1922 (1) TMI 10 - HC - Indian Laws

Minors Not Liable in Partnership Transactions

Muhammad Rafiq Versus Khawaja Qamar Din and Ors.

Muhammad Rafiq Versus Khawaja Qamar Din and Ors. - AIR 1922 Lah 441 Issues:1. Whether a minor can be held liable in a partnership for transactions conducted while being a minor.2. Interpretation of Section 247 of the Contract Act regarding a minor's admission to the benefits of a partnership.3. The applicability of Section 11 of the Contract Act in relation to minors creating partnerships.4. The distinction between a partnership based on contract and one where a minor is automatically a co-sharer.5. The legal status of contracts made by minors and the liability of a minor in a partnership.Analysis:1. The case involved a dispute where the plaintiff sought to recover money from a partnership, Muhammad Rafiq-Ilam Din, for transactions occurring in 1917 while one partner, Muhammad Rafiq, was a minor. Initially, the suit was dismissed due to the minor's involvement. However, on appeal, the District Judge referred to a precedent allowing minors to enter partnerships with major individuals. The case was remanded for further consideration under Order 41, Rule 23.2. The appeal argued that Section 247 of the Contract Act does not negate Section 11, which prohibits minors from creating partnerships while benefiting from them. Legal precedents were cited to support the contention that minors lack the capacity to contract. The court found this argument convincing, emphasizing that a minor cannot simultaneously create and benefit from a partnership.3. Reference was made to a previous case involving a Hindu joint family where a minor could act as an agent under Section 184 of the Indian Contract Act. The court highlighted that Section 247 allows minors to be admitted to partnership benefits, making their share liable if admitted. However, this provision does not grant minors the authority to establish partnerships.4. The judgment clarified that for a minor to benefit from a partnership under Section 247, the partnership must already exist. In cases where a minor's involvement would render the partnership void ab initio, the minor cannot be held liable. The distinction between partnerships by contract and those where a minor is automatically a co-sharer was crucial in determining the minor's liability.5. It was established that contracts made by minors are void or voidable, and while a minor in a Hindu joint family setup may have different legal implications, a minor in a partnership based on contract cannot be held liable if the partnership was not legally formed due to the minor's involvement. The appeal was accepted, the remand order was set aside, and the trial court's decision was reinstated, with costs to be borne by the defendant.