TABLE OF CONTENTS

ACKNOWLEDGEMENTS...............................................................................................................2

INTRODUCTION...........................................................................................................................4

HYPOTHESIS................................................................................................................................4

RESEARCH METHODOLOGY........................................................................................................4

OBJECTIVES AND SCOPE.............................................................................................................5

RESEARCH QUESTIONS................................................................................................................5

MINOR PARTNERS- LEGAL ASPECTS............................................................................................5

LEGAL PROVISION.......................................................................................................................6

Section 30-Minor Admitted To The Benefits Of Partnership.................................................6

Scope of the Section...............................................................................................................7

Application.............................................................................................................................7

Status: Sub-clause (1).............................................................................................................8

Extent of share: Sub-clause (2)..............................................................................................8

Liability: Sub-clause (3).........................................................................................................9

Capacity to sue: Sub-clause (4)..............................................................................................9

Attainment of majority: Sub-clause (5)................................................................................10

ROLE OF GUARDIAN..................................................................................................................10

MINOR’S PARTICIPATION IN BUSINESS.......................................................................................11

MINOR CAN BE ADMITTED ONLY TO THE BENEFITS OF A PARTNERSHIP ..................................11

RIGHTS AND LIABILITIES OF THE MINOR..................................................................................13

POSITION OF A MINOR ON ATTAINING MAJORITY......................................................................14

FORMATS OF AGREEMENTS.......................................................................................................16

CONCLUSION.............................................................................................................................18

BIBLIOGRAPHY.........................................................................................................................19
 MINOR UNDER PARTNERSHIP ACT

INTRODUCTION
Section 30 deals with the rights and liabilities of a minor who is entitled to the benefits of a
partnership. That being said, sub-section (1) makes it very clear that the minor cannot in any
case be a full-fledged partner in a partnership, but can only be admitted to the benefits of a
partnership by consent of all the partners. Further, the section talks about the position of
minor vis-à-vis the partnership post attainment of majority. Furthermore, the said section also
deals with the extent to which a minor can be made liable with regard to “acts of the firm”.

A minor is someone who is yet to attain majority under the law of the land he is subject to.
The law of the land to which an Indian minor would be subject to is the Indian Majority Act,
1875. Section 30 of the aforementioned act makes it clear that eighteen is the age at which a
person domiciled in India is deemed to have attained majority.

HYPOTHESIS
According to Section 4 of Indian Partnership Act following are the 4 essentials of partnership.
1. There must be an agreement to constitute partnership.
2. Partnership must be organized to constitute a business.
3. There must be an agreement to share profit of the business between the Partners
4. The business must be carried out by all or one acting for all.
Even if all these essentials are met with, then also there are some categories of individuals
who are not competent to enter into the partnership agreement. Minors are such category of
individuals who are not competent to enter into the partnership deed even though all the
requirements of section 4 are met with. This exception has been made by the legislature with
an intention.

RESEARCH METHODOLOGY
The views presented in this project are on the basis of secondary resources on predetermined
content and general ideas. All the research herein is doctrinal.

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OBJECTIVES AND SCOPE

1 To understand the concept of minor as a partner in a partnership firm including
subjects such as: rights of a minor, liabilities of a minor, duties of a minor.

2 To know the position of a minor under the Indian law of partnership.

3 To examine rights and liability of minors in Partnership Act, 1932.

4 To examine the issues raised before the Courts in relation to minors under Partnership
Act.

RESEARCH QUESTIONS
1. Whether a minor can be admitted in the business of a partnership firm?
2. Is a suit by a minor maintainable?
3. What is the liability of a minor on attaining majority?
4. Can a partnership firm that has appointed a minor as a full partner with equal rights
and obligations as that of adults be registered?

MINOR PARTNERS- LEGAL ASPECTS

Under the Indian Contract Act 1872, in terms of Section 11, only such persons as are
competent to contract : Who are of sound mind, are not disqualified from continuing by law
in force. In other words a minor who is not a person competent to contract in the eye of law
as such, would not be entitled to become partner. Under section 30 (1) of the Indian
Partnership Act, 1932 a minor can be admitted to the share of profits of a partnership firm. In
other words minor cannot become full fledged partner and he shares only in the profits of the
firm and not in losses.

