Section 60 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.
Section 60 lets an LLP settle with its creditors or with its partners under the supervision of the Tribunal. The Tribunal orders a meeting, a three-fourths majority in value can agree to a deal, and once the Tribunal sanctions it, the deal binds everyone in that class. For help structuring a settlement with creditors, speak to our legal consultation team.
Where a compromise or arrangement is proposed between the LLP and its creditors, or between the LLP and its partners, the Tribunal may order a meeting (60(1)). If a majority representing three-fourths in value agrees and the Tribunal sanctions, the deal binds all creditors or partners and the LLP (60(2)). The order must be filed within thirty days and takes effect only after filing (60(3)). Default now draws a penalty of Rs 10,000 plus Rs 100 a day (60(4), as substituted in 2021).
Section 60 at a glance
| Sub-section | What it provides |
|---|---|
| 60(1) | Tribunal may order a meeting of creditors or partners on application |
| 60(2) | Three-fourths in value agrees; Tribunal sanction makes it binding; disclosure proviso |
| 60(3) | Order filed within thirty days; effective only on filing |
| 60(4) | Penalty for default in 60(3) |
| 60(5) | Tribunal may stay suits and proceedings against the LLP |
"Tribunal" means the National Company Law Tribunal constituted under section 408 of the Companies Act, 2013 (s.2(1)(u) as amended).
Section 60(1): who can ask for a meeting
Two types of arrangement are covered: (a) between the LLP and its creditors, and (b) between the LLP and its partners. The application may be made by:
- the LLP;
- any creditor or partner; or
- where the LLP is being wound up, the liquidator.
The Tribunal "may" order a meeting of the creditors or partners "to be called, held and conducted in such manner as may be prescribed or as the Tribunal directs". The word "may" leaves it to the Tribunal; there is no right to a meeting. The rules under section 79(2) deal with the manner of calling, holding and conducting the meeting.
Section 60(2): the three-fourths majority and the sanction
If "a majority representing three-fourths in value of the creditors, or partners, as the case may be, at the meeting" agree, the compromise or arrangement, "if sanctioned by the Tribunal, by order", is binding on all the creditors or all the partners, and on the LLP. Where the LLP is being wound up, it binds the liquidator and the contributories.
Three things to notice:
- The test is three-fourths in value, of those at the meeting. The text speaks of a majority "representing" that value. It does not add a separate headcount test.
- Sanction is separate from the vote. The vote alone does not bind anyone; the Tribunal's order does.
- The text uses "creditors" and "partners" for the two classes; it does not define classes further.
The disclosure proviso
The Tribunal may not sanction unless it is satisfied that the LLP, or any other applicant, "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." A deal built on an incomplete picture of the LLP's affairs is therefore exposed. See our article on investigation of an LLP's affairs for how investigations arise.
Section 60(3): file within thirty days
The order of the Tribunal under 60(2) "shall be filed by the limited liability partnership with the ... within thirty days after making such an order and shall have effect only after it is so filed." In the OCR copy the name of the filing authority is missing from the printed line; section 62(3) uses "the Registrar" for the same step, so the Registrar is the likely recipient, but check the official text. The practical rule is clear: until filed, the order has no effect.
Section 60(4): penalty after 2021
As substituted by clause 17 of the 2021 Act: "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."
| Point | Detail |
|---|---|
| Who | The LLP and its every designated partner |
| Base penalty | Rs 10,000 |
| Continuing default | Further Rs 100 for each day after the first |
| Cap | Rs 1,00,000 for the LLP; Rs 50,000 for every designated partner |
| Before 2021 | Punishable with fine which may extend to one lakh rupees (original text) |
Example. Raman Textiles LLP's creditors approve a settlement by three-fourths in value, and the Tribunal sanctions it on 3 June. The LLP does not file the order by 3 July. Under 60(3) the order has no effect until it is filed, and under 60(4) the LLP and each designated partner face the penalty above for the delay.
Section 60(5): stay of suits
At any time after an application is made, the Tribunal "may ... 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." It is a discretionary power, and the terms are for the Tribunal. This gives a pending proposal some breathing room.
What comes after sanction
Once an order is made, section 61 gives the Tribunal power to supervise the working of the deal and, if it cannot be worked satisfactorily, to order winding up. Section 62 adds powers for reconstruction and amalgamation. See our article on sections 61 and 62. Our guide on compromise and arrangement for an LLP covers the topic in practice.
Need help with a compromise or arrangement?
A proposal that reaches the Tribunal needs accurate disclosure, a clear classification of creditors or partners and a record of the vote. Our legal consultation team can review your position and the likely route before you file.
Key takeaways
- Tribunal may order a meeting of creditors or partners on an application by the LLP, a creditor, a partner or a liquidator (60(1)).
- Three-fourths in value must agree, and the Tribunal must sanction (60(2)).
- Full disclosure of material facts is a condition of sanction.
- The order must be filed within thirty days and takes effect only after filing (60(3)).
- Since 2021, default draws Rs 10,000 plus Rs 100 a day, with caps (60(4)).
Read next
- Sections 61–62: enforcing arrangements, reconstruction and amalgamation
- Section 59: foreign limited liability partnerships
- Compromise and Arrangement for LLP
- Winding Up and Dissolution of LLP
Disclaimer: Based on the Limited Liability Partnership Act, 2008 as amended by the Limited Liability Partnership (Amendment) Act, 2021, as consulted on 1 October 2026. Forms, fees and procedure are set by the LLP Rules, 2009 as amended from time to time. This article is general information, not legal advice; check the official text before acting.