability partnership] as are in his custody or under his control and which he is required by law to deliver up;
(d) within the twelve months next before the commencement of the winding up or at any time thereafter, conceals any part of the property of the [limited liability partnership] to the value of one hundred rupees or upwards, or conceals any debt due to or from the [limited liability partnership];
(e) within the twelve months next before the commencement of the winding up or at any time thereafter, fraudulently removes any part of the property of the [limited liability partnership] to the value of one hundred rupees or upwards;
(f) makes any material omission in any statement relating to the affairs of the [limited liability partnership];
(g) knowing or believing that a false debt has been proved by any person under the winding up, fails for a period of one month to inform the [liquidator or LLP liquidator] thereof;
(h) after the commencement of the winding up, prevents the production of any book or paper affecting or relating to the property or affairs of the [limited liability partnership];
(i) within the twelve months next before the commencement of the winding up or at any time thereafter, conceals, destroys, mutilates or falsifies, or is privy to the concealment, destruction, mutilation or falsification of, any book or paper affecting or relating to, the property or affairs of the [limited liability partnership];
(j) within the twelve months next before the commencement of the winding up or at any time thereafter makes, or is privy to the making of, any false entry in any book or paper affecting or relating to, the property or affairs of the [limited liability partnership];
(k) within the twelve months next before the commencement of the winding up or at any time thereafter, fraudulently parts with, alters or makes any omission in, or is privy to the fraudulent parting with, altering or making of any omission in, any book or paper affecting or relating to the property or affairs of the [limited liability partnership];
(l) after the commencement of the winding up or at any meeting of the creditors of the [limited liability partnership] within the twelve months next before the commencement of the winding up, attempts to account for any part of the property of the [limited liability partnership] by fictitious losses or expenses;
(m) within the twelve months next before the commencement of the winding up or at any time thereafter, by any false representation or other fraud, obtains on credit, for or on behalf of the [limited liability partnership], any property which the [limited liability partnership] does not subsequently pay for;
(n) within the twelve months next before the commencement of the winding up or at any time thereafter, under the false pretence that the [limited liability partnership] is carrying on its business, obtains on credit, for or on behalf of the [limited liability partnership], any property which the [limited liability partnership] does not subsequently pay for;
(o) within the twelve months next before the commencement of the winding up or at any time thereafter, pawns, pledges or disposes of any property of the [limited liability partnership] which has been obtained on credit and has not been paid for, unless such pawning, pledging or disposing is in the ordinary course of the business of the [limited liability partnership]; or
(p) is guilty of any false representation or other fraud for the purpose of obtaining the consent of the creditors of the [limited liability partnership] or any of them, to an agreement with reference to the affairs of the [limited liability partnership] or to the winding up;

he shall be punishable, in the case of any of the offences mentioned in clauses (m), (n) and (o), with imprisonment for a term which may extend to five years, or with fine, or with both, and, in the case of any other offence, with imprisonment for a term which may extend to two years, or with fine, or with both:

Provided that it shall be a good defence

(i) to a charge under any of the clauses (b), (c), (d), (f), (n) and (o), if the accused proves that he had no intent to defraud; and
(ii) to a charge under any of the clauses (a), (h), (i) and (j), if he proves that he had no intent to conceal the true state of affairs of the [limited liability partnership] or to defeat the law.

(2) Where any person pawns, pledges or disposes of any property in circumstan-ces which amount to an offence under clause (o) of sub-section (1), every person who takes in pawn or pledge or otherwise receives the property, knowing it to be pawned, pledged, or disposed of in such circumstances as aforesaid, shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both.

(3) For the purposes of this section, the expression “officer” shall include any person in accordance with whose directions or instructions the [designated partners] of the [limited liability partnership] have been accustomed to act.

Penalty for falsification of books.