In case where a minor is admitted to the benefits of partnership, the following legal
propositions shall be valid: The minor should not be made liable for the losses in the firm.
The guardian of the minor should sign the deed.

The minors should not be treated as full partners. The partnership deed if otherwise valid is
not rendered invalid merely because minor has also signed the deed. The deed should specify
the share of profits and losses in the firm. A minor admitted to the benefits of partnership is

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entitled to share in profits and not in the losses. Though a minor cannot be made liable for
losses, the share of the minors may be made liable for the acts of the firm without attaching
any personal liability. As regards the minor’s position in a firm of partnership, the well known
ruling of the Privy Council in Mohari Bibi v. Dharmodas Ghose that a minor cannot be bound
by a contract because a minor’s contract is void and not merely voidable. A minor cannot
become a partner in a firm of partnership because partnership is basically formed on a
contract. Even though a minor cannot be a partner in a firm, the minor can however be
admitted (with consent of all partners) to the benefits of partnership under Section 30 of the
Indian Partnership Act 1932.

LEGAL PROVISION
SECTION 30-MINOR ADMITTED TO THE BENEFITS OF PARTNERSHIP.

(1) Minors admitted to the benefits of partnership. 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 for the time being, he may be admitted to the benefits of partnership.
(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.
(3) Such minor's share is liable for the acts of the firm, but the minor is not personally liable
for any such act.
(4) Such minor may not sue the partners for an account or payment of his share of the
property or profits of the firm, save when severing his connection with the firm, and in such
case the amount of his share shall be determined by a valuation made as far as possible in
accordance with the rules contained in section 48:
Provided that all the partners acting together or any partner entitled to dissolve the
firm upon notice to other partners may elect in such suit to dissolve the firm, and thereupon
the Court shall proceed with the suit as one for dissolution and for settling accounts between
the partners, and the amount of the share of the minor shall be determined along with the
shares of the partners.
(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

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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 had no knowledge of 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 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 in
accordance with sub-section (4).
(9) Nothing in sub-sections (7) and (8) shall affect the provisions of section 28.

SCOPE OF THE SECTION

It is intended to remedy the defects that the Indian Contract Act had left in relation to the law
of partnership. It does not apply to those minors who are admitted to benefits but who
attained majority after the commencement of the Act.

APPLICATION

The basic test applied to check the applicability of the section is the Insolvency Test that was
laid down in the case of Shivaguda Patil v. Chandrakant Sadalge. This laid down that a
minor cannot become partner but he can be admitted to the benefits of the partnership. He can
be entitled to have a right to share the property and profits to the extent agreed upon but he

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has no personal liability for the acts of the firm. So, the testing point is that the minor is not
insolvent even if the firm is since he is not a partner.

However, upon majority, and choice or default, he will be liable for debts and can be
adjudicated as insolvent for the acts of the acts of the partners.

STATUS: SUB-CLAUSE (1)

It makes it clear that a minor cannot be a partner but can only be admitted to the benefits of a
partnership. A firm position can only be given to the minor by express consent of the partners
and cannot be thrust upon them. This is because he is a potential partner and his introduction
should be subject to the consent of all other partners.

Thus, the default capacity of a minor as a partner is one in which he is only admitted to the
benefits of the partnership. The Income Tax Act, 1922, under section 2 (6-B) defines the word
“partner” as including any person who, being a minor, has been admitted to the benefits of
partnership. Hence where a minor is admitted as a full partner with equal rights and
obligations with adults, the deed is invalid. This was laid down in the case of Hardutt Ray
Gajadhar Ram v. CIT

Any partnership deed in which the minor is described as a full partner cannot even be
accepted for registration. This was laid down in the cases of Commissioner of Income Tax,
Bombay v. D. Khetan and Co. and Bankamal Lajja Ram v. CIT. He can only behave as a
dormant partner and enjoy the benefits of the partnership. It thus follows that the minor’s
income in the partnership business, as a partner, would not be considered as earned income
for tax purposes.

The issue that arises then is that there is the chance that the omission to treat income of the
minor as earned income might be considered as a mistake under section 35 of the Income Tax
Act.

