MINOR

1. MINOR • A Minor is person who has not completed 18 years of age (section 3, Indian Majority Act). • A Minor for whom a guardian is appointed by a court (for the person or property or both) attains majority when he completes 18 years of age. A person of foreign domicile also attains majority on completion of 18 years (Amended Sect of 3 of Indian Majority Act) • Contracts with minors are void ab initio. (Sec. 11 of Indian Contract Act). • If a minor misrepresents his age, he is not liable for his contracts and also he cannot ratify the contracts on his attaining majority as they are void ab initio. • If any loan is granted to a minor, he cannot ratify the loan on attaining majority.

2. MINOR • Accounts in the name of minors who could understand the nature of bank transactions and who have uniform signature are opened by banks. At present, Minors who have attained the age of 10 years. • However, No current account in the name of the minor and No cheque Book facility. • A Minor’s estate is liable for necessaries supplied to him as per his status in life. But he does not have any personal liability i.e. we cannot sue a minor for recovery of any monies lent. • NO loan or overdraft should be permitted to a minor. Security taken from him cannot be enforced.

3. MINOR • Any guarantee obtained will also not be a valid as the original contract is void. But is third party ‘indemnifies’ the overdraft he will be liable. • Guardian: • Father is the natural guardian. • After father Mother (Section 6, Hindu Minority and Guardianship Act) • A Guardian can be a Natural Guardian, Testamentary Guardian, Legal Guardian a) Natural guardian - Varies from Religion to Religion b) Testamentary Guardian – Guardian appointed by a Will c) Legal Guardian - Guardian appointed by Court Testamentary Guardian takes effect only after the death of Father and mother. • Minor Married Girl : Husband (if major), If husband is minor, Girl’s father/mother If the girl is widow, Father/mother Illegitimate minor Child: Mother Even if a person is convicted of an offence, the natural guardian continued to be NG.

4. MINOR • Opening of TD in the name of minors by close relatives like grant parents- while parents are alive • Permissible with F or S. Money belongs to close relatives who name will be the former. • Current and SB account can not be opened. Only TD • In the case of death of Close relatives, money would be payable to NG or to the Minor on his attaining majority.

5. MINOR • Accounts opened in minor’s name only, operations after the minor attains majority will be permitted only to him and the guardian can not operate the account. • If the Account is in the Joint names, NG can operate the account even after minor attains majority. • If the Minor dies during the minority the balance would be paid to the NG. If no NG, to the legal representatives of the Minor. • If the guardian dies, the amount would be payable to the NG or held at the disposal of the Court.

6. ACCOUNTS IN THE NAME OF WOMEN • Law does not make any difference between a married woman and a single woman. Both are capable of entering into contracts in their own right. • In the case of married women, employment details of the husband to be noted. • Husband is not liable to repay the debts of his wife unless it is proved that she acted as the agent of the husband. He is liable if a debt is incurred by the wife for necessities and loan was given with his consent. • A Women cannot be arrested or imprisoned for non-payment of judgement debit • (Section 56 of CPC) • A Married women dependent on husband cannot be adjudged as insolvent.

7. PARDANASHIN WOMEN • Pardanashin Women means a woman who does not have any contact with outside world. • It will be difficult to prove that the contract was free from undue influence and also she had understood the nature of transactions etc. • No account is opened in the name of an illiterate Pardanashin women • Extreme care should be taken for opening account for literate Pardanashin women.

8. ILLITERATES • Only SB/TDR accounts will be opened. Generally, No Current Account. • The Account is preferably opened as joint account with a close literate blood relative. (viz. Brother, Sister, Father, Mother etc) • Left hand thumb impression to be obtained and it should be witnessed. • One Identification mark is noted in the A/c opening form/SS Sheet. • No Cheque Book facility • The Cashier/Officer should personally ascertain the amount of deposit/withdrawal from the illiterate depositors.

