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The Supreme Court last week held that sub-Section (5) of Section 30 of the Indian Partnership Act, 1932 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.

Section 30 of the Act of 1932 reads:

30. Minors admitted to the benefits of partnership.—
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(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 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 6 months.
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State of Kerala had filed an appeal against an order of the High Court dismissing the writ appeals preferred by it confirming the judgment and order passed by the Single Judge.

The Single Judge had quashed and set aside the demand towards sales tax under the Kerala General Sales Tax Act which was for the dues of the partnership firm in which the private respondents namely, Lakshmi Vasanth and J. Raj Mohan Pillai were partners but minors.

Lakshmi Vasanth and J. Raj Mohan Pillai were inducted as partners of the partnership firm, namely, M/s. Malabar Cashew Nuts and Allied Products, when they were minors.

The partnership firm was reconstituted on January 1, 1976 and the two minor partners were removed as partners.

A bench of Justices MR Shah and BV Nagarathna further noted that the concerned Department was aware of their retirement as partners.

Lakshmi Vasanth attained majority in 1987 and J. Rajmohan Pillai attained majority in 1984. Thereafter, the Department raised a demand towards the sales tax against the partnership firm as well as against the respondents partners herein for the period between 1970-71 to 1995-1996.

The bench held that in the facts and circumstances of the case, sub-Section (5) of Section 30 shall not be applicable at all.

"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....", said the bench.

"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....", added the top court.

With this view, the Court held that no error had been committed by the Single Judge and the Division Bench in quashing and setting aside the demand of sales tax against the private respondents towards the dues of the partnership firm being the partners as a minor in the year 1975-76.

Cause Title: State of Kerala & Ors etc etc vs Laxmi Vasanth etc etc