Chapter XII - Compromise, Arrangement or Reconstruction of Limited Liability Partnerships
Section 60
Section 60: Compromise, or arrangement of limited liability partnerships
Section 60 governs Tribunal-supervised compromises or arrangements between an LLP and its creditors or partners.
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This article is for general information. Refer to the Limited Liability Partnership Act, 2008 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Where a compromise or arrangement is proposed—
(a) between a limited liability partnership and its creditors; or
(b) between a limited liability partnership and its partners,
the Tribunal may, on the application of the limited liability partnership or of any creditor or partner of the limited liability partnership, or, in the case of a limited liability partnership which is being wound up, of the liquidator, order a meeting of the creditors or of the partners, as the case may be, to be called, held and conducted in such manner as may be prescribed or as the Tribunal directs.
(2) If a majority representing three-fourths in value of the creditors, or partners, as the case may be, at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Tribunal, by order be binding on all the creditors or all the partners, as the case may be, and also on the limited liability partnership, or in the case of a limited liability partnership which is being wound up, on the liquidator and contributories of the limited liability partnership:
Provided that no order sanctioning any compromise or arrangement shall be made by the Tribunal unless the Tribunal is satisfied that the limited liability partnership or any other person by whom an application has been made under sub-section (1) has disclosed to the Tribunal, by affidavit or otherwise, all material facts relating to the limited liability partnership, including the latest financial position of the limited liability partnership and the pendency of any investigation proceedings in relation to the limited liability partnership.
(3) An order made by the Tribunal under sub-section (2) shall be filed by the limited liability partnership with the Registrar within thirty days after making such an order and shall have effect only after it is so filed.
(4) If default is made in complying with the provisions of sub-section (3), the limited liability partnership and its every designated partner shall be liable to a penalty of ten thousand rupees, and in case of continuing default, with a further penalty of one hundred rupees for each day after the first during which such default continues, subject to a maximum of one lakh rupees for limited liability partnership and fifty thousand rupees for every designated partner.
(5) The Tribunal may, at any time after an application has been made to it under this section, stay the commencement or continuation of any suit or proceeding against the limited liability partnership on such terms as the Tribunal thinks fit, until the application is finally disposed of.
Key takeaways
Meeting order
The Tribunal may order a creditors’ or partners’ meeting on an eligible application.
Approval and sanction
A majority representing three-fourths in value at the meeting, followed by Tribunal sanction, is required for binding effect.
Registrar filing
The Tribunal order takes effect only after filing with the Registrar within thirty days.
Updated penalty
The 2021 amendment replaced subsection (4) with a fixed and continuing penalty subject to caps.
When this section applies
Section 60 governs Tribunal-supervised compromises or arrangements between an LLP and its creditors or partners.
Key steps
- Identify parties: Determine whether the proposal concerns creditors or partners and who may apply.
- Seek a meeting: Apply to the Tribunal for directions on calling and conducting the meeting.
- Disclose and vote: Provide all material facts and check the three-fourths-in-value vote.
- Seek sanction and file: Obtain Tribunal sanction and file its order with the Registrar within thirty days.
Practical preparation
Check these section-specific points against the facts and records.
- Identify whether the proposed arrangement is with creditors or partners and the proper applicant.
- Give the Tribunal all material facts, including the latest financial position and pending investigations.
- Verify approval by a majority representing three-fourths in value and obtain Tribunal sanction.
- File the Tribunal order with the Registrar within 30 days; record that it takes effect only on filing.
Practical checklist
Do
- Disclose the latest financial position and pending investigations.
- Record the vote by value.
- File the Tribunal order within thirty days.
Avoid
- Do not rely on the arrangement before the sanctioned order is filed.
- Do not use the pre-2021 fine wording in subsection (4).
Illustrative example
Hypothetical: section 60 in practice
An LLP proposes to restructure its obligations to creditors.
Identify parties
Determine whether the proposal concerns creditors or partners and who may apply.
Seek a meeting
Apply to the Tribunal for directions on calling and conducting the meeting.
Disclose and vote
Provide all material facts and check the three-fourths-in-value vote.
Seek sanction and file
Obtain Tribunal sanction and file its order with the Registrar within thirty days.
Outcome
- A qualifying creditor vote and Tribunal sanction can bind the creditors, but the order has effect only after it is filed with the Registrar; default in filing may incur the amended penalty.
Glossary
- Compromise or arrangement
- A proposal between an LLP and its creditors or partners considered under section 60.
- Contributories
- Persons bound by the sanctioned arrangement in a winding-up case as stated in subsection (2).
Frequently asked questions
Is the creditors’ vote enough by itself?
No. The statutory majority, Tribunal sanction and filing of the order are all material.
Can the Tribunal pause a suit?
Yes. Subsection (5) permits a stay on terms while the application is pending.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026