# Cessation of Partnership Interest [Section 24]

## How a Partner Ceases

### (A) As per LLP Agreement

A person may cease to be a partner in accordance with the LLP agreement.

### (B) In Absence of Agreement

By giving notice of intention to resign of NOT LESS than 30 days to other partners.

### (C) Automatic Cessation

A person shall cease to be a partner on:

1. His death, OR

2. Dissolution of the LLP, OR

3. Being declared of unsound mind by a competent court, OR

4. Having applied to be adjudged insolvent OR being declared insolvent

## Effect of Cessation — Position of Former Partner

### 1. Continuing Obligation

Cessation does NOT discharge the partner from any obligation incurred while he was a partner.

### 2. Holding Out — Deemed Partner for Outsiders

A former partner is still regarded as a partner of the LLP for the purposes of dealings between the LLP and any person — EXCEPT if:

The person dealing with the LLP has notice that the former partner has ceased, OR
Notice of cessation has been delivered to the ROC

## Why This Matters

This 'holding out' rule protects third parties who may have relied on the partner's apparent authority. The cleanest way for a ceasing partner to terminate this exposure is to ensure filing with the ROC.

Worked example

### Example 1

Q: Mr. R is a partner in PQR LLP. There is no clause in the LLP Agreement on cessation. Can he resign? How?

A: Yes. In absence of agreement, Mr. R may cease as partner by giving a notice in writing of NOT LESS than 30 days to the other partners.

### Example 2

Q: Mr. S ceased as partner of XYZ LLP on 1-Mar-2026. No notice was filed with ROC. On 15-Apr-2026, Mr. T (who did not know about S's cessation) entered into a contract believing S is still a partner. Is the LLP bound?

A: Yes. Since neither did Mr. T have notice of S's cessation nor was notice filed with ROC, Mr. S is regarded as a partner for purposes of the LLP's dealing with Mr. T. The LLP is bound.

### Example 3

Q: Mr. A, a partner in ABC LLP, was declared of unsound mind on 10-Jun-2026. Does he automatically cease as partner?

A: Yes. Under Section 24, a person shall cease to be a partner on being declared of unsound mind by a competent court — automatic cessation, no notice needed.

⚠️ Common exam mistakes

Stating notice period as 30 days — it is 'not LESS than 30 days' (i.e., 30 days or more).
Believing cessation discharges the former partner from past obligations — it does not.
Forgetting the dual condition for ending 'holding out' exposure — actual notice to the third party OR notice filed with ROC.

Bare-Act text Section 24 · The Limited Liability Partnership Act, 2008 · click to expand

Section 24 - Cessation of partnership interest: A person may cease to be a partner of a LLP in accordance with an agreement with the other partners or, in the absence of agreement with the other partners as to cessation of being a partner, by giving a notice in writing of not less than thirty days to the other partners of his intention to resign as partner. A person shall cease to be a partner of a LLP on his death or dissolution of the LLP, or if he is declared to be of unsound mind by a competent court, or if he has applied to be adjudged as an insolvent or declared as an insolvent.

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