539. If with intent to defraud or deceive any person, any officer or [partner] of a [limited liability partnership] which is being wound up

(a) destroys, mutilates, alters, falsifies or secrets, or is privy to the destruction, mutilation, alteration, falsification or secreting of, any books, papers or securities; or
(b) makes, or is privy to the making of, any false or fraudulent entry in any register, book of account or document belonging to the [limited liability partnership];

he shall be punishable with imprisonment for a term which may extend to seven years, and shall also be liable to fine.

Penalty for frauds by officers.

540. If any person, being at the time of the commission of the alleged offence an officer of a [limited liability partnership] which is subsequently ordered to be wound up by the [Tribunal] or which subsequently passes a resolution for voluntary winding up,

(a) has, by false pretences or by means of any other fraud, induced any person to give credit to the [limited liability partnership]; or
(b) with intent to defraud creditors of the [limited liability partnership], has made or caused to be made any gift or transfer of or charge on, or has caused or connived at the levying of any execution against, the property of the [limited liability partnership]; or
(c) with intent to defraud creditors of the [limited liability partnership], has concealed or removed any part of the property of the [limited liability partnership] since the date of any unsatisfied judgment or order for payment of money obtained against the [limited liability partnership], or within two months before that date;

he shall be punishable with imprisonment for a term which may extend to two years and shall also be liable to fine.

Liability where proper accounts not kept.

541. (1) Where a [limited liability partnership] is being wound up, if it is shown that proper books of account were not kept by the [limited liability partnership] throughout the period of two years immediately preceding the commencement of the winding up, or the period between the incorporation of the [limited liability partnership] and the commencement of the winding up, whichever is shorter, every officer of the [limited liability partnership] who is in default shall, unless he shows that he acted honestly and that in the circumstances in which the business of the [limited liability partnership] was carried on, the default was excusable, be punishable with imprisonment for a term which may extend to one year.

(2) For the purposes of sub-section (1), it shall be deemed that proper books of account have not been kept in the case of any [limited liability partnership], if there have not been kept

(a) such books or accounts as are necessary to exhibit and explain the transactions and financial position of the business of the [limited liability partnership], including books containing entries made from day to day in sufficient detail of all cash received and all cash paid; and
(b) where the business of the [limited liability partnership] has involved dealings in goods, statements of the annual stock takings and (except in the case of goods sold by way of ordinary retail trade) of all goods sold and purchased, showing the goods and the buyers and the sellers thereof in sufficient detail to enable those goods and those buyers and sellers to be identified.

Liability for fraudulent conduct of business.

542. (1) If in the course of the winding up of a [limited liability partnership], it appears that any business of the [limited liability partnership] has been carried on, with intent to defraud creditors of the [limited liability partnership] or any other persons, or for any fraudulent purpose, the [Tribunal], on the application of [the liquidator or the LLP liquidator] or any creditor or [partner] of the [limited liability partnership], may, if it thinks it proper so to do, declare that any persons who were knowingly parties to the carrying on of the business in the manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the [limited liability partnership] as the [Tribunal] may direct.

On the hearing of an application under this sub-section, [the liquidator or the LLP liquidator], as the case may be, may himself give evidence or call witnesses.

(2) (a) Where the [Tribunal] makes any such declaration, it may give such further directions as it thinks proper for the purpose of giving effect to that declaration.

(b) In particular, the [Tribunal] may make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the [limited liability partnership] to him, or on any mortgage or charge or any interest in any mortgage or charge on any assets of the [limited liability partnership] held by or vested in him, or any person on his behalf, or any person claiming as assignee from or through the person liable or any person acting on his behalf.

(c) The [Tribunal] may, from time to time, make such further order as may be necessary for the purpose of enforcing any charge imposed under this sub-section.

(d) For the purpose of this sub-section, the expression “assignee” includes any person to whom or in whose favour, by the directions of the person liable, the debt, obligation, mortgage or charge was created, issued or transferred or the interest was created, but does not include an assignee for valuable consideration (not including consideration by way of marriage) given in good faith and without notice of any of the matters on the ground of which the declaration is made.