The legal position is made clear from the cases of Sanyasi Charan Mandal v. Krishnadhan
Banerji and Bindraban v. Atmaram. It is said that since a minor cannot be a partner by
contract, he can’t be the part of a firm. The share he has is nothing more than a right to
participate in the property of the firm, after its obligations have been satisfied.

EXTENT OF SHARE: SUB-CLAUSE (2)

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A minor admitted to the benefits of partnership, as specified in Section 30 (1) of the Act, has
a right to such share of the property and profits of the firm as may be agreed upon at the time
the deed is made.

LIABILITY: SUB-CLAUSE (3)

The law since 1866 was that the minor was held personally responsible for the obligations of
the firm if he didn’t repudiate the partnership within reasonable time after attaining majority.
The position of law today is that any minor admitted to the benefits of partnership is not
personally liable for the acts of the firm except in some cases like Abdul Razzak v. Rauf
Ahmad, Harmohan v. Sudarshan, Kanchachumma v. Chalaipuram Bank.

Sub section (3) draws a distinction between personal liability and liability limited to the share
held by a minor in the firm assets. The ‘personal liability’ is more or less conceived as limited
to the assets that exclude the assets of the partnership i.e. a debt would be satisfied with the
application of general assets.

In the case of Ranganayakulu v. Narsimha Rao & Co. it was argued that this meaning of
‘personal liability’ should be applied to adult partners as well. However, it would be
erroneous to give it such an interpretation because in relation to minors, personal liability can
never be deduced as liability to be arrested for recovery of a debt, while in adults it is very
much a possibility hence the same interpretation cannot be applied.

The share of a minor in the firm’s property is subject to the firm’s debts. Ordinarily, each
partner is liable as if a decretal debt is his personal liability. But, in relation to the minor, his
liability is limited to assets as part of the partnership only. This was specified in the cases of
Sahai Bros. v. CIT and Ranganayakullu v. Narsimharao].

CAPACITY TO SUE: SUB-CLAUSE (4)

This clause lays down that a minor admitted to the benefits of a partnership may not sue the
partners for an account or payment of his share of the property or profits of the firm except
when he is severing his connection with the firm. Then, in such a situation, the amount of his
share is determined by a valuation which is made as far as possible in accordance with the
rules given under section 48.

Section 48 lays down that –

Mode of settlement of accounts between partners –

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In settling the accounts of a firm after dissolution, the following rules shall, subject to
agreement by the partners, be observed-

(a) losses, including deficiencies of capital, shall be paid first out of profits, next out of
capital, and, lastly, if necessary, by the partners individually in the proportions in which they
were entitled to share profits;

(b) the assets of the firm, including any sums contributed by the partners to make up
deficiencies of capital, shall be applied in the following manner and order-

(i) in paying the debts of the firm to third parties;

(ii) in paying to each partner rateably what is due to him from the firm for advances as
distinguished from capital;

(iii) in paying to each partner rateably what is due to him on account of capital; and

(iv) the residue, if any, shall be divided among the partners in the proportions in which they
were entitled to share profits.

The proviso specifies that in case of dissolution, the amount of the share of the minor shall be
determined along with the shares of the partners.

ATTAINMENT OF MAJORITY: SUB-CLAUSE (5)

According to this clause, any minor admitted to the benefits of partnership at any time within
6 months of his attaining majority, or obtaining knowledge that he had been admitted to the
partnership, whichever is later, may give a public notice that he has elected to become or not
to become a partner in the firm. Such notice shall decide his position in the firm. The proviso
says that if he fails to give such notice, then he shall become a partner in the firm after the
expiry of the said 6 months, by default.

ROLE OF GUARDIAN
Such partnerships shall be valid till the minor is not regarded as a full partner since the
guardian has the power to purport the contract on behalf of the minor, as long as the purpose
is governed by section 30. In the true nature of the benefits, the guardian is entitled to even
refuse them or to choose to accept them. The knowledge of the minor is not a necessary
factor.

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MINOR’S PARTICIPATION IN BUSINESS

A minor admitted to the benefit of a partnership cannot actively become engaged in conduct
of business within Section 2 (6AA) (b) of the Income Tax Act, 1922,.

