Professional Documents
Culture Documents
RANCHI
SUBMITTED TO:
SUBMITTED BY:
(ASSISTANT PROFESSOR)
SEMESTER: ‘2ND’
(NUSRL, RANCHI)
ROLL NO.- 1010
BEFORE
AT RANCHI, JHARKHAND
IN THE MATTER OF
CARSEI……………………………………………………………………….…….PLAINTIFF
VS.
JON SNOW………………………….……………………………...……………...DEFENDANT
Contents
TABLE OF CONTENT...........................................................................................................III
LIST OF ABBREVIATIONS..................................................................................................IV
INDEX OF AUTHORITIES.....................................................................................................V
List of Statutes................................................................................................................V
List of Books..................................................................................................................V
List of Cases...................................................................................................................V
List of Websites..............................................................................................................V
STATEMENT OF JURISDICTION..........................................................................................6
STATEMENT OF FACTS........................................................................................................7
STATEMENT OF ISSUES........................................................................................................8
SUMMARY OF ARGUMENTS...............................................................................................9
ARGUMENTS ADVANCE....................................................................................................10
ISSUE-1: PLAINTIFF CARSEI HAS NO LOCUS STANDI TO BRING THE CASE
AGAINST DEFENDENT JON SNOW ON THE INDIVIDUAL CAPACITY.................10
1.1: ARGUENDO-...............................................................................................................10
ISSUE-2: DAENEYRS WILL BE SOLELY LIABLE FOR HER NEGLIGENCE
RATHER THEN FIRM?......................................................................................................13
2.1: The relationship between the partners and the firm and their liability.....................13
2.2: Liability of designated partners in LLP Act..............................................................15
2.3: Daenerys was negligent on her part..........................................................................15
PRAYER..............................................................................................................................XVII
& AND
LLP LIMITED LIABILITY PARTNERSHIP
AIR ALL INDIA REPORTER
ANR. ANOTHER
BOM BOMBAY
CAL CALCUTTA
GUJ GUJRAT
CO. COMPANY
CORP. CORPORATION
HON’BLE HONOURABLE
ICA INDIAN CONTRACT ACT
CA CHARTERED ACCOUNTANT
PVT. PRIVATE
LTD. LIMITED
ORS. OTHERS
SC SUPREME COURT
VS. VERSUS
LIST OF STATUTES
THE INDIAN CONTRACT ACT, 1872
LIMITED LIABILITY OF PARTNERSHIP ACT, 2008
COMPANIES ACT, 2013
PARTNERSHIP ACT, 1932
LIST OF BOOKS
AVTAR SINGH, CONTRACT AND SPECIFIC RELIEF (EBC, 12TH EDITION, 2017)
POLLOCK & MULLA, THE CONTRACT ACT (LEXIS NEXUS, 14TH EDITION, 2013)
LAW RELATING TO LIMITED LIABILITY OF PARTNERSHIP IN INDIA BY S.A NAIK
(LEXIS NEXUS, EDITION 2010)
LIST OF CASES
Rajesh Baid & Anr. V. Mohammad Ibrahim 2016 SCC Online Cal 4077: AIR 2016
Cal 344: (2016) 166 AIC 800: (2016) 5 CHN 593.
T. R. Pratt (Bombay) Ltd. v. E. D. Sasson & Co. Ltd., AIR 1936 Bom 62.
Salomon v Salomon & Company Ltd [1897] AC 2.
In Dhulia Amalner Motor Transport Ltd. v. R. R. Dharamsi, AIR 1952 Bom 337.
Abdul Haq v. Das Mai (1910) 19 IC 595.
M/s Diamond Nation V. Deputy State Tax Commissioner LNINDU (2019) GUJ 115
LIST OF WEBSITES
blog.ipleaders.in
www.mca.gov.in
www.jstor.org
www.lawctopus.com
www.manupatra.com
www.scconline.com
We humbly submit to the jurisdiction of this court from the counsel on behalf of the
defendant in the Civil Court of Ranchi, Jharkhand under section 91, 192 & 202 of Civil
Procedure Code, 1908.
1
The Courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature
excepting suits of which their cognizance is either expressly or impliedly barred.
