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29. Reading Clauses (8) and (11) together, the position is that the three major partners were to share the losses between them only because the minor was given one-fourth share in the profits only. When the minor attained majority he was made liable for the losses to the extent of his share in the profits, namely, one-fourth. A reasonable construction of the instrument, therefore, leads to the conclusion that during the minority of Shyam Manohar Lal Gupta the three major partners would share the losses equally, while on the minor attaining majority their share of losses will be one-

32. Here the deed made adequate provision for the shares in profits as well as in losses till the three minors attained majority. The shares of the two adult partners were not equal. There is no provision as to how the losses will be shared if and when one of the minors became major. The minors had a two annas share each. When one minor became a major he would have a two annas share in losses. But there is no indication in the deed as to how the four-annas share in losses of the other two minors was going to be shared between the original two adult partners and the minor who had attained majority. On one minor attaining majority the position would be that one partner has four annas while the other has six annas and the third two annas. The shares being unequal, the presumption under Section 13(b) of the Indian Partnership Act, that the share in losses will be in the same proportion in which the profits are shared will not solve the problem, because the share in losses attributable to the minors would remain undistributed. The document does not give an adequate answer to this problem. Hence, the change in the shares brought about by one minor attaining majority is not evidenced by the instrument of partnership.

33. The vital thing is to read the clause as a whole and not concentrate only on the words "no change". The correct test is: Is the change, if any, evidenced by the instrument of partnership ?

34. Under sub-section (8) of Section 184 where any such change has taken place in the previous year, the firm has to apply for fresh registration. The word such emphasises that the change is one which is not evidenced by the instrument of partnership.

35. The view taken in Ganesh Lal's case [1968] 68 ITR 696 (All) and Ram Narain's case [1972] 84 ITR 233 (All) is the same, that on a minor attaining majority a change takes place in the constitution of the firm, and the firm must apply for fresh registration under Section 184(8) of the Act, In these cases, it was held that the definition of partnership in Section 4 of the Indian Partnership Act envisages an agreement between the parties. A minor lacking contractual capacity cannot enter into a contract. A partnership in which a minor is admitted to its benefits consists only of major partners, while the minor is only admitted to its benefits. The minors could not bind themselves during their minority to become partners on their attaining majority, and the option could be exercised by the minors only after they attain majority. Beyond admitting them to the benefits of the partnership, the partnership deed could not make them partners. The constitution of the firm evidenced by the partnership deed consisted only of major partners. It could not in law contemplate that the minors admitted to the benefits of the partnership would necessarily and automatically become partners. The conclusion was that when the minor attains majority a change takes place in the constitution because the minor then becomes a partner. The declaration in the deed that on attaining majority the minor will automatically become a partner is meaningless. The Bench observed that there is no dispute that the expression "partner" as defined in the I. T. Act includes a minor who has been admitted to the benefits of the partnership. But it ruled that "whether there was a change in the constitution of the firm for the purpose of applying the provisions of the I. T. Act relating to the registration of firms cannot be decided by that definition. None of the sections from Sections 184 to 186, which deal with the registration of firms, defines what is intended by the expression 'a change in the constitution of the firm' used in different places in those sections. For that we must turn to the law contained in the Indian Partnership Act." (See [1972] 84 ITR 233, 238).

37. The principle that a minor lacks contractual capacity is neither material nor relevant. The guardian of the minor acts on his behalf, and the action of the guardian is valid in law, unless the minor on attaining majority repudiates it on some good grounds. The fact that the minor could not bind himself during his minority to become a partner on attaining majority is equally irrelevant. No one says that the minor on attaining majority becomes a partner only because that was the agreement in the original deed. The agreement in the original deed evidenced the consent of the other major partners to accept the minor as a partner. When he becomes a major, the minor is free to exercise his option. The crux of the matter is whether there is any change in his position under the I. T. Act when he opts to remain in, on attaining majority. Since he was already a partner, he continues as a partner.