(3) Where any business of a [limited liability partnership] is carried on with such intent or for such purpose as is mentioned in sub-section (1), every person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to fifty thousand rupees, or with both.

(4) This section shall apply, notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the declaration is to be made.

Power of [Tribunal] to assess damages against delinquent [designated partners], etc.

543. (1) If in the course of winding up a [limited liability partnership], it appears that any person who has taken part in the promotion or formation of the [limited liability partnership], or any past or present [designated partner], [liquidator, LLP liquidator or officer] of the [limited liability partnership]

(a) has misapplied, or retained, or become liable or accountable for, any money or property of the [limited liability partnership]; or
(b) has been guilty of any misfeasance or breach of trust in relation to the [limited liability partnership];

the [Tribunal] may, on the application of [the liquidator, or the LLP liquidator], or of any creditor or [partner], made within the time specified in that behalf in sub-section (2), examine into the conduct of the person, [designated partner] [liquidator, LLP liquidator or officer] aforesaid, and compel him to repay or restore the money or property or any part thereof respectively, with interest at such rate as the [Tribunal] thinks just, or to contribute such sum to the assets of the [limited liability partnership] by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust, as the [Tribunal] thinks just.

(2) An application under sub-section (1) shall be made within [one] year from the date of the order for winding up, or of the first appointment of the liquidator in the winding up, or of the misapplication, retainer, misfeasance or breach of trust, as the case may be, whichever is longer.

(3) This section shall apply notwithstanding that the matter is one for which the person concerned may be criminally liable.

Liability under sections 542 and 543 to extend to partners or directors in firm or [limited liability partnership].

544. Where a declaration under section 542 or an order under section 543 is or may be made in respect of [a firm, limited liability partnership or body corporate], the [Tribunal] shall also have power to make a declaration under section 542, or pass an order under section 543, as the case may be, in respect of any person who was at the relevant time a partner in that firm or [a designated partner of that limited liability partnership or a director of that body corporate].

Prosecution of delinquent officers and [partners] of [limited liability partnership].

545. (1) If it appears to the [Tribunal] in the course of a winding up by , or subject to the supervision of, the [Tribunal], that any past or present officer, or any [partner], of the [limited liability partnership] has been guilty of any offence in relation to the [limited liability partnership], the [Tribunal] may, either on the application of any person interested in the winding up or of its own motion, direct the liquidator either himself to prosecute the offender or to refer the matter to the Registrar.

(2) If it appears to the [LLP liquidator] in the course of a voluntary winding up that any past or present officer, or any [partner], of the [limited liability partnership] has been guilty of any offence in relation to the [limited liability partnership], he shall forthwith report the matter to the Registrar and shall furnish to him such information and give to him such access to and facilities for inspecting and taking copies of any books and papers, being information or books and papers in the possession or under the control of the [LLP liquidator] and relating to the matter in question, as the Registrar may require.

(3) Where any report is made under sub-section (2) to the Registrar, he may, if he thinks fit, refer the matter to the Central Government for further inquiry.

The Central Government shall thereupon investigate the matter and may, if it thinks it expedient, apply to the [Tribunal] for an order conferring on any person designated by the Central Government for the purpose, with respect to the [limited liability partnership] concerned, all such powers of investigating the affairs of the [limited liability partnership] as are provided by [Limited Liability Partnership Act] in the case of a winding up by the [Tribunal].

(4) If on any report to the Registrar under sub-section (2), it appears to him that the case is not one in which proceedings ought to be taken by him, he shall inform the [LLP liquidator] accordingly, and thereupon, subject to the previous sanction of the [Tribunal], the [LLP liquidator] may himself take proceedings against the offender.

