Partnership Act- Position of minor (Section 30)

Introduction

Minor in general not capable of contract. Partnership is specific type of contract. Hence minor cannot enter into partnership. There is "But" to this idea, and which is provided by Section 30 of Partnership Act. There are certain nuances and subtleties with respect to minor's position.

Section 30 have 8 clauses which deals with different aspects related to minor's position.

Can minor share profits in partnership ?

Clause 1 offers answer to this question. It states that minor may not be partner, but he may be admitted to benefits of partnership. Meaning he can share profits with consent of of all partners.

What are the rights of minor ?

Clause 2 provide explanation to this. Minor can have share in the property of partnership along with the profits. He can also have access to and inspect and copy any of the accounts of the firm.

This is however limited in nature. He can have access to accounts only and not to other books

Liability of minor ?

Share of the minor in property is liable for the acts of the firm, but minor will not be personally liable for any such act.

Can minor sue partners for share and payment ? 

Yes, but in limited way. He cannot sue all the time. In below cases this right is granted

First, when minor want to severe his connection with firm, then his share will be determined by valuation made in accordance with rules contained in section 48.

Second, if other partner had given notice of dissolution and firm is going to be dissolved, and while settlement, share of minor along with other partner

After becoming major, can minor become regular partner ? And How ?

There are two cases.

Example. Let's assume, Sonu is minor, admitted to benefits in a firm "Chocolate Wale". He become 18 years old on 1st January 2019.

Now first case, If Sonu knew that he is admitted to the benefit of partnership, he has to give public notice withing six months. In this case it will be till 30th Jun to either become partner or not to become a partner.

Second Case is assume Sonu didn't know that he is admitted to benefit. He came to know about it on say 15th August. In this case later date is 15th August,so he will have to give notice on this date related to his election or rejection.

Actual date would be the later date. If Sonu come to know before 30th June then He will have to give notice till 30th June.

So to  put in bare act's language, person have to give notice within six month of his attaining majority or when it comes to his knowledge whichever is later.

If notice is not given in stipulated time, by default he will become a partner. So if minor don't want to become partner in that case only notice is needed, because anyways he is going to become a partner.

Burden of proof related to date of knowledge of benefit

The claim that Minor didn't know that he was admitted to partnership will be supported by proof from the side who makes such a claim.

Meaning burden of proving the fact that person has been admitted as minor to the benefits of partnership in the firm and such person had no knowledge of such admission until a particular date is on a  party who makes such a claim.

What if minor decides to become a partner ?

Now say minor was born on 1 Jan 2000. On 10th Jan 2018 he becomes a partner by giving public notice.

Then whatever rights and liabilities vis-a-vis partners of the firm are concerned, they continue to be the same upto the date on which he becomes a partner. His share in profits as well as property will be the same whatever it was at the time of he becoming major.

Important thing is He will also become a liable for firm's act retrospectively. Meaning In above case minor will be liable for firm's all act from 1 Jan 2000 when he was admitted for benefit.

What if minor decides NOT to become a partner ?

In this case his  rights and liabilities will continue up to the date on which he gives public notice of not to become a partner.

His shares will not be liable for any acts of the firm done after the date of the notice.

Even after denouncing partnership, he still can sue the partners for his share of the property in accordance with the sub section 4.


Apart from above provision, it is mentioned that whether minor decides to become a partner or not, his representation for holding out will still be applicable. Meaning section 28 will be applicable to minor irrespective of his decision to join the firm or not.


Thanks,


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