Decriminalization
The Bill seeks to modify the punishment and penalty prevailing in the Act. The changes that are brought forward in the amendment bill is given in the following table-
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Section
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Nature of Offence
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Existing punishment
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Proposed punishment
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7(1)
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Failure of LLP to have at least 2 designated partners
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Fine – not less than ₹ 10,000/- but which may extended to ₹ 5 lakhs.
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Fine – ₹ 10,000/-; continuing offence – ₹ 100/- per day subject to a maximum of ₹ 1 lakh for LLP and ₹ 50,000/- for partners
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7(4)(5) or 8 or 9
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7(4) – Failure to give consent by an individual to act as designated partner;
7(5) – Failure by the designated partner to satisfy such conditions and requirements as may be prescribed.
8 – Liabilities of designated partners – contravention of sec. 8;
9 – Changes in designated partner
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Fine – not less than ₹ 10,000/- but which may extended to ₹ 1 lakh
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Fine – ₹ 10,000/-; continuing offence – ₹ 100/- per day subject to a maximum of ₹ 1 lakh for LLP and ₹ 50,000/- for partners
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13 (4)
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Failure to file the notice – change of registered office of LLP
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Fine – not less than ₹ 2,000/- but which may extend to ₹ 25,000/-
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Fine – ₹ 500/- for each day subject to maximum of ₹ 50,000/-
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21(2)
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Failure to publish name of LLP in invoices etc.
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Fine – not less than ₹ 2,000/- but which may extend to ₹ 25,000/-
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Fine – ₹ 10,000/-
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25 (4)
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Failure to file a notice with registrar about the cessation of partner or change in name of partner
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Fine – not less than ₹ 2,000/- but which may extend to ₹ 25,000/-
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Fine – ₹ 10,000/-
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25(5)
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Failure to file a notice with Registrar about the change of LLP
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Fine – not less than ₹ 2,000/- but which may extend to ₹ 25,000/-
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Fine – ₹ 10,000/-
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30(2)
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Carrying an act with intent to defraud creditors or any other purposes
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Imprisonment – up to 2 years; fine – not less than ₹ 50,000/- but which may extend to ₹ 5 lakhs.
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Imprisonment – up to 5 years.
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34(5)
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Maintenance of books and accounts; preparation of Statement of Account and Solvency for the financial year and file the same with the Registrar
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Fine – not less than ₹ 25,000 but which may extend to ₹ 5 lakhs to LLP;
Fine – not less than ₹ 10,000/- but which may extend to ₹ 1 lakh for partners
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Fine – ₹ 100/- per day subject to a maximum of ₹ 1 lakh for LLP and ₹ 50,000/- for partners.
Section 34(6) has been inserted – Maintenance of books of accounts, preparation of statement of account and audit – Fine – not less than ₹ 25,000/- but which may be extended up to ₹ 5 lakhs to LLP;
For partners – fine not less than ₹ 10,000/- but which may extend to ₹ 1 lakh.
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35
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Failure to file Annual return with Registrar within 60 days of the closure of financial year.
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Fine – not less than ₹ 10,000/- but which may extend to ₹ 1,00,000/-
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Fine – ₹ 100/- per day subject to a maximum of ₹ 1 lakh.
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60(4)
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Failure to file the order of Tribunal on compromises or arrangements with the Registrar within 30 days of the order.
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Fine up to ₹ 1,00,000/-
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Fine – ₹ 100/- per day subject to a maximum of ₹ 1 lakh for LLP and ₹ 50,000/- for partners.
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62(4)
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Failure to file the order of Tribunal on reconstruction or amalgamation with the Registrar within 30 days of the order.
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Fine up to ₹ 50000/-
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Fine – ₹ 100/- per day subject to a maximum of ₹ 1 lakh for LLP and ₹ 50,000/- for partners.
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74
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Penalty for non compliance of order of Tribunal
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Imprisonment – upto 6 months; fine – not less than ₹ 50,000/-
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General Penalty – Fine – ₹ 5000/- and for continuous offence – ₹ 100/- per day subject to a maximum of ₹ 1 lakh.
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Adjudication of penalties
The Bill introduces a new Section 76A for the purpose of adjudication of penalties.
Adjudicating Officers
The Central Government may, by an order published in the Official Gazette, appoint as many officers of the Central Government, not below the rank of Registrar, as adjudicating officers in such manner as may be prescribed. The Central Government shall, while appointing adjudicating officers, specify their jurisdiction in the order.
Imposition of penalties
The Adjudicating Officer may, by an order, impose the penalty on the limited liability partnership or its partners or designated partners or any other person, as the case may be, stating therein any non-compliance or default under the relevant provisions of this Act.
The adjudicating officer shall, before imposing any penalty, give an opportunity of being heard to such limited liability partnership or its partner or designated partner or any other person, who is in default.
Rectification of defaults
The Adjudicating Officer may direct such limited liability partnership or its partner or designated partner or any other person, as the case may be, to rectify the default, wherever he considers fit for reasons to be recorded in writing.
No penalty
In case default relates to non-compliance of sub-section (3) of section 34 or sub-section (1) of section 35 and such default has been rectified either prior to or within thirty days of the issue of the notice by the adjudicating officer, no penalty shall be imposed in this regard and proceedings under this section in respect of such default shall be deemed to be concluded.
Reduced penalty
If penalty is payable for non-compliance of any of the provisions of this Act by-
- a small limited liability partnership; or
- a start-up limited liability partnership; or by its partner or designated partner or any other person
in respect of such limited liability partnership, then such limited liability partnership or its partner or designated partner or any other person, shall be liable to a penalty which shall be one-half of the penalty specified in such provisions subject to a maximum of ₹ 1 lakh for limited liability partnership and ₹ 50,000/- for every partner or designated partner or any other person, as the case may be.
Appeal
- Any person aggrieved by an order made by the adjudicating officer may prefer an appeal to the Regional Director having jurisdiction in the matter.
- The appeal shall be filed within 60 days from the date of receipt of the order of Adjudicating Authority by the aggrieved person in such form and in such manner as may be prescribed.
- The Regional Director may extend the time of filing appeal by not more than 30 days. He has to record reasons for the same in writing.
- The Regional Director may, after giving an opportunity of being heard to the parties to the appeal, pass such order as he thinks fit, confirming, modifying or setting aside the order appealed against.
Punishment for non compliance of order
Where a limited liability partnership fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be, within a period of 90 days from the date of receipt of the copy of the order, such limited liability partnership shall be punishable with fine which shall not be less than ₹ 25,000/-, but may extend to ₹ 5 lakhs.
Where a partner or designated partner of a limited liability partnership or any other person who is in default fails to comply with an order made under sub-section (3) or sub-section (7), as the case may be, within a period of 90 days from the date of receipt of the copy of the order, such partner or designated partner or any other person shall be punishable with imprisonment which may extend to 6 months or with fine which shall not be less ₹ 25,000/- but may extend to ₹ 1 lakh or with both.
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