"Brown Solutions LLP" was formed in India to provide solar panel installation solutions. Mr. Pradeep, an NRI, considered inducting: (1) Mr. Rajeev,…

CA Intermediate · Corporate and Other Laws · MTP · September 2026
"Brown Solutions LLP" was formed in India to provide solar panel installation solutions. Mr. Pradeep, an NRI, considered inducting: (1) Mr. Rajeev, who resided in India from 2nd July 2023 to 30th October 2023; (2) Ms. Jenny, a U.S.A. citizen visiting India on a business visa; (3) Darkhorse LLP, a Singapore-registered LLP; and (4) Urban Tech Pvt. Ltd., an Indian private company. They jointly decided to appoint Mr. Rajeev and Mr. Pradeep as designated partners. The LLP's registered office is in Jaipur. It was registered on 12-12-2024. Six months later, Brown-Tech Solutions Ltd. discovered the registration and, believing the LLP's name could cause confusion or dilute its brand, filed a complaint before the Registrar. Contributions under the LLP Agreement: Mr. Rajeev — ₹ 5,00,000 cash; Mr. Pradeep — ₹ 8,00,000 cash; Ms. Jenny — a patented AI algorithm valued at ₹ 11,00,000; Darkhorse LLP — specialised solar equipment valued at ₹ 15,00,000; Urban Tech Pvt. Ltd. — R&D services over 2 years, valued at ₹ 20,00,000. Mr. Rajeev, without informing his partners, used the LLP's letterhead to contract with Wardha Corporation for solar equipment worth ₹ 20 lakh for his own personal use; when Wardha Corporation sought payment from the LLP, Rajeev admitted the purchase was personal. Separately, a client sued the LLP for ₹ 15 lakh in damages over a legitimate project (handled by Ms. Jenny and Darkhorse LLP) that went wrong, and demanded payment from Jenny's and Darkhorse LLP's personal assets since LLP assets were said to be insufficient. Current position: LLP assets ₹ 50 lakh; existing LLP liabilities ₹ 30 lakh; Wardha Corporation's claim ₹ 20 lakh; client's legitimate claim ₹ 15 lakh. For a new project needing ₹ 15 lakh, Ms. Jenny lent ₹ 5 lakh to the LLP at 5% interest under a formal loan agreement; the LLP simultaneously took a similar loan from Hem Finance Ltd. (an NBFC). On default, Ms. Jenny claimed repayment priority owing to her fiduciary position as a partner; Hem Finance Ltd. disputed this. In light of the above facts, answer the following Multiple Choice Questions (Each MCQ 2 Marks):
(A) (a) No, since Mr. Pradeep is an NRI he cannot form an LLP or become a designated partner.
(B) (b) Yes Mr. Rajeev, having stayed in India for more than 120 days in the relevant period, satisfies the "resident in India" test; he, together with Mr. Pradeep (an NRI, who faces no bar on being a designated partner), can be appointed as the LLP's two designated partners.
(C) (c) No, both designated partners must have resided in India for more than 180 days to qualify.
(D) (d) Yes, both can become designated partners only because they are citizens of India.

Suggested Answer and Working Notes:

Correct Answer: Option (B)

(b) Yes Mr. Rajeev, having stayed in India for more than 120 days in the relevant period, satisfies the "resident in India" test; he, together with Mr. Pradeep (an NRI, who faces no bar on being a designated partner), can be appointed as the LLP's two designated partners.

Topics: The Foreign Exchange Management Act, 1999, The Limited Liability Partnership Act, 2008

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