Rule 35 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 35 is the longest rule in the 2009 Rules. Its first eleven sub-rules set the procedure when an LLP, its creditors or its partners want a compromise or arrangement sanctioned. This article explains sub-rules (1) to (11), as notified in 2009: the application, the Tribunal's directions, the meeting, voting, the chairman's report, the petition for confirmation, and the filing of the order. Sub-rules (12) to (17), on revival and rehabilitation, are in the next article.
An application to convene a meeting of creditors or partners is supported by an affidavit with the proposed compromise annexed (rule 35(1)). The Tribunal gives directions on who meets, when, who chairs, quorum, proxies, values, notice and reporting (rule 35(3)). Notice goes to each person by post at least 21 clear days before the meeting (rule 35(5)). The chairman reports the result within the time fixed, or within seven days after the meeting (rule 35(9)). If agreed, the LLP or its Liquidator presents a petition for confirmation within seven days of the chairman's report (rule 35(10)). The order is filed with the Registrar (rule 35(11)). The Rules and the Act have been amended since 2009.
Read this first: the 2009 text and later amendments
This article reports what rule 35(1) to (11) provided as notified on 1 April 2009. The Rules have been amended several times since, and the forms, fees, time limits and the way applications are made may differ now. The Act too has been amended. Check the current Rules and the MCA portal before acting. This article gives no fee amount and no portal step, and it refers to the prescribed forms without naming them. It adds no fact about the Tribunal beyond what the rule says; for the Tribunal as defined in the Act, see Section 2 of the LLP Act, Part 2.
Rule 35 implements section 60 of the Act, and section 62 for reconstruction and amalgamation; see Section 60: compromise or arrangement and Sections 61-62. Our guide on compromise and arrangement in an LLP gives the wider picture. If you are in or near such a proceeding, our legal dispute resolution service can advise.
Rule 35(1) and (2): the application and service
Rule 35(1): an application under section 60(1) for an order convening a meeting of creditors, partners, or both "shall be supported by an affidavit". A copy of the proposed compromise or arrangement is annexed as an exhibit. The affidavit is in the prescribed form.
Rule 35(2): where the LLP is not the applicant, a copy of the summons and of the affidavit "shall be served on the limited liability partnership, or, where the limited liability partnership is being wound-up, on its liquidator", not less than 14 days before the date fixed for the hearing of the summons. The summons is in the prescribed form.
Rule 35(3): the Tribunal's directions
On the hearing of the summons or any adjourned hearing, the Tribunal "shall, by order, unless it thinks fit for any reason to dismiss the summons", give directions on:
| Item | Matter |
|---|---|
| (i) | Which creditors and/or partners are to meet |
| (ii) | Time and place of the meeting(s) |
| (iii) | Appointment of a chairman for each meeting |
| (iv) | Quorum and procedure, including voting by proxy |
| (v) | Values of the creditors and/or partners |
| (vi) | Notice of the meeting and any advertisement |
| (vii) | Time within which the chairman reports the result to the Tribunal |
| (viii) | Other matters the Tribunal considers necessary |
Clause (b) says the order "shall be in accordance with the rules as may be laid down in this behalf". The text does not say which rules, so the clause points to rules not found in this text.
Rule 35(4): proxies and body corporate representatives
- Proxy. Voting by proxy is permitted, provided a signed proxy in the prescribed form is filed with the LLP at its registered office not later than 48 hours before the meeting.
- Body corporate. Where a body corporate that is a partner or creditor authorises a representative, a copy of the authorisation, certified true by a designated partner or other authorised officer of that body corporate, is lodged with the LLP at its registered office not later than 48 hours before the meeting.
Rule 35(5) to (7): notice, advertisement and copies
- Notice (5). Notice goes to each creditor or partner individually, by the chairman or, if the Tribunal so directs, by the LLP (or its Liquidator) or any other person the Tribunal directs, by post under certificate of posting to the last known address, not less than 21 clear days before the meeting. It carries a copy of the proposed compromise or arrangement, a statement showing the material interest of the designated partners, if any, and a form of proxy.
- Advertisement (6). The notice is advertised if the Tribunal so decides, in the newspapers and manner it directs.
- Copies (7). Every creditor or partner entitled to attend is furnished by the LLP, without charge and within 48 hours of a requisition, with a copy of the proposed compromise or arrangement.
