Introduction
According to Section 3[1] of the Indian Majority Act, a person who is under the age of majority, that is, under the age of 18, is said to be a minor. Section 4[2] of the Indian Partnership Act, 1932, defines partnership and partner as follows: ‘Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into a partnership with one another are called individually “partners” and collectively a “firm”, and the name under which their business is carried on is called the “firm name”. Simply put, a partnership is an agreement between people to share the interests of a company, and the people who conclude this agreement are called partners. As seen in the Indian Contract Act of 1872, minors could not be parties to the contract. Contracts involving minors are invalid. However, India’s partnership law has its legal provisions regarding minors.
Position of a minor as a partner
Partnerships arise from contracts. Therefore, the parties to the Articles of Incorporation must be legally competent. Minors are not legally competent and can not be partners. If a minor becomes a full partner with another person of legal age, the contract will be invalidated and the document containing their contact information will be unenforceable, even between other major partners. In addition, any person who has reached the legal age and has good judgement can appoint an agent. Therefore, minors cannot be the principal of a school. In a partnership, each partner is considered a principal but minors cannot be principals, nor can they be partners. Minors have no legal capacity, but they can accept the benefits. According to this position of minors, Section 30 of the Indian Partnership Act may allow minors to be profitable for the time being with the consent of all partners in the partnership, although minors may not be partners in the company[3]. It states that if a minor is granted the benefits of the partnership, as agreed, he is entitled to a portion of the company’s assets and profits and may also access, view, and copy all of the company’s accounts. Such minors are not personally liable to third parties for the company’s actions, but only their share is liable for such actions. When they reach the age of majority, such minors have the option of becoming partners or leaving the company without becoming partners. He can exercise this option within 6 months of getting the majority. However, if you are unaware of your partnership acceptance, you will have access to the option within 6 months of receiving the knowledge of your partnership acceptance. This voting right must be exercised by him upon public notice. It does not use this option under any circumstances, he will automatically become a shareholder after the above 6-month period has expired. It is mentioned above that for many people to form a partnership, they need to have the right contract, and the partnership relationship comes from the contract, not the status. Of course, this means that all-important requirements of a valid contract must be met, and therefore, all partners must be able to conclude a contract. Minors are legally incompetent, and the contract is invalid. They cannot be partners in a partnership. If a minor becomes a full partner in the partnership when the partnership is formed, the certificate will be invalid, and the document cannot be enforced. Also for other collaborators.
Minor Admission to the Benefits of Partnership
In accordance with this legal situation, Article 30 (1)[4] provides that minors may not be shareholders of the company, but may initially recognise the interests of the company with the consent of all shareholders. The introduction of minors into the benefits of a partnership presupposes the existence of valid partnerships among those who are competent to contract. Minors so recognized, are entitled to such a distribution of property and social interests by agreement. This obstacle is removed when he terminates the connection with his company. He can also access, view, and copy all of your company’s accounts. In this respect, his position differs from that of a company partner. Shareholders have the right to access, inspect, and copy all books in the company, but minors’ rights are restricted to their accounts only. It was considered undesirable to allow anyone other than real partner access to company secrets. Each partner is jointly and individually responsible for all actions of the company. In addition, his liability is unlimited and can extend to his personal property. Minors, on the other hand, are not personally responsible for such actions. Only that stock is responsible for the company’s actions.
Position of a minor as an agent
An agreement by a minor is void as he is incapable of entering into a contract. Therefore, minors cannot appoint a representative. In other words, minors cannot serve as principals. Therefore, Article 183[5] provides that anyone who has reached the statutory age and can make a judgment under the applicable law can hire a real lawyer. There are no obstacles for minors to act as agents. The agent is just a link between the principal and the third party and must be responsible for executing the contract. Agents may not be able to contract. Section 184[6] provides that anyone (even a minor) can be a representative between a client and a third party. Even if the contract is concluded through the mediation of a minor, the client and the third party will be bound[7]. It was mentioned earlier that the minor could be an agent detaining the third party and himself. As far as the relationship between the client and his representative is concerned, a binding contract between them is only possible if both parties, the client and the representative, can enter into a contract. Regarding the aspect, Section 184 says that a person under the age of the majority and with a sound mind may become an agent under the provisions contained herein. A Representative can enter into contracts with his client and a third party, but as far as his responsibility to the client is concerned, his minority is out of the question.
Conclusion
From the above discussion, it can be said that partnerships with minors as the only other shareholders cannot be incorporated. Partnerships arise from contracts. According to Section 11[8], minors are not legally competent. In the case of Dwarkadas Khetan[9], the Hon’ble Supreme Court ruled that minors cannot even be full-time partners in existing companies. It has been determined to allow minors to recognize the interests of existing companies.
Author(s) Name: Anushka Gupta
References:
[1] Indian Majority Act, 1875
[2] Indian Partnership Act, 1932
[3]Indian Partnership Act, 1932, s 30(1)
[4] Indian Partnership Act, 1932, s 30(1)
[5] Constitution of India, 1950
[6] Indian Contract Act, 1972
[7] Dr. R.K. Bangia, Contract-II (Seventh Edition, Allahabad Law Agency, 2017)
[8] Indian Contract Act, 1972
[9] Dwarkadas Khetan and Co., Bombay v. Commissioner Of Income-Tax, Bombay City, Bombay[1968] 1971 80 ITR 283 Bom