9. BLIND PERSONS • Blind Persons competent to enter into contracts. • In view of their disability, more than ordinary care is to be exercised. • The accounts will be conducted on the lines of an illiterate accounts • SB A/c or other deposit accounts can be opened in the name of blind persons with single or joint operations. • Account can be opened in the name of sole proprietorship concern/Firms where a blind persons in involved

10. BLIND PERSONS • He can also issue a Power of Attorney in favour of third persons. • Cheque Book can be issued. • Account in single name to be operated by a PA holder. The PA must be duly notarized or attested by a magistrate under the court seal. • Account in joint names: another persons should be with sight and who is generally a close relative. • Person with sight can operate by cheque

11. LUNATICS • A lunatic cannot enter into a valid contract (Section 11 of Indian Contract Act) as he is incapable of understanding his interests. • No account can be opened in the name of Lunatic. • When a customer becomes of unsound mine, operations should be stopped and the balance to be paid to the Guardian or Manager appointed under the Mental Health Act. • LUCID INTERVALS – Means the period during which he has understanding capacity. Contracts entered into by an insane persons during Lucid Intervals are binding on him

12. LUNATICS • Cheque issued by an insane should be returned as it will not be possible to know that the person has singed a cheque during a ‘lucid interval’. • Operations on an account can be stopped on receiving notice of insanity/lunacy or some conclusive evidence; mere hearsay report is not sufficient. • Normally, the court will appoint a Receiver at the request of a near relation under Mental Health Act. The balance in the a/c has to be paid to the Receiver.

13. DRUNKEN PERSONS • If the drunkenness is severe, Drunken persons are unable to understand the implications of his transactions. Hence the contract/transactions is void. • If he is able to understand the transactions, it will be binding on him.

14. INSOLVENTS • A persons who cannot pay his/her debts of Rs.500/- or more may be declared insolvent. • Insolvency is a Civil Death i.e. he cannot bind his estate by entering into contracts. • An application for declaring a person insolvent can be made either by person himself or by his creditors

15. INSOLVENTS • Operations in the account must be stopped immediately and the Official Receiver is authorized to operate the account. • Cheque issued by a third party in favour of the insolvent must be returned unpaid. The cheque should be paid only the Receiver. • Cheques issued by the customer must be returned unpaid. It has to be returned with remarks ‘Payee’s title requires confirmation’. He has no authority to deal with his assets including bank accounts.

16. INSOLVENTS • However, operations of an insolvent in the following cases is permitted • Operations as agent of another person’s account • Operation of a Trust account as Trustee • Operations of his own PPF Account. • When a persons adjudged insolvent, the balance in his account has to be paid to the Official Receiver by a cross Banker’s Cheque. • An insolvent person cannot act as a Director of a Company.

17. INSOLVENTS • No Account should be opened for an undischarged insolvent. • Two Acts of Insolvency : • Presidency Towns Insolvency Act 1909: Mumbai, Kolkota, Chennai • Provincial Insolvency Act : Applicable to all other areas • Minors, Lunatics, Married women dependent on husbands, Companies and Corporations cannot be declared insolvent

18. OFFICIAL LIQUIDATOR • Official Liquidator is appointed by the High Court for winding up of Limited Co under Companies Act. • Once he is appointed, he comes the liquidator of the Company. • He should maintain a Account with RBI/SBI/Associate of SBI (S 522 of Cos Act) • All the monies received by him shall be deposited in the account and he should issue only Order cheques.

19. OFFICIAL LIQUIDATOR • By issuing Order cheque, the disposal of the estate can be verified through the endorsement of the payee. • Once a liquidator is appointed by the court, the Company cannot operate on its account.

20. JOINT ACCOUNTSE or S Account • If one of the Joint A/c holders stops operation of the account by the other, future operations will be permitted only under joint operations. • The account can be closed/transferred under instructions from the both the account holders.

21. JOINT ACCOUNTS • On the death of one, the balance is payable to the survivor. The survivor holds the balance in trust for the legal representatives of the deceased. The banker is discharged of his liability by making payment to the survivor. • If any Court order prohibits payment to the Survivor, the balance should not be paid to the survivor and it should be dealt with as per the court order.