The rule uses the words "clear days" without defining them, so the counting method should be confirmed from the current Rules.
Rule 35(8): the compliance affidavit
The chairman, or the LLP or other person directed to issue the notices and advertisement, files an affidavit not less than 7 days before the meeting (or the first meeting), showing that the directions on notices and advertisement have been complied with. "In default thereof, the summons shall be posted before the Tribunal for such orders as it may think fit to make."
Rule 35(9): the chairman's report
The chairman of each meeting reports the result to the Tribunal "within the time fixed by the Tribunal, or where no time has been fixed, within seven days after the conclusion of the meeting". The report states accurately the number of creditors or partners present and voting, in person or by proxy, their individual values and the way they voted.
Rule 35(10): petition for confirmation
| Situation | What happens |
|---|---|
| Compromise or arrangement agreed, with or without modification, as in section 60(2) | The LLP, or its Liquidator, presents a petition to the Tribunal for confirmation within seven days of the filing of the chairman's report (10(i)) |
| Proposed for a reconstruction or amalgamation of LLPs | The petitioner prays for appropriate orders and directions under section 62 (proviso) |
| The LLP fails to present the petition | Any creditor or partner may present it with the leave of the Tribunal, and the LLP is liable for the costs (10(ii)) |
| No petition presented, or the requisite majority under section 60(2) was not obtained | The chairman's report is placed before the Tribunal for such orders as may be necessary (10(iii)) |
Rule 35(11): filing the order
An order made by the Tribunal under section 60(3) and section 62(3) "shall be filed with Registrar concerned" in the prescribed form with the annexure fee. An Explanation says that in computing "the period of 30 days from the date of order", the time needed to obtain a certified copy is excluded.
Drafting point. Sub-rule (11) itself states no period. The Explanation speaks of "the period of 30 days from the date of order", which suggests a thirty-day period that the sub-rule does not print. Sub-rule (17)(v) has a thirty-day period for the LLP Administrator's filing, and the Act's sections 60(3) and 62(3) must be read to confirm the period for this filing. This article states it only as a point to verify.
A worked example of the sequence
Pillai Textiles LLP owes money to several creditors and proposes a scheme to pay them in instalments. The LLP applies, with an affidavit annexing the scheme. The Tribunal hears the summons and directs that the creditors meet at a stated time, appoints a chairman, fixes quorum and proxy procedure, and fixes the time for the chairman's report. Notices go by post under certificate of posting at least 21 clear days before the meeting. A creditor that is a company sends its authorised representative, whose certified authorisation reaches the registered office 48 hours before the meeting. The chairman files his report; the scheme is agreed by the requisite majority. The LLP presents a petition for confirmation within seven days of the report, and the Tribunal's order is later filed with the Registrar.
Practical points
- Draft the proposed arrangement first; it is annexed to the affidavit and goes with every notice.
- Count the 21 clear days and the 48-hour and 7-day deadlines carefully; they are fixed.
- Make sure the chairman's report records numbers, values and the way each voted.
- If the LLP does not petition within seven days, a creditor or partner can do so with leave, and the LLP bears the costs.
Need help with a compromise or arrangement?
The sequence of affidavit, directions, notice, meeting and petition has strict timing. Our legal dispute resolution team can advise on the current procedure and represent you.
Key takeaways
- An application to convene a meeting needs an affidavit with the proposed compromise annexed (rule 35(1)).
- The Tribunal's order covers who meets, when, who chairs, quorum, proxies, values, notice and reporting (rule 35(3)).
- Proxies and body corporate authorisations reach the registered office at least 48 hours before the meeting (rule 35(4)).
- Notice goes by post under certificate of posting at least 21 clear days ahead (rule 35(5)).
- The chairman reports within the fixed time, or seven days after the meeting (rule 35(9)).
- The petition for confirmation is due within seven days of the report (rule 35(10)); the order is filed with the Registrar (rule 35(11)).
- All of this is as notified in 2009; check the current Rules.
Read next
- Rule 35: revival and rehabilitation of an LLP and the LLP Administrator
- Rule 34: foreign limited liability partnership
- Rule 41: compounding of offences
Disclaimer: Based on the Limited Liability Partnership Rules, 2009 as notified on 1 April 2009. The Rules have been amended several times since; current forms, fees and time limits must be checked before acting. This article is general information, not legal advice; check the official text before acting.