(5) If it appears to the [Tribunal] in the course of a voluntary winding up that any past or present officer, or any [partner], of the [limited liability partnership] has been guilty as aforesaid, and that no report with respect to the matter has been made by the [LLP liquidator] to the Registrar under sub-section (2), the [Tribunal] may, on the application of any person interested in the winding up or of its own motion, direct the [LLP liquidator] to make such a report, and on a report being made accordingly, the provisions of this section shall have effect as though the report had been made in pursuance of the provisions of sub-section (2).

(6) If, where any matter is reported or referred to the Registrar under this section, he considers that the case is one in which a prosecution ought to be instituted, he shall report the matter to the Central Government; and that Government may, after taking such legal advice as it thinks fit, direct the Registrar to institute proceedings:

Provided that no report shall be made by the Registrar under this sub-section without first giving the accused person an opportunity of making a statement in writing to the Registrar and of being heard thereon.

(7) When any proceedings are instituted under this section, it shall be the duty of the [liquidator or LLP liquidator] and of every officer and agent of the [limited liability partnership] past and present (other than the defendant in the proceedings) to give all assistance in connection with the prosecution which he is reasonably able to give.

For the purposes of this sub-section, the expression “agent”, in relation to a [limited liability partnership], shall be deemed to include any banker or legal adviser of the [limited liability partnership] and any person employed by the [limited liability partnership] as auditor.

(8) If any person fails or neglects to give assistance in the manner required by sub-section (7), the [Tribunal] may, on the application of the Registrar, direct that person to comply with the requirements of that sub-section.

(9) Where any such application is made with respect to a [liquidator or LLP liquidator], the [Tribunal] may, unless it appears that the failure or neglect was due to the [liquidator or LLP liquidator] not having in his hands sufficient assets of the [limited liability partnership] to enable him so to do, direct that the costs of the application shall be borne by the [liquidator or LLP liquidator] personally.

Miscellaneous provisions

Liquidator to exercise certain powers subject to sanction.

546. (1) The [liquidator or LLP liquidator, in the case of voluntary winding up] may

(a) with the sanction of the [Tribunal], when the [limited liability partnership] is being wound up by or subject to the supervision of the [Tribunal]; and
(b) with the sanction of a [resolution passed by three-fourths of total number of partners] of the [limited liability partnership], in the case of a voluntary winding up,
(i) pay any classes of creditors in full;
(ii) make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages, against the [limited liability partnership], or whereby the [limited liability partnership] may be rendered liable; or
(iii) compromise any [obligation to contribute or liability against such obligation], debt, and liability capable of resulting in a debt, and any claim, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or alleged to subsist between the [limited liability partnership] and a [partner] or alleged [partner] or other debtor or person apprehending liability to the [limited liability partnership], and all questions in any way relating to or affecting the assets or liabilities or the winding up of the [limited liability partnership], on such terms as may be agreed, and take any security for the discharge of [any such obligation], debt, liability or claim, and give a complete discharge in respect thereof.

(1A) Notwithstanding anything contained in sub-section (1), in the case of a winding up by the [Tribunal], [the Central Government may make rules] providing that the liquidator may, under such circumstances, if any, and subject to such conditions, restrictions and limitations, if any, as may be specified in the rules, exercise any of the powers referred to in sub-clause (ii) or sub-clause (iii) of sub-section (1) without the sanction of the [Tribunal].

(2) In the case of a voluntary winding up, the exercise by the [LLP liquidator], in the case of voluntary winding up of the powers conferred by sub-section (1) shall be subject to the control of the [Tribunal].

(3) Any creditor or [partner] may apply to the [Tribunal] with respect to any exercise or proposed exercise of any such power.

Notification that a [limited liability partnership] is in liquidation.

547. (1) Where a [limited liability partnership] is being wound up, whether by or under the supervision of the [Tribunal] or voluntarily, every invoice, order for goods or business letter issued by or on behalf of the [limited liability partnership] or a [liquidator or LLP liquidator] of the [limited liability partnership], or a receiver or manager of the property of the [limited liability partnership], being a document on or in which the name of the [limited liability partnership] appears, shall contain a statement that the [limited liability partnership] is being wound up.

