The Supreme Court ruled that Section 30(5) of Partnership Act shall not be applicable to a minor partner who was not a partner at the time of his attaining the majority.
Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the High Court of Kerala at Ernakulum by which the High Court has dismissed the writ appeals preferred by the appellant/State and has confirmed the judgment and order passed by the Single Judge quashing and setting aside the demand towards the sales tax under the Kerala General Sales Tax Act which was for the dues of the partnership firm in which the private respondents original writ petitioners were partners but minors, the State has preferred the present appeals.
Advocate C.K. Sasi, appearing on behalf of the State, contended that as after attaining the majority, the respondents 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.
Advocate Ranjit Kumar, appearing on behalf of one of the respondents, argued that admittedly the respondents were removed as partners in the year 1976 which was in the knowledge of the Department. Once the day on which the respondents attained the majority, they were not the partners, sub-Section (5) of Section 30 shall not be applicable at all.
The division bench of Justice M.R. Shah and Justice B.V. Nagarathna opined 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.
The court said that 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.
The court 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.
The court held that no error has been committed by the Single Judge and the Division Bench in quashing and setting aside the demand of sales tax against the private respondents herein towards the dues of the partnership firm being the partners as a minor in the year 1975-76.
The court dismissed the appeal and said that it will be open for the Department to recover the dues of the partnership firm from the other partners in accordance with law.
Case title: State of Kerala & Ors. etc. v/s Laxmi Vasanth etc.
Citation: Special Leave Petition (C) Nos. 15623-15626 of 2021