TMI Blog1990 (3) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... both the petitions and the learned High Court Government Pleader for the Assistant Commissioner of Commercial Taxes, Dharwad-respondent No. 1; and the State of Karnataka-respondent No. 2, in both the criminal revision petitions, are heard. The learned counsel for respondent No. 3 in Criminal Revision Petition No. 301 of 1989 did not make his submissions. 3.. In Criminal Revision No. 301 of 1989, respondent No. 3 is represented and notice to respondent No. 4 has been dispensed with, whereas in Criminal Revision Petition No. 283 of 1989, notice to respondent Nos. 3 and 4 therein has been dispensed with on the submissions made by the learned counsel representing the petitioners therein. 4.. The facts in Crl. Misc. No. 4 of 1989 in the Court of the Judicial Magistrate First Class, Siddapur, out of which Criminal Revision Petition No. 301 of 1989 arises, are these: M/s. Shriram Adike Stores, Siddapur, is a partnership firm ("the firm" for short) that came into existence on 11th January, 1975, as a result of contract of partnership entered into between Basavaraj C. Patil-respondent No. 3, and Sudhabai S. Gokarn-respondent No. 4 in the criminal revision petition. Sudharshan, son of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay the tax and penalty sought to be recovered. While admitting the existence of the firm, respondent No. 4 contended that she was a sleeping partner of the firm; that both the petitioners were minors at the time of assessment; and that, therefore, they were not liable to pay the amount stated to be due from the firm. They also contended that the assessment made was defective and the firm was not in due to the Government on the count of sales tax. Alternatively, they pleaded, that even if it was held that the amount claimed in the application as due from the firm, that could be recovered only from respondent No. 3 and not from them. 5.. The learned Magistrate heard both the sides and by the order dated 15th July 1989, negatived the objections and directed issuance of a warrant for the levy of the amount by attachment and sale of any movable property belonging to petitioner Nos. 1 and 2 and respondent Nos. 3 and 4 under section 421(1)(a) of the Code of Criminal Procedure ("the Code" for short if and when necessary). 6.. It is this order that is assailed by the petitioners in Criminal Revision Petition No. 301 of 1989. The petitioners have sought the setting aside of the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners in both the petitions, it appears, it would be necessary and advantageous to refer to the undisputed facts and the position in law bearing on the questions that need answer in these petitions. 11.. The partnership deed between respondent Nos. 3 and 4 in both the petitions was executed on 11th January, 1975. The copy of the partnership deed placed on record by the petitioners in Criminal Revision Petition No. 283 of 1989 shows that respondent No. 3 in both the petitions and one Arun Bhikkurao Kodkani were carrying on business in partnership at Siddapur under a deed of partnership executed on 6th October, 1973; that Arun expressing his desire to retire from the firm, retired on 24th October, 1974; that respondent No. 4 in both the petitions, offered to be a partner in the firm; that respondent No. 3 agreed to take her as a partner of the firm with a view to strengthen the financial position of the firm under certain terms and conditions; that both respondent Nos. 3 and 4 agreed to admit petitioner Nos. 1 and 2 in both the petitions, who were then aged 11 years and 6 years respectively, to the benefits of the firm only; and that respondent Nos. 3 and 4 were carrying on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed was not paid on or before the due date for payment, applications were filed by the Assistant Commissioner of Commercial Taxes (Asst.), Dharwad, to recover the tax, as well the penalty levied under section 13(2) of the Act. 16.. The firm is in existence. It has not been dissolved. According to the learned counsel for the petitioners, the firm discontinued its business with effect from 1st August, 1981. 17.. Section 15(2) of the Act, as substituted by Act 9 of 1964, which has come into force with effect from 1st April, 1964, deals with the liability of a dissolved firm to pay the tax or penalty. It lays down that when a firm liable to pay the tax, or penalty, is dissolved, the assessment of the tax and the imposition of penalty shall be made as if no dissolution of the firm had taken place, and every person who was at the time of dissolution a partner of the firm and the legal representative of any such person who is deceased, shall be jointly and severally liable to pay the tax or penalty assessed or imposed. 18.. In Ganesha Narayana Hegde Doddamane v. Commercial Tax Officer [1977] 40 STC 400 (Kar); ILR (1977) Kar 583; (1977) 2 Kar LJ 508, this Court held that the partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e due date. 21.. Thus, the resultant position that emerges from the aforesaid facts is, they committed default in the payment of tax within the prescribed time. If any default is made in the payment of tax within the prescribed time, the whole of the amount on the date of default becomes a charge on the properties of the defaulter and the same can be recovered by any one of the modes provided in the Act. The modes of recovery of tax provided under the Act are under section 13(3)(a), 13(3)(aa), 13(3)(b) and section 14. The Assistant Commissioner of Commercial Taxes (Asst.), Dharwad, in the cases on hand, resorted to the mode of recovery of tax as provided under section 13(3)(b) of the Act by making applications to the jurisdictional Magistrate with a prayer to recover the arrears as if it was a fine imposed by the court. 