2
Other suits to be instituted where defendants reside or cause of action arises -Subject to the limitations
aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction -
(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement
of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually
and voluntarily resides, or carries on business, or personally works for gain, provided that in such case
either the leave of the Court is given, or the defendants who do not reside, or carry on business, or
personally work for gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises.
Daenerys and Jon Snow are partners who were jointly own and operate an accounting firm.
Daenerys instruct a new associate, Sansa to review the previous year quarter’s financial
records for a client named as Carsei and then to prepare a report on it.
Sansa placed some critical information in the different section of the report.
While going through the reports Daenerys brisked through the Sansa’s report and she misses
critical information that elevates the amount of taxes which client must have to pay to the
government and because of this client Carsei, had to pay penalties for his underpayment of
taxes.
Because of this Carsei sues Jon Snow who was not the partner who had filled the tax return of
Carsei.
ISSUE-1: WHETHER THE PLAINTIFF CARSEI HAS LOCUS STANDI TO BRING THE
CASE AGAINST DEFENDENT JON SNOW ON THE INDIVIDUAL CAPACITY?
The counsel on behalf of the defendant most humbly contends that the plaintiff Carsei has no
Locus Standi to bring the case against the defendant Jon Snow on the individually capacity
because there is no expressed or implied contract between the parties is established for
partnership and neither there is a promise of profit sharing between the partners & Section 3
(1)3 of Limited Liability of Partnership Act, 2008 states that, ‘a LLP is a separate legal entity
and firm will be liable and not partners.
The counsel further submits that Daenerys is solely liable for her negligence with profession
because she is a designated partner at that time of the firm and there is an absence of
knowledge to Jon Snow and this is explained in Section 84 of Limited Liability of Partnership
Act, 2008.
3
Section 3 (1) of Limited Liability of Partnership Act, 2008 states that, ‘A limited liability partnership is a body
corporate formed and incorporated under this Act and is a legal entity separate from that of its partners
4
Liabilities of designated partners. —Unless expressly provided otherwise in this Act, a designated partner
shall be—
(a) responsible for the doing of all acts, matters and things as are required to be done by the limited liability
partnership in respect of compliance of the provisions of this Act including filing of any document, return,
statement and the like report pursuant to the provisions of this Act and as may be specified in the limited
liability partnership agreement; and
(b) liable to all penalties imposed on the limited liability partnership for any contravention of those provisions.
Daenerys and Jon Snow are partners, who were jointly own and operate an accounting firm
and this much information doesn’t prove that this is a firm who is registered under the
Partnership Act, 1932 because there is an absence of one of the main element of partnership
that is defined under Section 5 of Partnership Act, 1932 which states that, ‘The relation of
partnership arises from contract and not from status’ & Section 4 which states that
‘Partnership is the relation between persons who have agreed to share the profits of a
business carried on by all or any of them acting for all.’
In the current situation there is no expressed or implied contract between the parties is
established for partnership and neither there is a promise of profit sharing between the
partners which proves that this not a partnership. Hence there is no joint liability of partners
and plaintiff has no right to sue an individual (Jon Snow) for the negligence of other one
(Daenerys).
1.1: ARGUENDO-
Section 3 (1) of Limited Liability of Partnership Act, 2008 states that, ‘A limited liability
partnership is a body corporate formed and incorporated under this Act and is a legal
entity separate from that of its partners.’
From the Section 3 (1) of Limited Liability of Partnership Act, 2008, it can be concluded that
the firms are legally separated entity from its partners and firm will take decision on the
behalf of itself and there is a common seal5 that contains the word 'Corporate seal' and
includes the corporate name, place of the company, date of its incorporation in Limited
Liability Partnership which makes this type of partnership6 a separate legal entity.
5
If the partners decide, the LLP can have a common seal [Section 14(c)]. It is not mandatory though. However, if it
decides to have a seal, then it is necessary that the seal remains under the custody of a responsible official. Further, the
common seal can be affixed only in the presence of at least two designated partners of the Limited Liability
Partnership.
6
Limited Liability of Partnership Act, (2008).
