by Shruti Prakash Pandav
Partnership means when two or more than two persons join hands for business or profit making through a contract. The profit out of this partnership as well as the liabilities is shared equally among all the partners. This act of profit making and sharing is governed by Indian Partnership Act,1932. All the individual partners should be competent to be in a contract for legally eligible for partnership. All the individual partners should be:-
● Above 18 years of age i.e. Major
● Sound mind
● Not disqualified by any law in force
If all the partners are competent to enter into a contract, they can enter into a partnership also but if any of the above is not fulfilled, the contract as well as the partnership will be held void and illegal under the eye of law. Therefore, one must full-fill all the conditions to be a valid contract to be able to enter into a legal partnership.
MINOR AS A PARTNER :
Minor is a person who has not attained 18 years of age and cannot be a partner because he is not competent to contract as a contract with a minor is void-ab-initio. The Indian Majority act, 1875 sets the majority age limit to 18 years of age to make sure that the person is able to understand his position as a partner and also makes a rational judgement in benefit for his other partners and firm or any business organisation. But section 30 of Indian Partnership Act, deals with an exception to this rule as it deals with minors admitted to the benefit of partnership. Since a minor cannot be a partner, section 30 gives him a right that he can get all the benefits out of the partnership, only if all the other partners agree for the minor to be a partner and give consent for the same.
RIGHTS OF A MINOR AS A PARTNER :
· Share of Profits- A minor as a partner, has full right to get all the shares of the profits made by the partnership firm.
· Share of the property- He has also the right to get his part of share from the ownership of property by the partnership firm.
· Access to all the accounts- he can access to all the accounts or documents related to profits but this right is limited as he cannot access to all the books.
· No right to file a suit- if in any case, the minor as a partner is not given his share of profits or property, he does not have the right to file a suit against the partnership firm, but if he detach himself from the firm with consent of all the other partners or the firm gets dissolved, the court may further decide on the accounts of the firm.
LIABILITIES OF A MINOR AS A PARTNER :
Liabilities of a minor as a partner are limited as he can only to liable to an extent to profits or property. A minor cannot be personally liable for any conduct of the partnership firm.
In another landmark case of Commissioner of Income tax v. Dwarkadas Khetan and co, 1961 the apex court overruled the previous Bombay high court judgement. In this case, in a partnership of four partners, one was a minor named Kantilal but he was represented as a full- fledged partner of the firm with all the profits and liabilities of a regular partner and it was further given for registration. In this case the minor partner was also given the right to vote. The hon’ble Judge held that in accordance to section 30, a minor cannot be a full-fledged partner but he can be entitled to all the benefits of the firm with consent of the other partners, but in this case since the minor is given the right to vote, the court considers the registration of this partnership. In the case of Sanyani Charan Mandal v Ashutosh Ghose, in this case the court held that a minor as a partner cannot be held insolvent in any case even if other partners are declared as insolvent.
POSITION OF A MINOR AS A PARTNER AFTER ATTAINING THE MAJORITY AGE :
After the minor attains 18 years of age, he gets 6 months of time to decide to be elected as a full partner with all the rights and liabilities of the partnership and declare the same. If he declares to be a partner,
● He gets all the rights and liabilities liker the other partners
● He can get personally liable for all the acts of the partnership firm
● He gets equal share of all the profits and property of the firm and can also access to all the accounts as well as books of the firm.
But, if after the expiration of 6 months of time, he rejects to be a partner, he will continue to get all the benefits and liabilities as he had as a minor partner. In the very interesting case of Shivgouda Rajiv Patil v. Chandrakant Neelkanth Sedalge, 1964 in which there were four partners in the partnership firm, one of them was a minor but was with consent of the other partners, admitted to the benefits of the firm. Due to some reason, the following partnership got dissolved and meanwhile the minor partner attained 18 years of age. Some people filed a case against the firm for clearing the debts and each partner was held liable. The question was that is the minor who recently became major liable to pay the debts. The Supreme court held that since at the time of dissolution, the person was still a minor, he is not entitled to pay any debts and hence section 30 if Indian Partnership act does not apply.
To create the relationship of partnership, there must be a contact between the partners and hence, a minor is not capable of a contract and a contact with a minor is null and void. The decision of the apex court in various case laws states that a minor in any condition cannot be a full-fledged partner and does not have full rights and liabilities of a regular partner. The only plus point that section 30 of Indian Partnership act gives is that he, with the consent of other partners, can be admitted to the benefits for profits arising out of the partnership. Minor as a partner has very limited rights and liabilities also.