Indian Contract Act, 1872 states that a person only who is of sound mind, attained majority and not disqualified can enter into the contract and is a competent party to contract, it is mentioned under Section 11 of the given Act. A person who is below 18 years of age and hasn’t attained the majority is minor. Provisions for attainment of majority are mentioned under Section 3 of the Indian Majority Act of 1875.
Section 4 of the Partnership Act, 1932 states that “Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into a partnership with one another are called individually “partners” and collectively a “firm”, and the name under which their business is carried on is called the “firm name”.
Minors right to partnership is mentioned in Section 30 of the Partnership Act. Section 30 of the Act says that minors can be admitted to the benefits of the partnership. He can enjoy the benefits of the partnership like share in profits but it is possible only when he is admitted with the consensus of all the partners in the firm. Minor cannot have all the rights of the partners and he can’t be the full partner of the firm it is mentioned in the sub-section (1) of the act. Furthermore, the said section also deals with the extent to which a minor can be made liable about “acts of the firm”.
In this article, the focus is drawn upon the benefits that minors get when he is admitted to a partnership firm, rights, and liabilities of the minors and what are disadvantages for entering minors into partnership.
Minors can be admitted only for the benefits of the partnership
The Act of the Indian Partnership was drafted by a special committee, before the enactment of this act, the provisions of the Partnership Act was provided from the Indian Contract Act. When the draft was created by the special committee, no major changes were done. They believed that the provisions under Section 11 of the Indian Contract Act about the incapability of the minors in the admission of the contract need not be changed. Following this, the Committee did not allow minors to become a partner in a partnership, although they allowed a minor to be admitted to the benefits of a partnership. In Mahori Bibi’s v. Dharmodas Ghose case it was held by the privy council that the minors could be given benefits of a partnership.
In the S.C. Mandal v. Krishnadhan case it was held that under Section 4 of the Partnership Act, a firm means a bunch of individuals who have entered into a contract of partnership among themselves and reading it with Section 11 of the Contract Act, it is often interpreted that a minor can’t be a neighborhood of the contracted partnership. A minor can only be admitted to the advantages of a partnership, which partnership has got to exist independently. There can be cannot be no independent contract between two minors.
In Shriram sardarmal didwani v. Gourishankar it was held that minors are incompetent to form a contract and partnership contracts cannot be entered by them. In H.R.G Ram v. Commissioner of Income Tax It was held by the High court of Allahabad that any partnership deed which divides the obligations and rights between the main and minor partners equally is going to be invalid because it is going to be in contravention of Section 30 of the Indian Partnership Act. After all, in such a case not only the advantages are given to the minor, but liabilities also are being imposed upon the minor.
Rights and Liabilities of Minors
Rights of minors in Partnership
The followings rights of the minors are: –
A minor has the right to share the profit of the share and property as decided or agreed upon by the partners, he has access to the accounts of the firms. “It follows that he has no right of access to those other books of the firm which do not contain matters of account.” Mention under Section 30 (2) of the partnership act. Minors are not liable for the loss of the firm. They also have the right to claim for the benefits of the partnership. He has no right to participate in the conduct of the business.
“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.” says Section 30 (5) of the given act.
“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 did not know such admission until a particular date after the expiry of six months of his attaining majority shall lie on the persons asserting that fact.” says section 30(6) of the given Act.
The following are the liabilities of the minors: –
Under Section 30(3) of the Act states 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 the case of S.C. Mandal v. Ashutosh Ghose it was held by the Court that the creditors of the firm can only recover the quantity from a minor to the extent of his share within the firm, but they can’t sue the minor personally. The full-fledged partners don’t enjoy this benefit as they will be made personally liable.
Liabilities after attaining majority
“(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 did not know 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 by sub-section (4).
(9) Nothing in sub-section (7) and (8) shall affect the provisions of section 28.”
Section 28 discusses the holding out which states that if a minor has misrepresented some fact, he’ll be responsible for holding out. Therefore, if a minor even after leaving the partnership represents himself as a partner, he’ll be stopped from denying it later.
Minors are the below 18 years and they haven’t attained the maturity to form the decision hence it is not possible to make them a full partner. Limited rights and liabilities provide the minor with sufficient power and stance in the company. To become a partner, they need to come into the contract hence it is not possible to enter into the contract as it is null and void and it does not allow minors to become partners. After attaining the majority then only they can become the partner of the firm and contribute to the losses of the firm as then they become efficient to contribute to the business. Minors can only be admitted for the benefits and they have no liability because below 18 years cannot earn legally.
- How does the Indian Majority Act play a role in minor admission to partnership?
- What are the rights and liabilities of minors?
- What are the liabilities of minors when they attain majority?
 The Indian Partnership Act, section 30
 The Indian Partnership Act, section 30, sub-section 1
 The Indian Partnership Act, section 30, sub-section 3.
 ILR(1903) 30 Cal. 539 (PC)
 (1922) 24 BOMLR 700
 AIR 1961 Bom 136
  18 ITR 106
 AIR 1915 Cal 482