Position of minor in a partnership firm
The Indian Majority Act of 1875, defines a minor as anyone who has not yet attained the age of majority. As per the statue, a domiciled person in India will at the age of eighteen reach the age of majority. The Indian Partnership Act within section 30 talks about a minor being admitted into the partnership. At a closer examination of the clause, especially section 30(1), it is said that a minor can be admitted to the benefits of the partnership firm with the due consent of the other partners, but a minor cannot be a full-fledged partner in cases of partnership.
Rights of Minor :
A minor admitted to the benefits of a partnership has all the rights of a full partner.
• Such minor is entitled to his agreed shares of the property and of the profits of the firm.
• Such minor has the right to access and taking copies of the book of accounts of the firm. It follows that he has no right of access to those other books of the firm which do not contain matters of account.[Section 30(2)]
• Such minor is not personally liable to the third parties for the debts of the firm, but his liability is limited only up to his shares in the partnership assets and profits.
For instance, if the partnership assets fall short in distinguishing the debts of the firm the separate personal property of the minor cannot be applied for the payment of the debts.
• Such minor cannot bring any suit against the partners for an account or payment of his share of the property or profits of the firm unless he first serves his connection with the firm.[Section 30(4)]
• Such minor is not entitled to take part in the conducting of the business as he has no representative capacity to bind the firm.
• Where the minor becomes a partner by his own choice or by failure to give within the specified time six months after attaining the age of majority, he becomes personally liable to the third parties for all the debts of the firm retrospectively from the date of his admission to the benefits of partnership.
Rights of the minor if he elects not to become a partner:
• His rights and liabilities shall continue to be those of a minor up to the date of giving public notice;
• His share shall not be liable for any acts of the firm done after the date of the notice;
•He shall be entitled to sue the partners for his share of the property and profits.
• If after attaining the age of majority but before choosing to become a partner the minor represent and knowingly permits himself to be represented as a partner in the firm, he will be personally liable to anyone who on the faith of such representation granted credit to the firm on the ground of ‘holding out’.
Liabilities of minor :
Liability during minority :
Sub-section 3 of section 30 says that “such minor’s share is liable for the acts of the firm, but the minor is not personally liable for any such act.”
In, Addepally Nageswara Rao and Bros v. CIT,the Andhra Pradesh High Court held that he contributes capital or is entitled to get benefit in the profits of the firm, it is to that extent that the liability can be fastened on the minor. But in no case, the person of the minor or his other property which he has not brought into the assets of the partnership can be held liable. That is the purport and scope of Section 30(3) of the Indian Partnership Act.
