26. Partner as agent.—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.
1. Subs. by Act 31 of 2021, s. 11, for sub-sections (4) and (5) (w.e.f. 1-4-2022).
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27. 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.
(2) 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.
(3) An obligation of the limited liability partnership whether arising in contract or otherwise, shall be
solely the obligation of the limited liability partnership.
(4) The liabilities of the limited liability partnership shall be met out of the property of the limited
liability partnership.
28. Extent of liability of partner.—(1) 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.
(2) The provisions of sub-section (3) of section 27 and sub-section (1) of this section shall not affect
the personal liability of a partner for his own wrongful act or omission, but a partner shall not be
personally liable for the wrongful act or omission of any other partner of the limited liability partnership.
29. Holding out.—(1) Any person, who by words spoken or written or by conduct, represents
himself, or knowingly permits himself to be represented to be a partner in a limited liability partnership is
liable to any person who has on the faith of any such representation given credit to the limited liability
partnership, whether the person representing himself or represented to be a partner does or does not know
that the representation has reached the person so giving credit:
Provided that where any credit is received by the limited liability partnership as a result of such
representation, the limited liability partnership shall, without prejudice to the liability of the person so
representing himself or represented to be a partner, be liable to the extent of credit received by it or any
financial benefit derived thereon.
(2) Where after a partner's death the business is continued in the same limited liability partnership
name, the continued use of that name or of the deceased partner's name as a part thereof shall not of itself
make his legal representative or his estate liable for any act of the limited liability partnership done after
his death.
30. Unlimited liability in case of fraud.—(1) In the event of an act carried out by a limited liability
partnership, or any of its partners, with intent to defraud creditors of the limited liability partnership or
any other person, or for any fraudulent purpose, the liability of the limited liability partnership and
partners who acted with intent to defraud creditors or for any fraudulent purpose shall be unlimited for all
or any of the debts or other liabilities of the limited liability partnership:
Provided that in case any such act is carried out by a partner, the limited liability partnership is liable
to the same extent as the partner unless it is established by the limited liability partnership that such act
was without the knowledge or the authority of the limited liability partnership.
(2) Where any business is carried on with such intent or for such purpose as 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 1
[five years] and with
fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
(3) Where a limited liability partnership or any partner or designated partner or employee of such
limited liability partnership has conducted the affairs of the limited liability partnership in a fraudulent
1. Subs. by Act 31 of 2021, s. 12, for “two years” (w.e.f. 1-4-2022).
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manner, then without prejudice to any criminal proceedings which may arise under any law for the time
being in force, the limited liability partnership and any such partner or designated partner or employee
shall be liable to pay compensation to any person who has suffered any loss or damage by reason of such
conduct:
Provided that such limited liability partnership shall not be liable if any such partner or designated
partner or employee has acted fraudulently without knowledge of the limited liability partnership.
31. Whistle blowing.—(1) The Court or Tribunal may reduce or waive any penalty leviable against
any partner or employee of a limited liability partnership, if it is satisfied that—
(a) such partner or employee of a limited liability partnership has provided useful information
during investigation of such limited liability partnership; or
(b) when any information given by any partner or employee (whether or not during investigation)
leads to limited liability partnership or any partner or employee of such limited liability partnership
being convicted under this Act or any other Act.
(2) No partner or employee of any limited liability partnership may be discharged, demoted,
suspended, threatened, harassed or in any other manner discriminated against the terms and conditions of
his limited liability partnership or employment merely because of his providing information or causing
information to be provided pursuant to sub-section (1).