In the case of A. Rajachanna Visweswara Rao v. Commissioner of Income tax (AP) it was laid
down by the court that no partner can actively engage himself in conduct of business unless
he is a partner who is competent to enter into a contract. It said that section 30 of the Indian
Partnership Act admits minors to the benefits of the partnership. This pre-supposes that there
exists a partnership apart from the minor as well, since he cannot contract with another to
form a partnership. Thus, he was allowed to be admitted to the benefits of a partnership when
there are at least 2 major partners who constitute a partnership already. This reaffirmed that a
minor does not become a full fledged partner in the sense of conducting the business
according to law.

The business involves a series of contracts and agreements which a minor partner cannot
certainly enter into. This stands in accordance with the section 11 of the Indian Contract Act
which prohibits a minor from entering into any contract. A partnership is a relation resulting
from an agreement or contract. A person can become a partner only by an act of consent on
his part and others. But a minor is incapable of giving such consent. Hence, he cannot
become a full fledged partner and stays restricted to the benefits of the partnership alone.

MINOR CAN BE ADMITTED ONLY TO THE BENEFITS OF A PARTNERSHIP

The Special Committee consisting of Shri Brojender Lal Mitter, Sir Din Shaw Mulla, Sir
Alladi Krishnaswami Iyer and Sir Arthur Eggar which drafted the bill which lead to the
enactment of the present Act observed that they did not have any particularly satisfactory
reason to depart from the general principle of Contract Law stated in Section 11 1. Moreover,
they observed that it had been the general law in India ever since 1866 that minors could be
entitled to the benefits of a partnership. Thus, in view of these observations the Committee
decided not to allow minors to be a part of the partnership since the partnership is the result
of a contract which a minor is incapable of being a party to. They, however, allowed a minor
to enjoy the benefits of a partnership.
1 [(1903) 30 IA 114].

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It has been observed in the Sanyasi Charan Mandal v. Krishnadhan case.2 since a “firm”
under Section 43 (or the now repealed Section 239, Indian Contract Act, 1872) means a group
of persons who have entered into a contract of partnership. Since, under Section 11, a minor
is incapable of entering such a contract, he cannot be a part of this group of persons under
Section 4. Since a minor cannot form a firm, the minor can only be admitted to the benefits of
a partnership that already exists independently.4 Consequently, there can be no partnership
between only minors. To put it more simply, there must be an existing partnership between
two major partners before a minor can be admitted to its benefits.

The High Court of Allahabad held in the Hardutt Ray Gajadhar Ram v. Commissioner of
Income Tax5 that a deed which divided the rights and obligations equally amongst the three
major and the lone minor partner was invalid as it was in contravention of Section 30 as it
bestowed upon the minor not only the benefits of the partnership, but also the liabilities of
personal nature (including but not limited to his interest/share in the partnership).

Earlier there was some confusion in this regard as the Madras High Court in Jakka Devayya
v. Commissioner of Income Tax6 and Vincent and Ors. v. Commissioner of Income Tax 7,
the Patna High Court in Sahai Bros. v. Commissioner of Income Tax 8and the Bombay High
Court in Dwarakadas Khetan & Co. v. Commissioner of Income Tax 9 was of the view even
if the partnership deed did make minor a full-fledged partner like all other partners insofar as

2 (1922) 49 Cal 560,570 as cited in S.D. Singh & J.P. Gupta (‘Singh’), Law of Partnership in
India 456 (V.P. Singh ed., 2000).

3 The Indian Partnership Act, § 4.

4 Lachmi Narain v. Beni Ram, AIR 1931 All 327 as cited in Singh 456.

5 [1950] 18 ITR 106 (All)

61952] 22 ITR 264 (Mad).

7 1952] 22 ITR 285 (Mad).

8 1958] 33 ITR 40 (Patna).

9 1956] 29 ITR 903 (Bom).

