Partnership Deed vs LLP Agreement in India: What Each Must Contain and What Happens If You Do Not Register
A partnership deed and an LLP agreement look alike and work differently: one is governed by the Partnership Act, 1932 and the Register of Firms, the other by the LLP Act, 2008 and a filing with the Registrar. The clauses each needs, the cost of not registering, and how to execute them.
Two founders starting a consultancy, a family running a trading business, a group of professionals setting up a practice: each will sign either a partnership deed or an LLP agreement. The documents overlap in content and differ sharply in legal consequence. This guide explains both, the clauses each needs, and the registration step that most people underrate. Position as of October 2026.
The legal frames
Partnership firm. Governed by the Indian Partnership Act, 1932. The deed is a contract among partners; the firm is not a separate legal person; partners are jointly and severally liable. Registration with the Registrar of Firms is optional in law but, as explained below, practically essential.
Limited liability partnership. Governed by the Limited Liability Partnership Act, 2008. The LLP is a body corporate with separate legal personality and perpetual succession; partners' liability is limited. Section 23 provides that the mutual rights and duties of the partners, and of the LLP and its partners, are governed by the LLP agreement, which must be "filed with the Registrar in such form, manner and accompanied by such fees as may be prescribed"; in the absence of agreement on a matter, the provisions of the First Schedule apply. Under rule 21 of the LLP Rules, 2009, the agreement is filed in Form 3 within 30 days.
The cost of not registering a partnership
Section 69 of the Partnership Act is the trap. For an unregistered firm:
- A partner cannot sue the firm or other partners to enforce a right arising from the deed or the Act (section 69(1)).
- The firm cannot sue a third party to enforce a right arising from a contract (section 69(2)).
- The bar extends to set-off and other proceedings to enforce contractual rights (section 69(3)), with exceptions for suits for dissolution and accounts of a dissolved firm and certain insolvency proceedings.
The Supreme Court applied the bar in Sunkari Tirumala Rao v. Penki Aruna Kumari (17 January 2025), holding a recovery suit between partners of an unregistered firm barred under section 69(1) while noting that a suit for dissolution and accounts falls outside it. An unregistered firm that cannot sue its own customers for unpaid invoices has a serious commercial problem. Register.
Clauses both documents need
| Clause | Partnership deed | LLP agreement |
|---|---|---|
| Name, business, registered office | Yes | Yes |
| Partners, capital contribution, profit-sharing ratio | Yes | Yes (First Schedule default: equal shares) |
| Roles, authority, decision-making, meetings | Yes | Yes (designated partners' duties) |
| Admission, retirement, expulsion, death | Yes | Yes |
| Non-compete during the term; confidentiality | Yes (post-term restraint limited by Contract Act s. 27, with the sale-of-goodwill exception) | Same |
| Accounts, audit, bank operation | Yes | Yes (statutory audit thresholds under the LLP Act) |
| Dispute resolution | Arbitration recommended | Arbitration recommended |
| Dissolution and winding up | Yes | Yes (LLP Act procedure) |
| Amendment | Supplementary deed | Supplementary agreement filed in Form 3 |
Stamp duty and execution
Both are chargeable instruments. Partnership deeds have their own article in most state schedules; LLP agreements are charged either under a partnership entry that covers them or under the residual "any other agreement" entry, depending on the state. Stamp before or at execution (section 17, Indian Stamp Act, 1899). Neither is excluded by the IT Act's First Schedule, so they can be e-signed with DSC or Aadhaar eSign; for the LLP filing, confirm the Registrar's current requirements for the executed copy. ****
After signing
- Partnership: apply to the Registrar of Firms with the deed; obtain PAN; register for GST if required.
- LLP: file Form 3 within 30 days of the agreement; obtain PAN; maintain the statutory registers.
- Both: calendar the events the deed or agreement makes dated (capital calls, profit distribution dates, retirement notice periods, audit deadlines) and keep the executed document, stamp certificate and filing acknowledgements together.
Where Legatio fits. Legatio holds partnership and LLP agreement templates, executes them with the audit trail, and tracks the registration and filing tasks and the dated obligations. The choice of structure is for your adviser.
Position stated as of October 2026. General information, not legal advice.