LLP & Partners Penalized ?1.5 Lakh for Non-Functioning of Registered Office

LLP & Partners Penalized ?1.5 Lakh for Non-Functioning of Registered Office. As per section 13 of the Limited Liability Partnership:

Every limited liability partnership shall have a registered office to which all communications and notices may be addressed and where they shall be received.

A document may be served on a limited liability partnership or a partner or designated partner thereof by sending it by post under a certificate of posting or by registered post or by any other manner, as may be prescribed, at the registered office and any other address specifically declared by the limited liability partnership for the purpose in such form and manner as may be prescribed.

A limited liability partnership may change the place of its registered office and file the notice of such change with the Registrar in such form and manner and subject to such conditions as may be prescribed and any such change shall take effect only upon such filing.

If any default is made in complying with the requirements of this section, the limited liability partnership and its every partner shall be liable to a penalty of five hundred rupees for each day during which the default continues, subject to a maximum of fifty thousand rupees for the limited liability partnership and its every partner.

Facts About of the case:
A complaint has received from Shri. M. Prabhu on 06.10.2023 against the subject LLP alleging that the LLP is involved cheating public and by promising exorbitant returns. On receipt of the complaint, Registrar of Companies, Chennai had issued notices to the LLP and its Designated Partners under Section 38(1) of LLP Act, 2008 on 22.03.2024. The notice issued on 22.03.2024 to the LLP was returned/undelivered, which denotes that the LLP is not functioning at its registered address and has failed to maintain its registered office as required under Section 13 of LLP Act, 2008. Hence, the LLP and its Designated Partners are liable for penal action under Section 13(4) of the LLP Act, 2008.
Subsequently, the Adjudicating Authority had issued Notice to the LLP and its Designated Partners vide Notice No. ROC/CHN/ADJ/ARLES MAXENT/LLP/S. 13/2024 on 23.10. 2024.
No reply or submissions have been received from the LLP and its Designated Partners.
The Adjudicating Authority had issued Adjudication Hearing Notice to the LLP and its Designated Partners on 13.08.2024 for hearing on 20.08.2024. The Designated Partners/ authorized representatives did not appear for the hearing fixed on 20.08.2024. The Adjudicating Authority had issued final Hearing Notice on 23.10.2024 for hearing on 05.11.2024 at 12:30 PM. Neither the Designated Partners nor their authorized representatives have appeared on the said date. Hence, as per Rule 37A (11) of LLP (Amendment) Rules, 2022, the matter is being proceeded with in the absence of such persons (ex-parte).
It is noticed that the notice issued to the LLP on 22.03.2024 was returned /undelivered and the LLP has not submitted any notice to the Registrar regarding shifting of its registered office. Thus, it is evident that the LLP and its Designated Partners have failed to comply with provision of Section 13 of the LLP Act, 2008, thereby attracting penal provisions mentioned under Section 13(4) of the LLP Act,2008.
Since the LLP has not filed its statutory returns since its incorporation, the benefits of Small LLPs are not extended to this LLP while adjudicating the penalty.
Adjudication of Penalty
Having considered the facts and circumstances of the case, it is concluded that, the LLP has violated Section 13 of the LLP Act, 2008 for the period 22.03.2024 to 05.11.2024 (229 days).

To whom penalty imposed

Period of default

Per day penalty for default

Total Penalty

Maximum Penalty

Penalty

On LLP

229 days

500

269*500=1,34,500

50,000

On 1st DP

229 days

500

269*500=1,34,500

50,000

On 2nd DP

229 days

500

269*500=1,34,500

50,000

CCL Observation:
Upon careful consideration of the facts and circumstances of the case, it is established that the LLP has failed to maintain its registered office as required under Section 13 of the LLP Act, 2008. The notices sent by the Registrar of Companies, Chennai, to the LLP were returned undelivered, indicating that the LLP is not operating from its registered office and has not filed any notice of change in the registered office with the Registrar. Despite multiple opportunities, the LLP and its Designated Partners failed to respond to the notices or appear for the adjudication hearings. In view of the non-compliance, the LLP and its Designated Partners are held liable for penal action under Section 13(4) of the LLP Act, 2008. Accordingly, penalties have been imposed as per the prescribed provisions, with each entity being penalized up to the maximum limit permissible under the Act.
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As per section 13 of the Limited Liability Partnership:

Every limited liability partnership shall have a registered office to which all communications and notices may be addressed and where they shall be received.