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making him personally liable, the deed should be read liberally and his liabilities to be
confined in accordance with Section 30. In the landmark Commissioner of Income-tax v.
Dwarkadas Khetan and Co case,10 however, the Supreme Court of India overturned the
Bombay High Court judgment and held that a partnership wherein a minor is made a partner
to the extent that he was to be held personally liable for loses along with having the right to
vote and take part in the business could not be registered by the Income Tax Department.
Moreover, in case the Income Tax Authorities register the partnership as one being only
between the adult partners, where in fact there are certain minor partners as well, a new
contract is made which is substantially different from the one being executed and hence the
original contract cannot say to have been validly registered by registration of this “new”
contract. Therefore, it is clear that the position of the law is that a partnership deed should
clearly make it clear that the minor partners are not personally liable for the losses suffered
by the firm.

Further, in Banka Mal Lajja Ram & Co. v. Commissioner of Income Tax, Delhi, 11it was
held that a minor (Satish Kumar) cannot legitimately become a full-fledged partner through
his guardian (his mother Shrimati Shakuntala Devi) even if the other partners are consenting.
In contrast, in the C.I.T., Mysore v. Shah Mohandas Sadhuram, 12it was held that a contract
of partnership which only bestows its benefits upon the minor cannot be held invalid on
merely the ground that guardian purported to contract on the minor’s behalf until it is in
contravention of the provisions of Section 30.

The question as to whether the guardian is himself a partner or not is more or less
insignificant. In C.I.T. v. Kedarmall Keshardeo, 13it was held that where the widowed mother
(wife of deceased partner) entered into a partnership on her own behalf and as the natural
guardian of minor son, the minor son did not automatically become a partner. Therefore, the
clear position of law in this regard is that deed remains valid even in cases where the
guardian contracts on behalf of the minor insofar as the minor is not made personally liable

10 AIR 1961 SC 680.

11 AIR 1953 Punj 270 (DB).

12 AIR 1966 SC 15.

13 A.R. Visweswar Rao v. C.I.T., A.P., Hyd., AIR 1965 Andh Pra 1 as cited in Singh 462

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and the guardian still possessed the right of being the guardian when he contracted on the
minor’s behalf.

RIGHTS AND LIABILITIES OF THE MINOR

Under sub-section (2), a minor entitled to the benefits of a partnership is bestowed with the
right to share the profits as well as the property, as may have been decided at the time of
minor’s admission to the benefits of the partnership in question. Further, the minor has the
right to inspect any of the accounts of the firm. This access is however limited to only the
accounts and the minor does not have the right to access other books such as those which
may contain trade secrets. This limitation to the right of the minor, however seems
commonsensical and equitable as the minor is not liable to the extent to which the full-
fledged partners are liable, i.e., personally. The minor also has the right to sue for benefits of
the partnership to which he is admitted14

Under sub-section (3), the liability of a minor who is entitled to benefits arising out of a
partnership is limited with respect to that of a full-fledged partner. According to the holding
in the Sanyasi Charan Mandal v. Asutosh Ghose case,15 the creditors of the firm can only
proceed to the extent of minor’s interest in the firm but not personally against the minor.
However, this protection is not enjoyed by the full-fledged partners of the firm who can be
personally liable with respect to the creditors. The position of a minor Hindu in a joint family
trade is similar a minor admitted to the benefits of a partnership insofar as the former can also
not be held personally liable for the debts of the family trade and only his share in the trade
can be made liable. Thus, it can be concluded that the position of a minor Hindu in a joint
family trade is analogous to that of a minor who is entitled to the benefits of a partnership.
However, in cases where members of family carry on a business, there must be some positive
conduct on part of major members to show that they intended to admit certain minors to the
partnership. If the major member by ignorance or error of law mistakenly assume that the
minors were automatically entitled to the benefits of such a partnership, the minor would not
be entitled to the benefits under Section 30.