(2) If default is made in complying with this section, the [limited liability partnership], and every one of the following persons who wilfully authorises or permits the default, namely, any officer of the [limited liability partnership], any [liquidator or LLP liquidator] of the [limited liability partnership] and any receiver or manager, shall be punishable with fine which may extend to five thousand rupees.

Books and papers of [limited liability partnership] to be evidence.

548. Where a [limited liability partnership] is being wound up, all books and papers of the [limited liability partnership] and of the [liquidators or LLP liquidators] shall, as between the [partners] of the [limited liability partnership], be prima facie evidence of the truth of all matters purporting to be therein recorded.

Inspection of books and papers by creditors and [partners].

549. (1) At any time after the making of an order for the winding up of a [limited liability partnership] by or subject to the supervision of the [Tribunal], any creditor or [partner] of the [limited liability partnership] may, if the [Central Government], by rules prescribed so permit and in accordance with and subject to such rules but not further or otherwise, inspect the books and papers of the [limited liability partnership].

(2) Nothing in sub-section (1) shall be taken as excluding or restricting any rights conferred by any law for the time being in force

(a) on the Central or a State Government; or
(b) on any authority or officer thereof; or
(c) on any person acting under the authority of any such Government or of any such authority or officer.

Disposal of books and papers of [limited liability partnership].

550. (1) When the affairs of a [limited liability partnership] have been completely wound up and it is about to be dissolved, its books and papers and those of the [liquidator or LLP liquidator] may be disposed of as follows, that is to say :

(a) in the case of a winding up by [***] the [Tribunal], in such manner as the [Tribunal] directs;
[(b) in the case of voluntary winding up, in such manner as the limited liability partnership approves by three-fourths of total number of partners with the prior approval of the secured creditors, if any].

(2) After the expiry of five years from the dissolution of the [limited liability partnership], no responsibility shall rest on the [limited liability partnership], the [liquidator or LLP liquidator], or any person to whom the custody of the books and papers has been committed, by reason of any book or paper not being forthcoming to any person claiming to be interested therein.

(3) The Central Government may, by rules,

(a) prevent for such period (not exceeding five years from the dissolution of the [limited liability partnership]) as the Central Government thinks proper, the destruction of the books and papers of a [limited liability partnership] which has been wound up and of its [liquidator or LLP liquidator]; and
(b) enable any creditor or [partner] of the [limited liability partnership] to make representations to the Central Government in respect of the matters specified in clause (a) and to appeal to the [Tribunal] from any direction which may be given by the Central Government in the matter.

(4) If any person acts in contravention of any such rules or of any direction of the Central Government thereunder, he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to fifty thousand rupees, or with both.

Information as to pending liquidations.

551. [(1)(i) The LLP liquidator in the case of voluntary winding up, and the liquidator, in the case of winding up by Tribunal, shall prepare, every year, a statement of accounts as on 31st March in such form and manner containing such particulars with respect to proceedings in, and position of, the liquidation, as may be prescribed within two months from 31st March, and file after being audited:

(a) in case of winding up by the Tribunal, in the Tribunal; and
(b) in case of voluntary winding up, with the Registrar

within such time as may be prescribed:

Provided that where the LLP liquidator or liquidator has not, during the period of account, received or paid any sum of money on account of the assets of the limited liability partnership, he shall file an affidavit of no receipt or payment for the period.

(ii) The accounts shall be audited by a person qualified to act as auditor of the limited liability partnership and for the purpose of the audit, the LLP liquidator or liquidator shall furnish the auditor such information as the auditor may require:

Provided that no such audit is required where the transaction during the period is for Rs. 50,000 or less.

