Section 30(5) Partnership Act Not Applicable To A Minor Partner Who Was Not A Partner At The Time Of His Attaining Majority: Supreme Court

The Supreme Court observed that Sub-Section (5) of Section 30 of the Partnership Act shall not be applicable to a minor partner who was not a partner at the time of his attaining the majority.

He/she shall not be liable for any past dues of the partnership firm when he was a partner being a minor, the bench comprising Justices MR Shah and BV Nagarathna observed.

Section 30(5) of the Partnership Act, 1932, reads as follows: 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.

In this case, Lakshmi Vasanth and J. Raj Mohan Pillai were inducted as a partners of the partnership firm, namely, M/s. Malabar Cashew Nuts and Allied Products, when they were minors. The partnership firm was reconstituted on 01.01.1976 and the these two minor partners were removed as partner. Thereafter, Lakshmi Vasanth attained the majority in the year 1987 and J. Rajmohan Pillai attained the majority in the year 1984. The Department raised the demand towards the sales tax against the partnership firm as well as against Lakshmi Vasanth and J. Raj Mohan Pillai for the period between 1970-71 to 1995-1996. Allowing the writ petition filed by the duo, the Kerala High Court quashed and set aside the demand against them.

Before the Apex Court bench, the appellant state contended that as after attaining the majority, these persons did not give any notice as required under sub-Section (5) of the Section 30, they are deemed to be the partners and therefore, their liability to pay the dues of the partnership firm continued. The respondents contended that since they were removed as partners, there cannot be any deemed continuance as a partner on non compliance of Sub Section (5) of Section 30. It was submitted that only in a case where on the date of attaining the majority, a person continues as a partner, in that case the procedure as required under sub-Section (5) of Section 30 is required to be followed and if six months notice as required under sub-section (5) is not given, in that case he is deemed to have been continued as a partner and the consequences as mentioned in sub-Section (7) of Section 30 shall follow.

The bench, disagreeing with the contentions raised by the state, observed that, in the facts and circumstances of the case, sub-Section (5) of Section 30 shall not be applicable at all. The court said:

"Sub-Section (5) of Section 30 shall be applicable only in a case where a minor was inducted as a partner and thereafter at the time of attaining the majority he continued as a partner in that case such a partner who has been continued is required to give six months' notice as provided under sub-Section (5) of Section 30. If such a person who has been continued as a partner at the time of attaining the majority does not give six months notice as per sub-Section (5) of Section 30, in that case, he is deemed to have been and/or he shall be continued or treated to have been continued as a partner and the consequences and the liability as per sub-Section (7) of Section 30 shall follow. At the cost of repetition, it is observed that sub-Section (5) of Section 30 shall not be applicable to a minor partner who was not a partner at the time of his attaining the majority and, thereafter, he shall not be liable for any past dues of the partnership firm when he was a partner being a minor."

Observing thus, the court dismissed the appeals.

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