14 Tulsidas v. Ganga Ram AIR 1925 Sind 272

15 AIR 1915 Cal 482.

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Under sub-section (4), minor’s aforementioned right to sue for benefits of a partnership to
which he is entitled is limited. The minor is entitled to sue for his share only while severing
all connections from the firm. The sub-section further laid down that the resolution is to be
made in accordance with Section 48 as far as possible. The proviso to this sub-section
safeguards the full-fledged partners by allowing them to convert a suit by the minor for his
share in the partnership into one of dissolution of the firm. The same may be done by all
partners acting together or one partner who is entitled to dissolve the firm doing so after
giving notice to the other partners

POSITION OF A MINOR ON ATTAINING MAJORITY

Under sub-section (5), the minor has an option to either become a full-fledged partner of the
firm or severe his connections with the same. He may, within six months of attaining eighteen
years of age, choose to become or not, become a partner and signify the same by way of a
public notice as described under Section 72. Failing to do the same, results in his ispo facto
becoming a partner in the firm. The minor need not issue a public notice in case he wants to
continue being a partner because he would anyway, by default, become a partner on the
expiry of six months. The minor does continue to enjoy the rights, which he had enjoyed as a
minor, after he turns into a major till he decides to either continue or repudiate the partnership
or the expiry of the period six months, whichever is earlier. If the minor did not have the
knowledge that he was entitled to benefits of the partnership, he may signify his will to
repudiate the said contract within six months of his attaining knowledge of the fact that of he
was entitled to benefits of the partnership in question.

Under sub-section (6), the burden of proving that the minor did not have knowledge that he
was in fact entitled to the benefits of partnership rests with the party asserting the same. If the
person asserting so is the minor himself, then he would have the onus to prove the same in
accordance with Section 10616 and if it is someone else then Section 10117 and Section 10318
will throw the onus on him.

16 The Indian Evidence Act, § 106.

17 The Indian Evidence Act, § 101

18 The Indian Evidence Act, § 103

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Under sub-section (7), clause (a), the minor, who has either chosen to continue as a full-
fledged partner post attainment of majority or fails to signify his will to repudiate under sub-
section (5), becomes a full-fledged partner and such a minor can be held liable for not only
the debts incurred by the partnership after his becoming a partner, but also the ones which
had been incurred ever since he was entitled to benefits of the partnership. Thus, the minor in
a way becomes retrospectively liable. This is a major departure from English Law, wherein
the creditors are in a less favourable position. In English Law, the minor would be liable only
for debts incurred by the firm since he attained majority.

A minor’s share in the profits, on his joining the firm as a full-fledged partner post attainment
of majority, remains the same as was set out in the deed. This is in line with the view taken in
Bhogilal v. Commissioner of Income-tax 19 (sub-section (7), clause (b)) that there is no break
in the continuity of a partnership in the case where the minor elects to become a partner and
hence a new partnership does not come into existence.

In Shivgouda Rajiv Patil v. Chandrakant Neelkanth Sedalge 20 the question arose as to

whether the minor partner (Chandrakant) who had attained majority subsequent to
commitment of acts of insolvency by the other partners could be held to be personally liable
for the debts of the firm. The Supreme Court held that it was legally impossible for the Court
to hold the Chandrakant liable for the debts of a partnership that had already been dissolved
before he attained majority. 21 This establishes that a minor who was entitled to benefits of a
partnership cannot be held personally liable for the debts of the firm when it had already been
dissolved before he attained majority, i.e., attained the capacity to be a party to losses of the
firm along with profits.

Under sub-section (8), the minor who elects not to be a partner his share in the firm will be
liable to the extent of losses and debts incurred until he gave public notice about his intention
to sever his connections with the firm. He might thereafter bring a suit to enforce this quasi-
contract like contract to receive his share.

19AIR 1956 Bom 411 as cited in Desai 231.

20 AIR 1965 SC 212

21 id

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Sub-section (9) states that the two sub-sections which immediately precede sub-section (9)
do not in any way affect the rights of the party to whom the minor after attaining majority
might have misrepresented himself as a partner.

FORMATS OF AGREEMENTS
AGREEMENT ADMITTING A MINOR TO THE BENEFIT OF PARTNERSHIP

THIS AGREEMENT is made at this ......... day of ......... between Mr. A of the First
Part, Mr. B of the Second Part and Mr. C of the Third Part and Shrimati X for self and as the
natural guardian of her minor son Y of the Fourth Part.

WHEREAS the parties hereto of the First Second and Third Parts have been
carrying on business in partnership along with Mr. D In terms of deed of partnership
dated ......... entered into by the said partners.

AND WHEREAS the said D died on the day of ......... leaving his widow X and a
minor son named Y as his heirs.

