Introduction 

• This is a landmark judgment relating to the applicability of Section 30 (5) of the Indian Partnership Act, 1932.  
• This judgment was delivered by 2-judge bench comprising of Justice MR Shah and Justice MR Shah and Justice BV Nagarathna. 

Facts

• The private respondents were minors when they were inducted as partners in the partnership firm. 
• The partnership firm was reconstituted on 1st January 1976 and the aforesaid two minor partners were removed as partner. 
• The concerned department was aware of the retirement. 
• Thereafter when the aforesaid minors attained majority the department raised demand towards sales tax against the partnership firm as well as against the respondents. 
• The matter was before the learned single bench which allowed the writ petition and quashed and set aside the demand against the private respondents. 
• The appeals filed were dismissed by the High Court. 
• Hence, the matter is before the Supreme Court. 

Issue Involved 

• Whether the private respondents are liable to pay tax by the virtue of being partners in the partnership firm? 

Observations

• The Court observed that in the present facts Section 30 (5) of the Indian Partnership Act, 1932 (IPA) would not be applicable. 
• For the purpose of applicability of Section 30 (5) of IPA: 
  • A minor should have been inducted as a partner 
  • At the time of attaining majority he should have continued to be a partner 
  • Such a continued partner would be required to give six months notice as per Section 30 (5) of IPA 
  • If such a partner has not given notice as per Section 30 (5) he shall be deemed to be a partner and the liabilities as under Section 30 (7) shall follow. 
• Thus, the Court held that Section 30 (5) shall not be applicable in those cases where the minor was not a partner at the time of attaining majority. 
• Therefore, such a minor would not be liable for any past dues of partnership when he was partner being a minor. 
• Hence, the Court held that there was no error committed by the High Court and the Learned Single judge in quashing and setting aside the demand of sales tax

Conclusion

• The judgment discusses the liability of minor partner in a partnership firm. 
• It lays down the important principle that if the minor ceases to be a partner before attaining majority he shall not be liable for the dues of the partnership firm.