Rohit, a partner in an LLP, intentionally conceals material information from a client and induces the client to enter into a contract with the LLP. Later, the client discovers the concealment and alleges that the LLP obt
CS Executive · Setting Up of Business, Industrial and Labour Laws · PYQS · June 2026
Rohit, a partner in an LLP, intentionally conceals material information from a client and induces the client to enter into a contract with the LLP. Later, the client discovers the concealment and alleges that the LLP obtained the contract through fraud. Explain, under the Limited Liability Partnership Act, 2008, the liability of a partner in cases involving fraud and whether the LLP and its other innocent partners remain protected.
Answer & Explanation:
Under the Limited Liability Partnership Act, 2008, the protection of limited liability does not apply in cases involving fraud. Section 30 of the Act provides that if a partner acts with intent to defraud creditors of the LLP or any other person, or for any fraudulent purpose, the liability of such partner becomes unlimited for all or any of the debts or liabilities of the LLP. The Act further states that the LLP itself is liable for wrongful acts or omissions of a partner when such acts are carried out in the course of business, but in cases of fraud, the partner who acted fraudulently is personally responsible without limitation. The Act also clarifies that the liability of the LLP and of the other partners remains limited unless they had knowledge of the fraud or participated in it. Therefore, only the partner who committed the fraudulent act loses the benefit of limited liability, while innocent partners continue to enjoy protection under the Act.
Topics: Limited Liability Partnership (LLP)
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