Under Section 277 (2) of LLP Act, 2008 states that, ‘the limited liability partnership is liable
if a partner of a limited liability partnership is liable to any person as a result of a
wrongful act or omission on his part in the course of the business of the limited liability
partnership or with its authority.’ And under Section 27 (3)8 of LLP Act, 2008, states that,
‘obligation of the limited liability partnership whether arising in contract or otherwise,
shall be solely the obligation of the limited liability partnership.’
From the both sub section 2 and 3 of Section 27 of LLP, Act we can conclude that a partner is
not liable for act of others partner but it is LLP who is liable for act of partners.
And any act of partner without knowledge of another partner may bind the LLP because it is
firm is a separate legal entity and partners are just for the running of the business only.
Under Section 28 (1)9 of LLP Act, 2008, ‘A partner is not personally liable, directly or
indirectly for an obligation referred to in sub-section (3) of section 27 solely by reason of
being a partner of the limited liability partnership.’
From the Above section we can conclude that a partner can’t become personally liable only
because he is partner in LLP.
There are some essentials of Limited Liability Partnership Act which related to case:
(i) Limited liability protects the member’s personal assets from the liabilities of the
business. LLP’s are a separate legal entity to the members.
7
Extent of liability of limited liability partnership. — (1) A limited liability partnership is not bound by
anything done by a partner in dealing with a person if
(a) the partner in fact has no authority to act for the limited liability partnership in doing a particular act; and
(b) the person knows that he has no authority or does not know or believe him to be a partner of the limited
liability partnership.
8
An obligation of the limited liability partnership whether arising in contract or otherwise, shall be solely the
obligation of the limited liability partnership.
9
A partner is not personally liable, directly or indirectly for an obligation referred to in sub-section (3) of
section 27 solely by reason of being a partner of the limited liability partnership.
In Case of Rajesh Baid & Anr. V. Mohammad Ibrahim,10 as per the High Court of Calcutta
dismiss the plea of plaintiff to give an ad interim injunction on the matter of suit of property
because the plaintiff is having contract with the partners of the LLP company and the real
owner of the property is LLP itself named as Onex Project and there is no privity of contract
between the plaintiff and the real owner Onex Project Pvt. Ltd. And hence point no. 14 of
judgement states that Section 3 of the Limited Liability Partnership Act, 2008 says that a
limited liability partnership is a body corporate formed and incorporated under the said Act
and is a legal entity separate from that of the partners. Section 14 of the said Act provides that
on registration, a limited liability partnership shall, by its name, be capable of suing and being
sued. The title deed which is annexed to the injunction application shows that the Limited
Liability Partnership firm is a registered firm. As such, we have no hesitation to hold that the
said Limited Liability firm is a separate entity which is a body corporate and is capable of
being sued in its own name. The said Limited Liability Partnership firm has not been
impleaded as a party in this proceeding. No relief has been claimed against the said Limited
Liability Partnership firm.
In T. R. Pratt (Bombay) Ltd. v. E. D. Sasson & Co. Ltd.,11 the Bombay High Court the Court
said: "Under the law, an incorporated company is a distinct entity, and although all the shares
may be practically controlled by one person, in law, a company is a distinct entity." i.e. a
company has separate legal existence.12
10
Rajesh Baid & Anr. V. Mohammad Ibrahim 2016 SCC Online Cal 4077: AIR 2016 Cal 344: (2016) 166 AIC
800: (2016) 5 CHN 593.
11
T. R. Pratt (Bombay) Ltd. v. E. D. Sasson & Co. Ltd., AIR 1936 Bom 62.
12
Salomon v Salomon & Company Ltd [1897] AC 2
13
In Dhulia Amalner Motor Transport Ltd. v. R. R. Dharamsi, AIR 1952 Bom 337.
In Abdul Haq v. Das Mai,15 Abdul Haq was an employee in a company. He had not been paid
his salary for several months. He sued Das Mai, a director of the company for recovery of the
amount of salary due to him. It was held that he would not succeed, because "the remedy lies
against the company and not against the directors or members of the company.
Hence it is submitted that Defendant Jon Snow is not liable to pay the compensation
individually of Carsen’s penalties because in LLP a partner in not individually liable just
because he or she is in partner in LLP. 16 And Carsei doesn’t have locus standi to sue Jon
Snow individually and here Carsei personally sue one partner of LLP that is Jon Snow only
that’s why she is not entitle to get her compensation amount in this case.
