Position of minor
Section 30 of the Indian Partnership Act 1932 contains legal provisions regarding a minor in a partnership. We now know that the Indian Contract Act 1857 clearly states that no person is under 18 years of age, that is, minors may be parties to a contract. Therefore, in any partnership firm a minor cannot be a partner.
However, according to the Partnership Act, a minor can be admitted for partnership benefits. Although a minor cannot become a partner but he/she can enjoy the benefits of the firm. All the partners of the firm must be in agreement for giving the benefits to the minor in the partnership.
Rights of a minor
- A minor partner would clearly have a right to his share of the profits of the firm. But the minor partner is not liable for any loss beyond his interests in the firm. Therefore the liquidation of the personal assets of a minor partner cannot be used to pay the liabilities of the companies.
- He can also inspect the books of the firm like other partners of the firm. He can ask for the copy of the books as well.
- If necessary, he can sue any or all other partners for his share of profits or profits.
- Upon attaining majority, a minor partner has the right to become a partner of the firm. He has six months from obtaining a majority to decide to execute this right. Whether he decides to become a partner or not, he should give public notice about the same.
Liabilities of a Minor Partner
- A minor cannot be held personally liable for the loss of the firm. And if the firm declares bankruptcy, the minor’s share is kept with the official receiver.
- After attaining the age of majority or 18, the minor has to choose that whether he wants to become a partner or not. But he can choose not to be a partner. In this case, the minor partner must provide a public notice regarding this decision. And notice has to be given within 6 months of securing majority. If no such notice is given even after 6 months, the minor partner will become liable for all acts done by the other partners by the date of such notice.
- If the minor partner become a partner, he will be liable to all third parties for the acts performed by any and all partners as he/she was admitted for the benefits of the partnership.
- If he becomes a full-time partner, he will be considered a normal partner and will have all his liabilities. His share in the firm’s profits and assets would remain the same as when he was a minor partner.
Case Laws
CIT vs. Dwarkadas & Co: – The Supreme Court held that a minor cannot become a full partner in an existing firm. Section 30 only allows the minor to get benefits from the firm. The Honorable Judge then continued to observe: – “Section 30 of the Indian Partnership Act clearly states that a minor cannot become a partner, however, with the consent of the adult partners, he/she can be admitted for partnership benefits. Any document that goes beyond this section cannot be considered valid for the purpose of registration.
