Section 30 of The Indian Partnership Act, 1932- MINOR ADMITTED TO BENEFITS OF PARTNERSHIP

TANMOY MUKHERJI INSTITUTE OF JURIDICAL SCIENCE

Dr. Tanmoy Mukherji

Advocate

 

Section 30 of The Indian Partnership Act, 1932- MINOR ADMITTED TO BENEFITS OF PARTNERSHIP

 

Tanmoy Mukherji

Advocate

SECTION 30(1)-

A person who is a minor according to the law to which he is subject may not be a partner in a firm; but, with the consent of all the partners, he may be admitted to the benefits of partnership.

→Minor has no contractual capacity (Sec. 11, Indian Contract Act).

→Therefore, he cannot be a partner (no agreement), but can be admitted to the benefits with consent of all partners.

CASE LAWS-

SECTION 30(2)-

Such minor has a right to such share of the property and of the profits of the firm as may be agreed upon, and he may have access to and inspect and copy any of the accounts of the firm.

RIGHTS OF MINOR:

→Right to share in the profits of the firm as agreed.

→Right to share in the property (including goodwill).

→Right to inspect and copy the accounts.

CASE LAW:

 SECTION 30(3)-

Such minor’s share is liable for the acts of the firm, but the minor is not personally liable for any such act.

LIABILITY STRUCTURE:

POINTS TO REMEMBER:

→Creditors can proceed only against firm assets and minor’s share.

→Minor’s personal property is completely protected.

CASE LAWS:

SECTION 30(4)-

Such minor may not sue the partners for an account or payment of his share, except when severing his connection with the firm, and in such case the amount of his share shall be determined by valuation.

EXPLANATION:

→Minor cannot sue during subsistence of firm.

→Exception – When he severs connection.

→Then share determined by valuation (as per Sec. 48 principles).

DIAGRAM:

CASE LAW-

SECTION 30(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 not to become a partner in the firm.

If he fails to give such notice, he shall become a partner in the firm on the expiry of the said six months.

DIAGRAM – 6 MONTH RULE:

Basis	Minor Admitted to Benefits (Sec. 30)	Full Partner
Status	Not a partner (only beneficiary)	Partner
Rights	Share in profits, property & accounts	All rights of partner
Liability	Only share liable (Sec. 30(3))	Unlimited liability
Management	No right to participate	Can participate
Can Sue	Only after severance (Sec. 30(4))	Can sue at any time
Majority	Rights depend on election (Sec. 30(5))	N.A.

 

CONCEPT AT A GLANCE-

Minor cannot be a partner, but can be admitted to the benefits of partnership.

OVERALL FLOW DIAGRAM – SECTION 30-

Remember This!

✔ Minor today – Beneficiary.

✔ Adult tomorrow – Decision Maker.

✔ Law gives time, but not forever.

SECTION 30(6)-

Where any person has been admitted as a minor to the benefits of partnership, the burden of proving the fact that such person had no knowledge of such admission shall lie on the person asserting that fact.

 SECTION 30(7)-

Where such person becomes a partner, 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.

 SECTION 30(8)-

Where such person elects not to become a partner, his rights and liabilities shall continue to be those of a minor up to the date of the notice, and his share shall not be liable for any acts of the firm done after the date of the notice; and he shall be entitled to sue the partners for his share of the property and profits.

 SECTION 30(9)-

Nothing in sub-sections (7) and (8) shall affect the provisions of section 28.

Section 28 (Holding Out) - If minor is represented as partner and third party acts on it, firm may be liable to such third party.

IMPORTANT CASE LAWS ON SECTION 30-

CASE	PRINCIPLE LAID DOWN
CIT v. Dwarkadas Khetan & Co. (1961 SC)	Minor cannot be a full partner; partnership deed becomes invalid.
CIT v. Shah Mohandas Sadhuram (1966 SC)	Minor cannot be made liable for losses; only his share is liable.
Shivagouda v. Chandrakant (1965 SC)	If minor fails to give notice within six months, he becomes partner and personally liable.
CIT v. S. K. S. & Co. (1977)	Liability of minor is limited to his share.
CIT v. A.A. Adikappa Chettiar	Minor must make election clearly within time.
Kandathil Cheriya v. I.T. Commissioner	Minor can sue for his share only after severance of connection with the firm.
CIT v. P. Mohamed Haji (1976)	Minor cannot be personally liable before becoming major.
Sadiq Ali v. CIT	Knowledge of admission is presumed unless proved otherwise.
Scarf v. Jardine (UK)	Principle of holding out applicable to minors.
Mahomedbhai v. Ramzan (Bom)	Valuation to determine minor’s share to be done as per Sec. 48 principles.
CIT v. Sunil J. Kinariwala (2003 SC)	Assignment of share does not create sub-partnership.
Kedar Nath Keshardeo v. CIT (1968)	Minor does not automatically become partner on death of a partner.

 

SECTION-WISE SUMMARY TABLE-

Sub-Section	Essence
30(1)	Minor cannot be partner; admitted to benefits with consent.
30(2)	Right to share in profits & property; right to inspect accounts.
30(3)	Share liable for acts of firm; minor not personally liable.
30(4)	Cannot sue partners except after severing connection; share determined by valuation.
30(5)	Within 6 months of majority/knowledge, notice to become or not to become partner; if no notice, becomes partner.
30(6)	Burden of proving lack of knowledge lies on the person asserting.
30(7)	If becomes partner - rights & liabilities continue; personally liable to third parties for past acts.
30(8)	If not become partner - liability up to notice, can sue for share; share not liable for acts after notice.
30(9)	Nothing in sub-sections (7) & (8) affects Sec. 28.