RE: Partnership Firm
Pramod Kumar
(Querist) 20 January 2010
This query is : Resolved
Dear Sir,
Please guide me on following aspects with relevant case laws, if any:
Whether a Partnership firm can guarantee the debt of a Limited Liability Partnership Firm?
Infact the Partnership firm referred above hold a plot of land in the name of Partnership firm itself as Industrial Plot on Lease from District Industries Centre and intends to Sub-lease a part of such plot in the name of Limited Liability Partnership Firm with prior approval of District Industries Centre. The plot of land in question is to be taken in mortgage as collateral security from the Partnership firm in addition to mortgage of sub- lease rights by Limited Liability Partnership firm.
I feel the Partnership firm is constituted to carry on business of common interest amongst the Partners and to stood as Guarantor is not a business.
I shall be grateful if you enlight the matter together with statutory sections of statutes and Case Law/s thereon.
Thanks.
PRAMOD KUMAR
R.R. KRISHNAA
(Expert) 20 January 2010
A partnership firm can stand as a guarantor and there is no prohibition in it under the laws of guarantee. It is a entity and any entity/individual can guarantee the debt of a limited liability partnership firm.
Raj Kumar Makkad
(Expert) 20 January 2010
It shall be better if the terms of the partnership are gone through in depth before making any definite comment in the given case.
I suggest to once again go through the terms of the partnership firm and if either of them permit to be a guarantor similar as in the given case, it is justified and legal otherwise your view is correct.
