Minor as partner in a Partnership Firm – Indian Partnership Act.
As a minor he/she is not capable of entering into any contract thus, any agreement by, or with a minor is void ob initio. (Leading case: Mohit vs. Babita Ghosh).
As partnership is created by an agreement, a minor thus cannot enter into partnership, though he can be admitted to the benefits of the firm only with the consent of all the other partners.
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Rights of a minor admitted to the benefits of a partnership are:
He has the right to share the profits and the property of the firm in accordance with the agreement.
However, he cannot participate in the conduct of the business. He has the right to have access to, and inspect, and copy, any of the accounts of the firm.
However, his right is only limited to the books of accounts and not in respect of other books.
When he is not given his due share of the profits he has the right to file a snit for his share of profits or the property of the firm.
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He can become a partner in the firm on attaining majority and lie would be entitled to the same amount of share as he was getting as a minor.
He can use his option to serve his connections from the firm on attaining majority by giving a public notice of the same.
Liabilities of a minor admitted to the benefits of a partnership are:
He is only liable to the extent of his share in the profits and the property and he is not personally liable to the third parties.
Therefore, his private property cannot be used for the payments of the firm’s debts incurred in his minority. He cannot be declared insolvent in case the firm’s debts cannot be repaid out of the property of the firm.
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Position on attaining Majority.
Within six months of his attaining majority or his obtaining knowledge that he had been admitted to the benefits of the firm, which ever is later, the minor partner has to exercise his option, whether or not to become a partner. In case he fails to give a public notice within six months then it is presumed that he wishes to be partner.
His liability when he becomes a partner.
When the minor becomes a partner of his own volition or failure to give public notice in the specified time, then his rights and liabilities according to Section 30(7) are:
- He becomes personally liable to the third parties for all the acts done since he was admitted to the benefits of the partnership.
- His share in profits and property remains the same as he was entitled to as a minor.
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However, when he selects not to become a partner then according to Section 30(8) his rights and liabilities are:
- Up to the date of giving public notice his rights and liabilities remain the same of a minor.
- His share is not liable for any acts of the firm done after the date of public notice.
- He is entitled to sue the partners for his share of the profits and property in the firm.