Who is Minor?
A minor is a person who is not at the age of majority, i.e., below the age of 18. He is prohibited to enter into any contract, but he can get benefits from the contract, or from anywhere.
A Partnership is an agreement between the two or more persons to share profits or losses.
A minor cannot be a party to an agreement. An agreement involving minor is void under Indian Contract Act. However, Partnership Act has its own rules regarding minor.
Section 30 lays down that, a minor cannot be a partner even with the consent of all adult partners but he can admitted to gain benefits from the partnership.
Section 30: Minors admitted to the benefits of partnership
(1) A person who is a minor according to the law to which he is subject may not be a partner in a
firm, but, with the consent of all the partners for the time being, he may be admitted to the benefits
of partnership.
(2) Such minor has a right to such share of the property and of the profits of the firm as may be
agreed upon, and he may have access to and inspect and copy any of the accounts of the firm.
(3) Such minor’s share is liable for the acts of the firm, but the minor is not personally liable for any
such act.
(4) Such minor may not sue the partners for an account or payment of his share of the property or
profits of the firm, save when severing his connection with the firm, and in such case the amount of
his share shall be determined by a valuation made as far as possible in accordance with the rules
contained in section 48:
Provided that all the partners acting together or any partner entitled to dissolve the firm upon notice
to other partners may elect in such suit to dissolve the firm, and thereupon the Court shall proceed
with the suit as one for dissolution and for settling accounts between the partners, and the amount
of the share of the minor shall be determined along with the shares of the partners.
(5) At any time within six months of his attaining majority, or of his obtaining knowledge that he had
been admitted to the benefits of partnership, whichever date is later, such person may give public
notice that he has elected to become or that he has elected not to become a partner in the firm, and
such notice shall determine his position as regards the firm:
Provided that, if he fails to give such notice, he shall become a partner in the firm on the expiry of
the said six months.
(6) Where any person has been admitted as a minor to the benefits of partnership in a firm, the
burden of proving the fact that such person had no knowledge of such admission until a particular
date after the expiry of six months of his attaining majority shall lie on the persons asserting that
fact.
(7) Where such person becomes a partner,—
(a) his rights and liabilities as a minor continue up to the date on which he becomes a partner,
but he also becomes personally liable to third parties for all acts of the firm done since he was
admitted to the benefits of partnership, and
(b) his share in the property and profits of the firm shall be the share to which he was entitled
as a minor.
(8) Where such person elects not to become a partner,—
(a) his rights and liabilities shall continue to be those of a minor under this section up to the
date on which he gives public notice,
(b) his share shall not be liable for any acts of the firm done after the date of the notice, and
(c) he shall be entitled to sue the partners for his share of the property and profits in
accordance with sub-section (4).
(9) Nothing in sub-sections (7) and (8) shall affect the provisions of section 28.
RIGHTS OF A MINOR
- A minor admitted to the benefits of partnership has full rights as a partner
- Such minor is entitled to get profit and shares from the firm
- Such minor has access to the books of accounts or other books and can take copies of it.
- Such minor is not personally liable to third party for debts, but his liability is limited to the shares hold by him
- Such minor cannot bring suit against any partner
- Such minor cannot take any part in the conduct of the business as he has no representative capacity
After attaining majority, the minor will be provided 6 months to give a notice of he wants to remain partner or not. On the expiry of such period, he will be deemed as partner in the firm.
If he becomes a partner by giving notice, he will get rights and obligations as that of other partner. But if not, then —
- His rights and liabilities shall continue to be those of a minor upto the date of giving notice
- He can sue partners of the firm for his share
- He shall not be liable for any acts of the firm done after notice
When minor elect to become a partner
- He will be treated as normal partner, but he also becomes personally liable for all the acts of the firm
- His share will remain same as it was during his minority
RELEVANT CASE LAWS
Shivagouda Ravji Patil v. Chandrakant Neelkanth SadalgeAIR 1965 SC 212
Facts: The two firms were carrying the names “M. B. Sadalge” and “C. N. Sadalge” by three Respondents, Mallappa and Appasaheb respondents 2 and 3. Nilakanth Sadalge, respondent 1, was a minor and admitted to getting benefits out of the partnership. The partnership had indebted of Rs. 1,72,484 in the dealing with the appellant, and they both, respondent 2 & 3 were unable to pay the dues. The Partnership firm dissolved and Minor became major during that time and didn’t exercise to become a partner in the firm. The appellant filed an application before the court against all three respondents.
Issue: Whether the 1st Respondent could also be adjudicated insolvent on the basis of the said acts of insolvency committed by respondent 2 & 3?
Judgement: It is said that section 30(5) of the partnership act clears that after attaining a majority, a minor has the opportunity to be a partner or not in the firm within 6 months after giving a public notice. If he fails to give a notice within the said period, then he will become a partner after the expiry of such period. Under sub-section (7), a minor will be personally liable for all acts of the firm after becoming a major when he becomes a partner.
In the present case, the partnership was dissolved before the minor became major; from the date of the dissolution of the partnership, the firm ceases to exist. The partners were liable for the debt they took before the dissolution of the firm. Minor will not be liable for the debt of the firm as he ceases to be a partner in the firm because the firm was dissolved before attaining the age of majority.
Court held that Respondent 1 became a major only after the firm was dissolved, so section 30 does not apply to him.
PRESENT CASE
Q. 3/2018. Arun will be liable for the obligations of the firm from the date of his attaining majority. He cannot be adjudicated insolvent for acts of insolvency as he was a minor during the period of those acts, and he does not automatically become personally liable for them after attaining majority.