(iii) Where the audit of the accounts is not required under this section, the statements of accounts shall contain a declaration by the LLP liquidator or liquidator that the books and accounts are properly maintained and funds have been utilized only for the purpose of winding up of the affairs of the limited liability partnership.

Explanation:”Year” in relation to the statement means period from first day of April of the year to the 31st day of March following year.]

(2) When the statement is filed in [Tribunal] under clause (a) of sub-section (1), a copy shall simultaneously be filed with the Registrar and shall be kept by him along with the other records of the [limited liability partnership].

(2A) [***]

(3) Any person stating himself in writing to be a creditor or [partner] of the [limited liability partnership] shall be entitled, by himself or by his agent, at all reasonable times, on payment of the prescribed fee, to inspect the statement, and to receive a copy thereof or an extract therefrom.

(4) Any person untruthfully stating himself to be a creditor or [partner] for the above purpose shall be deemed to be guilty of an offence under section 182 of the Indian Penal Code (45 of 1860), and shall, on the application of the [liquidator or LLP liquidator], be punishable accordingly.

(5) If a [LLP liquidator or liquidator] fails to comply with any of requirements of this section, he shall be punishable with fine which may extend to five thousand rupees for every day during which the failure continues :

Provided that if the [LLP liquidator or liquidator] makes wilful default in causing the statement referred to in sub-section (1) to be audited by a person qualified to act as auditor of the [limited liability partnership], the [LLP liquidator or liquidator] shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees, or with both.

[***] Liquidator to make payments into the public account of India.

552. Every [***] Liquidator shall, in such manner and at such times as may be prescribed, pay the moneys received by him as liquidator of any [limited liability partnership], into the public account of India [***].

Voluntary liquidator to make payments into Scheduled Bank.

553. [(1) Every LLP liquidator shall pay, in such manner as may be prescribed, the monies received by him in his capacity as such in a Scheduled Bank to the credit of a special bank account opened by him in that behalf and called –

“the Liquidation Account of……………. LLP”:

Provided that if the Tribunal is satisfied that for the purpose of carrying on the business of the limited liability partnership or of obtaining advances or for any other reason, it is to the advantage of the creditors or partners that the LLP liquidator should have an account with any other bank, the Tribunal may authorise the LLP liquidator to make his payments into or out of such other bank as the Tribunal may select; and thereupon those payments shall be made in the prescribed manner and at the prescribed times into or out of such other bank.

(2) If any LLP Liquidator at any time retains for more than ten days a sum exceeding fifty thousand rupees or such other amount as the Tribunal may, on the application of the LLP Liquidator, authorize him to retain, then, unless he explains the retention to the satisfaction of the Tribunal, he shall

(a) pay interest on the amount so retained in excess, at the rate of twelve per cent per annum and also pay such penalty as may be determined by the Tribunal;
(b) be liable to pay any expenses occasioned by reason of his default; and
(c) also be liable to have all or such part of his remuneration, as the Tribunal may consider just, disallowed, or may also be removed from his office by the Tribunal.]

Liquidator not to pay moneys into private banking account.

554. [Neither the liquidator nor LLP Liquidator of a limited liability partnership] shall pay any moneys received by him in his capacity as such into any private banking account.

Unpaid dividends and undistributed assets to be paid into the [LLP Liquidation Account].

555. [(1) If the Liquidator or LLP Liquidator has in its hands or under his control any money representing

(a) any money representing dividend payable to any creditor or creditors, he shall transfer, within five days of such money being due, in a separate special bank account known as the “Dividend Account of M/s. ………… LLP (in liquidation)”.
(b) any money representing assets refundable to any partner or partners, he shall transfer, within five days of such money being due, in a separate special bank account known as the “Distributable Asset Account of M/s. ………….. LLP (in liquidation)”.