A document may be served on a limited liability partnership or a partner or designated partner thereof by sending it by post under a certificate of posting or by registered post or by any other manner, as may be prescribed, at the registered office and any other address specifically declared by the limited liability partnership for the purpose in such form and manner as may be prescribed.

A limited liability partnership may change the place of its registered office and file the notice of such change with the Registrar in such form and manner and subject to such conditions as may be prescribed and any such change shall take effect only upon such filing.

If any default is made in complying with the requirements of this section, the limited liability partnership and its every partner shall be liable to a penalty of five hundred rupees for each day during which the default continues, subject to a maximum of fifty thousand rupees for the limited liability partnership and its every partner.

Facts About of the case:

A complaint has received from Shri. M. Prabhu on 06.10.2023 against the subject LLP alleging that the LLP is involved cheating public and by promising exorbitant returns. On receipt of the complaint, Registrar of Companies, Chennai had issued notices to the LLP and its Designated Partners under Section 38(1) of LLP Act, 2008 on 22.03.2024. The notice issued on 22.03.2024 to the LLP was returned/undelivered, which denotes that the LLP is not functioning at its registered address and has failed to maintain its registered office as required under Section 13 of LLP Act, 2008. Hence, the LLP and its Designated Partners are liable for penal action under Section 13(4) of the LLP Act, 2008.

Subsequently, the Adjudicating Authority had issued Notice to the LLP and its Designated Partners vide Notice No. ROC/CHN/ADJ/ARLES MAXENT/LLP/S. 13/2024 on 23.10. 2024.

No reply or submissions have been received from the LLP and its Designated Partners.

The Adjudicating Authority had issued Adjudication Hearing Notice to the LLP and its Designated Partners on 13.08.2024 for hearing on 20.08.2024. The Designated Partners/ authorized representatives did not appear for the hearing fixed on 20.08.2024. The Adjudicating Authority had issued final Hearing Notice on 23.10.2024 for hearing on 05.11.2024 at 12:30 PM. Neither the Designated Partners nor their authorized representatives have appeared on the said date. Hence, as per Rule 37A (11) of LLP (Amendment) Rules, 2022, the matter is being proceeded with in the absence of such persons (ex-parte).

It is noticed that the notice issued to the LLP on 22.03.2024 was returned /undelivered and the LLP has not submitted any notice to the Registrar regarding shifting of its registered office. Thus, it is evident that the LLP and its Designated Partners have failed to comply with provision of Section 13 of the LLP Act, 2008, thereby attracting penal provisions mentioned under Section 13(4) of the LLP Act,2008.

Since the LLP has not filed its statutory returns since its incorporation, the benefits of Small LLPs are not extended to this LLP while adjudicating the penalty.

Adjudication of Penalty

Having considered the facts and circumstances of the case, it is concluded that, the LLP has violated Section 13 of the LLP Act, 2008 for the period 22.03.2024 to 05.11.2024 (229 days).

To whom penalty imposed	Period of default	Per day penalty for default	Total Penalty	Maximum Penalty	Penalty
On LLP	229 days	500	269*500=1,34,500	50,000	50,000
On 1st DP	229 days	500	269*500=1,34,500	50,000	50,000
On 2nd DP	229 days	500	269*500=1,34,500	50,000	50,000

CCL Observation:

Upon careful consideration of the facts and circumstances of the case, it is established that the LLP has failed to maintain its registered office as required under Section 13 of the LLP Act, 2008. The notices sent by the Registrar of Companies, Chennai, to the LLP were returned undelivered, indicating that the LLP is not operating from its registered office and has not filed any notice of change in the registered office with the Registrar. Despite multiple opportunities, the LLP and its Designated Partners failed to respond to the notices or appear for the adjudication hearings. In view of the non-compliance, the LLP and its Designated Partners are held liable for penal action under Section 13(4) of the LLP Act, 2008. Accordingly, penalties have been imposed as per the prescribed provisions, with each entity being penalized up to the maximum limit permissible under the Act.