AND WHEREAS the said X made a claim for the share of the said D In the assets
of the said partnership including goodwill and undistributed profits.

AND WHEREAS the said claim has been settled between the parties hereto of the
first, second and third parts and the said X and It Is agreed that the said X for self and as the
natural guardian of the said minor Y shall be paid a sum of Rupees .......... in full payment of
the share of the said deceased partner D In the capital assets including goodwill of the said
partnership and that the said Y shall be admitted to the benefits of the partnerships by paying
a share of 5% In the net profits of the firm.

AND WHEREAS the said amount of ......... has been paid to the said X before the
execution of these presents partly in cash and partly in securities In the nature of units of the
Unit Trust and purchased in the name of the said X and the said minor Y jointly in order to
safeguard the interest of the said Y and the said X hereby acknowledges receipt of the said
amount in full and declares that she for self and as the natural guardian of the said Y. has no
claim against said firm on account of the share of the said deceased partner D .

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 MINOR UNDER PARTNERSHIP ACT

AND WHEREAS the parties hereto of the first, second and third parts further
agree that they hereby admit minor Y to the benefits of the said partnership by paying him a
share of 5% in the net profits of the said partnership. He will not be liable to pay any part of
the losses of the said firm.

AND WHEREAS the parties of the first, second and third parts agree and declare
that they will pay the amount of the said share of the minor Y in the net profits of the firm
within three months from the end of the accounting year.

AND WHEREAS it is further agreed and declared that in view of the share given
to the said Y in the profits of the firm the shares of the partners of the first. second and third
parts in the profits of the firm will be readjusted and shall be as follows Mr.

A's share will be ......... 35%

Mr. B's share will be ......... 35%

Mr. C's share will be ......... 25%

However the losses of the partnership will be borne by the parties of the first, second and
third parts equally.

AND WHEREAS it is further agreed and declared that on the said minor attaining
the age of 18 years. he will be admitted as a partner In the said firm if the partnership
continues till then, on such terms as may be agreed between all the then partners and the said
D but not otherwise.

AND WHEREAS subject as aforesaid the parties of the first, second and thirdparts
will continue to carry on the business in partnership in terms of the said deed ofpartnership
above recited.

AND WHEREAS amendment made by this deed in the constitution and terms of
the partnership will be registered as required by the Partnership Act, and the Income Tax Act
within the prescribed terms.

IN WITNESS WHEREOF the partners have put their hands the day and year first
hereinabove written

Signed by the withinnamed Mr. A in the presence of

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LAW RELATING TO PARTNERSHIP
 MINOR UNDER PARTNERSHIP ACT

Signed by the withinnamed Mr. B in the presence of

Signed by the withinnamed Mr. C in the presence of
Signed by the withinnamed Mr. X
for self and as natural guardian of Y a minor in the presence of

CONCLUSION
“The relation of partnership arises from contract…” A minor is incompetent to contract and
therefore, a contract of partnership cannot be entered into with a minor. There cannot be a
partnership consisting of all minors or of one adult and all other minors. According to a
decision of the Supreme Court, a minor cannot even become a full-fledged partner in an
existing firm. The only concession that Section 30 gives is that a minor may be admitted to
the benefits of an existing firm. This can be done only with the consent of all the partners. A
partnership deed that attempt to make a minor a full-fledged partner is invalid to that extent.

When a minor is admitted to the benefits of a firm, the question arises what are his rights and
liabilities.

Firstly, the minor has the right to receive his agreed share of the property and of the profits of
the firm. For the purpose of finding out his share, and even otherwise, he may have access to
and inspect and copy any of the accounts of the firm. But as long as he remains in the firm he
does not have the right to sue the partners for an account or payment of his share of the
property or profits.

BIBLIOGRAPHY
1. M.R. Mallick, Goyle’s The Law of Partnership, 2nd Ed.
2. S.D. Singh & J.P. Gupta (‘Singh’), Law of Partnership in India 456 (V.P. Singh ed., 2000).
3. www.indiakanoon.com
4. www.manupatra.in
5. http://www.lawctopus.com/academike/minors-and-partnership-rights/
6. http://blog.ipleaders.in/rights-minor-partnership/
7. http://www.legalindia.com/minority-and-partnership/

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