(2) If the amounts which have been transferred to the “Dividend Account of M/s. ………….. LLP (in liquidation)” or “Distributable Asset Account of M/s. ………… LLP (in liquidation)” but have not been paid or claimed within six months from the date of transfer of such amount, the Liquidator or LLP Liquidator shall, within seven days from the date of expiry of the said period of six months, transfer the said amount into the Public Account of India in a separate account to be known as the “LLP Liquidation Account].

(3) The [LLP liquidator or liquidator] shall, when making any payment referred to in sub-sections (1) and (2), furnish to such officer as the Central Government may appoint in this behalf, a statement in the prescribed form, setting forth, in respect of all sums included in such payment, the nature of the sums, the names and last known addresses of the persons entitled to participate therein, the amount to which each is entitled and the nature of his claim thereto, and such other particulars as may be prescribed.

(4) The [LLP liquidator or liquidator] shall be entitled to a receipt from the [Scheduled Bank] for any money paid to it under sub-sections (1) and (2); and such receipt shall be an effectual discharge of the [LLP liquidator or liquidator] in respect thereof.

(5) Where the [limited liability partnership] is being wound up by the [Tribunal], the liquidator shall make the payments referred to in sub-sections (1) and (2) by transfer from the account referred to in section 552.

(6) Where the [limited liability partnership] is being wound up voluntarily [by] or subject to the supervision of the [Tribunal], the [LLP liquidator or liquidator] shall, when filing a statement in pursuance of sub-section (1) of section 551, indicate the sum of money which is payable to the [Scheduled Bank] under sub-sections (1) and (2) of this section which he has had in his hands or under his control during the six months preceding the date to which the said statement is brought down, and shall, within fourteen days of the date of filing the said statement, pay that sum into the [LLP Liquidation Account].

(7) (a) Any person claiming to be entitled to any money paid into the [LLP Liquidation Account] [***] may apply to the [Tribunal] for an order for payment thereof, and the [Tribunal], if satisfied that the person claiming is entitled, may make an order for the payment to that person of the sum due :

Provided that before making such an order, the [Tribunal] shall cause a notice to be served on such officer as the Central Government may appoint in this behalf, calling on the officer to show cause within one month from the date of the service of the notice why the order should not be made.

(b) [***]

(8) Any money paid into the [LLP liquidation Account] in pursuance of this section, which remains unclaimed thereafter for a period of [seven] years, shall be transferred to the general revenue account of the Central Government; but a claim to any money so transferred may be preferred under sub-section (7) and shall be dealt with as if such transfer had not been made, the order, if any, for payment on the claim being treated as an order for refund of revenue.

(9) Any [LLP liquidator or liquidator] retaining any money which should have been paid by him into the [LLP Liquidation Account] under this section shall

(a) pay interest on the amount retained at the rate of twelve per cent per annum, and also pay such penalty as may be determined by the Registrar :
Provided that the Central Government may in any proper case remit either in part or in whole the amount of interest which the [LLP liquidator or liquidator] is required to pay under this clause;
(b) be liable to pay any expenses occasioned by reason of his default; and
(c) where the winding up is by or under the supervision of the [Tribunal], also be liable to have all or such part of his remuneration as the [Tribunal] may think just to be disallowed, and to be removed from his office by the [Tribunal].

Enforcement of duty of [liquidator or LLP liquidator] to make returns, etc.

556. (1) If any [liquidator or LLP liquidator] who has made any default in filing, delivering or making any return, account or other document, or in giving any notice which he is by law required to file, deliver, make or give, fails to make good the default within fourteen days after the service on him of a notice requiring him to do so, the [Tribunal] may, on an application made to the [Tribunal] by any [partner] or creditor of the [limited liability partnership] or by the Registrar, make an order directing the [liquidator or LLP liquidator] to make good the default within such time as may be specified in the order.

(2) Any such order may provide that all costs of and incidental to the application shall be borne by the [liquidator or LLP liquidator].

(3) Nothing in this section shall be taken to prejudice the operation of any enactment imposing penalties on a [liquidator or LLP liquidator] in respect of any such default as aforesaid.