22.. In both the Criminal Miscellaneous cases, respondent No. 3 and respondent No. 4 and petitioner Nos. 1 and 2 sought to resist the applications on the ground that the assessment orders were invalid and unsustainable. But it is not their case, that being dissatisfied with the assessment orders, they or any of them preferred any appeal against the same as provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the contention and to answer the two questions. Section 30 of the Partnership Act reads: "30. (1) A person who is a minor according to the law to which he is subject may not be a partner in a firm, but, with the consent of all the partners for the time being, he may be admitted to the benefits of partnership. (2) Such minor has a right to such share of the property and of the profits of the firm as may be agreed upon, and he may have access to and inspect and copy any of the accounts of the firm. (3) Such minor's share is liable for the acts of the firm, but the minor is not personally liable for any such act. (4) Such minor may not sue the partners for an account or payment of his share of the property or profits of the firm, save when severing his connection with the firm, and in such case the amount of his share shall be determined by a valuation made as far as possible in accordance with the rules contained in section 48: Provided that all the partners acting together or any partner entitled to dissolve the firm upon notice to other partners may elect in such suit to dissolve the firm, and thereupon the court shall proceed with the suit as one for dissolution and fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership was stated by the Privy Council in Sanyasi Charan Mandal v. Krishnadhan Banerji ILR (1922) 49 Cal 560 at page 570; AIR 1922 PC 237 at pages 239-240, after considering the material provisions of the Contract Act, which at that time contained the provisions relevant to the law of partnership, thus: "A person under the age of majority cannot become a partner by contract...... and so according to the definition he cannot be one of that group of persons called a firm. It would seem, therefore, that the share of which S. 247 speaks is no more than a right to participate in the property of the firm after its obligations have been satisfied." 31.. The experience showed that sections 247 and 248 of the Indian Contract Act were defective in many a respect. They did not fix any definite period within which a minor was required to give notice of his intention to leave the firm. They did not provide expressly that the minor on attaining majority became a partner if he did not repudiate his connection with the firm within that time, though this principle was implicit by implication in section 248. 32.. Our Contract Act does not lay down fully the rights and remedies of a minor- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later, elect not to become a partner, he would become a partner after the expiry of the said period. Thereafter his rights and liabilities would be the same as those of the other partners as from the date he was admitted to the partnership. 36.. In the cases on hand, both the petitioners were admitted to the benefits of the partnership with the consent of respondent Nos. 3 and 4, the partners. They could not have become partners on 11th January, 1975, in view of section 30(1) of the Partnership Act. It is not the case of the petitioners or either of them that after attaining majority they/he exercised the option of becoming a partner in the firm or of severing their/his connection with it. The petitioners or either of them did not give any notice contemplated by section 30(5) of the Partnership Act. In that view of the matter, it can be said that they will have to be deemed to have elected to become partners of the firm. I, therefore, hold that both on the dates on which the liability of the firm to pay tax became enforceable and on the dates on which the amounts covered by the dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of notices had been issued by the Sales Tax Officer calling upon the respondent to get himself registered and to show. cause why he should not be assessed under section 11(5) of the Central Provinces and Berar Sales Tax Act, 1947. This Act had been subsequently repealed and had been replaced by the Madhya Pradesh General Sales Tax Act, 1958 ("the Act of 1958"). Towards the end of the year 1958, the respondent had applied for registration to the Sales Tax Officer, Chhindwara Circle, exercising jurisdiction over the Balaghat and Chhindwara districts. On December 27, 1958, a registration certificate had been granted to him. Thereafter, the Sales Tax Officer had issued a notice to the respondent under sections 17, 18 and 19 of the Act of 1958 and had proceeded to assess the respondent for the period 1st October, 1955 to 26th December, 1958. The amount assessed had come to Rs. 31,580.42 and a penalty of Rs. 5,000 had been imposed. The respondent's appeal to the Appellate Assistant Commissioner of Sales Tax and to the Board of Revenue had been dismissed at the admission stage itself, since the respondent had not deposited the past dues of the tax and the penalty demanded of him as requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the liability became enforceable only after the quantification was effected by assessment proceedings. Indeed, it is true, the petitioners were minors when the firm incurred the liability to pay tax and when the obligation to pay arose. But in view of my conclusion that the petitioners will have to be deemed to become partners of the firm on the expiry of the period of six months stated in section 30(5) of the Partnership Act and in view of the provisions contained in section 30(7) of the Partnership Act, the petitioners cannot escape the personal liability to pay the tax. At the time the tax liability became enforceable, i.e., after the conclusion of the assessment proceedings and at the time when the demand notices were served and the amount claimed in the applications became due, the petitioners were partners of the firm. Viewed from any angle, it is difficult to exonerate the petitioners from the personal liability to answer the claims made in the two applications. 41.. Added to that, section 15(2A) of the Act which came into force with effect from 18th November, 1983, clearly lays down that where any firm is liable to pay any tax or penalty or any other amount due under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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