2.1: The relationship between the partners and the firm and their liability.
Section 26 of Limited Liability Act, 2008 states that, ‘Every partner of a limited liability
partnership is, for the purpose of the business of the limited liability partnership, the
agent of the limited liability partnership, but not of other partners.’
From the above section we can conclude that according to Section 26 of the LLP Act, every
partner is an agent17 of the LLP for the purpose of the business of the entity. However, he is not
an agent of other partners. Further, the liability of each partner is limited to his agreed
contribution in the Limited Liability Partnership. It provides liability protection to its partners.
14
Company Act 2013.
15
Abdul Haq v. Das Mai (1910) 19 IC 595.
16
Section-28 (1) of LLP Act, 2008.
17
Section 182 of The Indian Contract Act, 1872. 'Agent' and 'principal' defined. —An 'agent' is a person
employed to do any act for another, or to represent another in dealings with third person
In Case of M/s Diamond Nation V. Deputy State Tax Commissioner, 19 the high court of the
Gujrat dismiss the plea of Go Green Diamond LLP because they wanted to have a contract
to become a partners under Partnership Act firm. The petitioner filed the case that an LLP
is separate legal entity and body of corporate under section 3 of LLP Act then the why the
application rejected citing Section 2(42) of the Act that the partnership firm under the ,
LLP Act cannot be a partner in the partnership firm in which section 4 of partnership act
state that contemplates a legal person who can be a partner in Partnership Act firm.
Courts says that the partners in partnership act firm have unlimited liability where as
partners of LLP have limited liability and nevertheless LLP is separate legal entity but the
general concept of partnership, firmly established in both systems of law, still is that a firm
is not an entity or "person" in law but is merely an association of individuals and a firm
name is only a collective name of those individuals who constitute the firm."
In the present case the partners of the LLP are only liable to pay the compensation on their
agreed contribution in LLP and therefore their liability is limited for the accounting firm.
18
Section 27 (c) & (d) of the LLP Act
19
M/s Diamond Nation V. Deputy State Tax Commissioner LNINDU (2019) GUJ 115
20
Liabilities of designated partners. - Unless expressly provided otherwise in this Act, a designated partner
shall be- (a) responsible for the doing of all acts, matters and things as are required to be done by the limited
liability partnership in respect of compliance of the provisions of this Act including filing of any document,
return, statement and the like report pursuant to the provisions of this Act and as may be specified in the
limited liability partnership agreement; and
(b) liable to all penalties imposed on the limited liability partnership for any contravention of those provisions.
In the present case Daenerys is designated partner in the LLP accounting firm and she had
directed her new associated Sansa to review client report in which she had done mistake and
Daenerys also brisked through the Sansa’s report and she also misses critical information and
because of this Carsei had to pay penalties to government. And when Daenerys instruct the
Sansa, Jon Snow had no knowledge about that report and Daenerys is in designated partners
role on that time so she will be solely responsible for all compliances and penalties of her
own wrong.
The current situation it is clear that negligence had been took place in the part of Daenerys
and she in negligent while going through the Carsei report and this is not acceptable with a
person who had taken rigorous training for becoming a Chartered Accountant and doing
mistakes who is day to day part of the CA profession. There is line that Daenerys usually
reads these reports in great depth before filling a tax return which proves that she knows
about the filling of tax returns and she is a Chartered Accountant by profession.
21
The role of designated partners in case of LLP is on same footage as of Directors in the case of a Company.
22
Section 8(a) of the LLP Act.
23
Section 10 of the LLP Act.
24
Section 30 of the LLP Act.
25
Ministry of Corporate Affairs, (29.05.2020), http://www.mca.gov.in/MinistryV2/liabilityofpartners.html.
Wherefore in the lights of facts stated, issues raised, arguments advanced and authorities
cited, it is most humbly prayed and implored before the Civil Court of Ranchi, that it may be
graciously pleased to adjudge and declare:
1. That the Daenerys is designated partner and she is negligent with her profession.
2. That the defendant Jon Snow is not liable to compensate the penalties of Carsei.
And pass any other order in favour of the Defendant which may deem fit in the ends of
justice, equity and good conscience.
For this act of kindness, the Defendant shall duty bound forever pay.