[Tribunal] or person before whom affidavit may be sworn.

558. (1) Any affidavit required to be sworn under the provisions, or for the purposes, of this Part may be sworn

(a) in India, before any Court [or the Tribunal], Judge or person lawfully authorised to take and receive affidavits; and
(b) in any other country, either before any [Tribunal], Judge or person lawfully authorised to take and receive affidavits in that country or before an Indian Consul or Vice-Consul.

Explanation : [Omitted by the J & K (Extension of Laws) Act, 1956.]

(2) All Courts [, Tribunals], Judges, Justices, Commissioners and persons acting judicially in India shall take judicial notice of the seal, stamp or signature, as the case may be, of any such Court [, Tribunal], Judge, person, Consul or Vice-Consul, attached, appended or subscribed to any such affidavit or to any other document to be used for the purposes of this Part.

Power of [Tribunal] to declare dissolution of [limited liability partnership] void.

559. (1) Where a [limited liability partnership] has been dissolved, whether in pursuance of this Part or of [section 62] or otherwise, the [Tribunal] may at any time within two years of the date of the dissolution, on application by the [liquidator or LLP liquidator] of the [limited liability partnership] or by any other person who appears to the [Tribunal] to be interested, make an order, upon such terms as the [Tribunal] thinks fit, declaring the dissolution to have been void; and thereupon such proceedings may be taken as might have been taken if the [limited liability partnership] had not been dissolved.

(2) It shall be the duty of the person on whose application the order was made, within thirty days after the making of the order or such further time as the [Tribunal] may allow, to file a certified copy of the order with the Registrar who shall register the same; and if such person fails so to do, he shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues.

Power of Registrar to strike defunct [limited liability partnership] off register.

560. (1) to (5) [***]

(6) If a [limited liability partnership], or any [partner] or creditor thereof, feels aggrieved by the [limited liability partnership] having been struck off the register [under section 75], the [Tribunal], on an application made by the [limited liability partnership], [partner] or creditor before the expiry of [five] years from the publication in the Official Gazette of the [notice striking off the name of the limited liability partnership from the register], may, if satisfied that the [limited liability partnership] was, at the time of the striking off, carrying on business or in operation or otherwise that it is just that the [limited liability partnership] be restored to the register, order the name of the [limited liability partnership] to be restored to the register; and the [Tribunal] may, by the order, give such directions and make such provisions as seem just for placing the [limited liability partnership] and all other persons in the same position as nearly as may be as if the name of the [limited liability partnership] had not been struck off.

(7) Upon a certified copy of the order under sub-section (6) being delivered to the Registrar for registration, the [limited liability partnership] shall be deemed to have continued in existence as if its name had not been struck off.

(8) & (9) [***]

[Power to wind up foreign companies, although dissolved.

584. Where a limited liability partnership registered or incorporated outside India, which has been carrying on business in India,

(a) ceases to carry on business in India;
(b) is dissolved or is carrying on business only for the purpose of winding up its affairs;
(c) is unable to pay its debts; or
(d) the Tribunal is of the opinion that it is just and equitable that the foreign limited liability partnership should be wound up,

it may be wound up as a limited liability partnership registered under this Act, notwithstanding that the limited liability partnership registered or incorporated outside India has been dissolved or otherwise ceased to exist as such under or by virtue of the laws of the country under which it was registered or incorporated.]

Third proviso to section 465(1) of the Companies Act, 2013 provides as under :

“Repeal of certain enactments and savings

Provided also that provisions of the Companies Act, 1956 (1 of 1956) referred in the notification issued under section 67 of the Limited Liability Partnership Act, 2008 (6 of 2009) shall, until the relevant notification under such section applying relevant corresponding provisions of this Act to limited liability partnerships is issued, continue to apply as if the Companies Act, 1956 has not been repealed.”

Income Tax 2019 | Tina Saha |