National Company Law Tribunal, New Delhi: In an application filed under Rule 11 of NCLT Rules, 2016 read with proviso to Section 241 of the Companies Act, 2013 seeking waiver of condition stipulated under Section 43(3) of the Limited Liability Partnership Act, 2008 to (LLP Act) file the accompanying petition, a division bench of Sankariah Shanmuga Sundaram (Judicial Member) and Dr. Sanjeev Ranjan Manni (Technical Member), dismissed the application and held that the court/tribunal cannot grant a waiver of the minimum partner requirement as prescribed by Section 43 of the LLP Act.
In the instant matter, the applicant is a minority partner in the Respondent LLP, holding approximately 11.33% of the shares/contributions. The applicant claimed that the designated partners of the LLP have committed acts of oppression and mismanagement leading to significant financial losses and irregularities and as the applicant’s contribution falls short of the one-fifth threshold required by Section 43 of the LLP Act, he is unable to file the petition without a waiver.
The applicant filed an application under Rule 11 of NCLT Rules read with proviso to Section 241 of the Companies Act, 2013 seeking waiver of the requirement under Section 43(3) of the LLP Act which requires that a minimum of one-fifth of the total number of partners file a petition for investigation of the affairs of the LLP. The applicant argued that there is no effective remedy available to him other than seeking an investigation into the LLP’s affairs. It was contended that serious prejudice will result if the condition is not waived, emphasiaing the need for substantial justice over technicalities.
The NCLT noted that Section 43 of the LLP Act provides the conditions under which an investigation into the affairs of a LLP can be conducted, including the requirement that at least one-fifth of the partners must file the petition and Rule 11 of NCLT Rules provides for the exercise of inherent powers by the Tribunal to pass orders not specifically provided in the rules.
The NCLT stated that the reliance on the Companies Act for waiver was impermissible, as it amounts to rewriting the statute. The NCLT cited Union of India v. Deoki Nandan Aggarwal, 1992 Supp (1) SCC 323 where the Supreme Court held that “it is not the duty of the Court either to enlarge the scope of the legislation or the intention of the legislature when the language of the provision is plain and unambiguous. The Court cannot rewrite, recast or reframe the legislation for the very good reason that it has no power to legislate. The power to legislate has not been conferred on the courts. The Court cannot add words to a statute or read words into it which are not there. Assuming there is a defect or an omission in the words used by the legislature, the Court could not go to its aid to correct or make up the deficiency.” The NCLT underscored that the courts cannot alter the plain language of statutes or legislate. The NCLT also noted that no notification extends the applicability of the Companies Act provisions to LLPs in this context.
The NCLT further asserted that “a provision vesting “inherent powers” on a Court or Tribunal are to be used sparingly and should not be used to imply and read in substantive powers where the statue itself does not prescribe such powers.” The Court opined that “the absence of any specific provision empowering this Tribunal to relax / waive the eligibility requirements prescribed under Section 43 of the LLP Act shows the clear legislative intent to strictly construe and follow the provisions of Section 43 of the LLP Act.” The NCLT held that the application could not be granted as there is no specific provision in the LLP Act for waiving the condition stipulated under Section 43(3) of the LLP Act.
The NCLT dismissed the present application and held that the Tribunal cannot grant a waiver of the minimum partner requirement as prescribed by Section 43 of the LLP Act. Consequently, the NCLT also dismissed the company petition as the same was non-maintainable due to the failure to meet the statutory requirement.
[Anirudh Kumar v. Hydraulics & Pneumatics India LLP, 2024 SCC OnLine NCLT 3427, Decided on 26-07-2024]
*Judgment by Dr. Sanjeev Ranjan Manni (Technical Member)
Advocates who appeared in this case :
Mr. Abhinav Bajaj, Mr. Saksham Jha, Ms. Geetanshi Chandna, Counsel for the Applicant
Mr. Krishnendu Datta, Senior Advocate with Mr. Kunal Vajani, Mr. Kunal Mimani, Mr. Shubhang Tandon, Mr. Aman Barar, Ms. Shraddha, Counsel for the Respondents
