An LLP, as a body corporate and falling within the definition of 'person', can enter into a partnership with an individual, and the differences in liability provisions between the acts do not disqualify an LLP from forming a partnership.

JUDGMENT :

Ext.P2 order passed by the Registrar of Firms declining registration of a partnership firm constituted by the petitioner is under challenge in this Writ Petition. The reason stated in Ext.P2 is that a LLP cannot be a partner of a firm.

2. Petitioner claims to be the designated partner of Sleeplock LLP which is a limited liability partnership registered under the Limited Liability Partnership Act, 2008 (for short "LLP Act"). The Sleeplock LLP formed a partnership firm along with one Gourav Raj in the name and style of M/s.Morning Owl Sleep Solutions. A partnership deed was executed accordingly on 18.09.2020. The said deed -Ext.P1 was submitted for registration before the respondent. The respondent rejected the same on the ground that LLP cannot be a partner of a firm. Petitioner has stated that the partnership is formed in order to carry out the business of processing, manufacturing, trading, importing, exporting, distribution and sales of furnished and semi-furnished mattress, latex form cores, pillows, rubberised coir, coconut rubber, other rubber and coir products, through retail outlets and through online platforms.

3. Petitioner claims that a partnership along with an LLP is not prohibited under the Partnership Act and that LLP is a legal entity, as defined under the LLP Act and it is separate from its partners. It has perpetual succession and is having a common seal. Under Section 14 it is capable of suing and being sued, on its registration. It is also capable of acquiring, developing or disposing of movable or immovable properties. Therefore, petitioner claims that the LLP is liable to be treated as a person and there cannot be any objection for registering a partnership with an LLP which is a person. It is stated that the said LLP has been given Ext.P4 Certificate of Incorporation.

4. The respondent has filed a statement reiterating his stand in the impugned order. It is stated that some of the provisions of the Limited Liability Partnership Act 2008 are inconsistent with that of the Indian Partnership Act, 1932, pertaining to the liability. According to the respondent, Section 25, 26 and 49 of the Indian Partnership Act, 1932 makes the partners to be jointly and severally liable with all the other partners and also severally liable for the acts of the firm, of which such person is a partner. At the same time it is stated that under Section 28 of the LLP Act, 2008 the provisions regarding the liability of the partnership firm is restricted to the contents to the LLP agreement ie. under the LLP Act, the liability of the partner is restricted only to the extent provided in the agreement; such a provision runs contrary to Section 25 and 49 of the Indian Partnership Act. It is also pointed out that under LLP foreign investment is permissible whereas it is not permissible under the Partnership Act.

5. The learned Counsel for the petitioner relied on the judgment of this Court in M.M.Pulimood vs. Registrar of Firm: 1984 KLT 420 in support of his contention that the rejection in Ext.P2 is illegal and without understanding the provisions contained in the LLP Act.

6. Relying on the judgment of the apex court in Dulichand Laxminarayanan vs. Commissioner of Income Tax, Nagpur : AIR 1956 SC 354 the learned Government Pleader argued that a firm cannot enter into a partnership with LLP. It is their case that though LLP is a kind of partnership having the nature of company the provisions in the LLP are completely frustrating the purport of Section 25 and 49 of the Indian Partnership Act.

7. Heard Adv.Mohammed Al Rafi, learned counsel for the petitioner and Smt.Princy Xavier, learned Government Pleader.

8. The question to be considered is whether LLP can be treated as a person which can be permitted to form a partnership with an individual. In the judgment in M.M.Pulimood's case (supra) relied on by the petitioner, a learned Single Judge of this Court was considering a case where a partnership deed was executed with a Private Limit