22. JOINT ACCOUNTS • Insolvency or lunacy of a joint holder will end the relationship. Further operations by either the solvent or insolvent account holder have to be stopped. • If a cheque is drawn by the solvent joint account holder, it should be returned with ‘Refer to drawer’

23. JOINT ACCOUNTS • A credit in the name of one of the a/c holder should not be credited to the Joint account except with his authority

24. JOINT ACCOUNTS • Supreme court judgement (Anumati vs PNB) • can be paid to one of the depositors on maturity • Can be paid before maturity with the consent of both the depositors • Cannot be pledged unless all the depositors pledge jointly. • Any variations or revocation of instructions can be effected only under the joint signatures of all the depositors.

25. JOINT ACCOUNTS • Premature payment of a deposit can be made to the survivor in case of death of the other joint depositor, provided both have signed a request to this effect in the account opening form. Otherwise, the payment can be made only on the maturity of the deposit • Granting of loan to the survivor is risky as the legal heir may be able to prove a better title than the survivor before the maturity of the deposit.

26. JOINT ACCOUNTS B or S ( Both or Survivor) • The operations are done jointly • In the case of death of one, the survivor is entitled to the balance

27. JOINT ACCOUNT • The Operations are done jointly. • On the death of one of the account holders, the balance is payable to the legal representative of the deceased and the survivor jointly.

28. ACCOUNTS OPERATED BY AGENTS AND ATTORNEYS • An agent has to clearly indicate that he is signing on behalf of the principal. • Agency is terminated on the death, insanity of principal and on insolvency of the principal. • Insolvency of the Agent does not terminate the agency

29. ACCOUNTS OPERATED BY AGENTS AND ATTORNEYS a) A cheque singed by insolvent Agent : can be paid b) Agent dies at the time of presentation of cheque signed by him : can be paid c) Usuance bill accepted by an agent/PA should be paid on the due date even if the agent is dead on due date. > A minor can be appointed as an agent.

30. POWER OF ATTORNEY • PA includes any instruments empowering a specified person to act for and in the name of the person executing it. The person giving power is called Donor or Grantor or Principal. The Other Persons to whom the power is giving is called Grantee or PA holder. • Two types of PA : Special PA and General PA • Special PA : authorises a person to act in a single transactions • General PA : authorizes a person to act in more than one transactions

31. POWER OF ATTORNEY • A Power of attorney is to be constructed very strictly eg: A power to endorse does not confer a power to draw, Power to operate does not confer power to overdraw. • PA has to be stamped as per Stamp Act of the state before or at the time of execution. If a PA is executed abroad, it has to be stamped within 3 months of its receipt into India

32. POWER OF ATTORNEY • A PA in favour of a holder of an office but not by name can be accepted, if a stamped letter of indemnity is obtained. • The PA should be duly authenticated and attested by a notary public or Oath Commissioner or a Magistrate under Court Seal

33. POWER OF ATTORNEY • PA must indicate that he is signing for and on behalf of the donor/principal, by writing the words, ‘per pro’ (per procuration ie by arrangement). • If the PA overdraws the account without authority, he will be liable for the overdrawn amount and not the principal. • The Terms of the PA should be clear viz. whether to issue Cheque book/Pass book, Or separate Cheque Book to be issued etc. Loose leaf cheque should be issued to PA.

34. JOINT HINDU FAMILY • JHF is legal entity. It has perpetual succession like Companies. It does not require registration. • Two main branches of Hindu Law :. • Dayabaga School : applicable to West Bengal – Son/daughter of a coparcener acquires right in JHF property only after father’s death. • Mitakshara School : applicable to rest of India. Son/daughter of a coparcener acquires right in JHF property by birth.

35. JOINT HINDU FAMILY • Mitakshara under Hindu Succession Act was amended in September 2005 and daughter of a co-parcener was also given the rights over JHF property on par with the son by birth. • JHF consists of one common living ancestor and his male/female descendents upto three generations next to him. Other female members like mother or daughter in-law are not co-parcener

36. JOINT HINDU FAMILY • Karta, eldest co-parcener is the head of JHF. Manages the JHF business. • No restrictions on the number of co-parceners. • A co-parcener is not an agent of other co-parcener

37. JOINT HINDU FAMILY • Karta: JHF Property including minor’s share are bound by the actions of the karta in respect of ancestral business of the family. He/she does not require the consent of other coparceners. Karta cannot bind the co-parceners for any new business. • When a minor attains majority he/she is required to ratify the previous transactions and also a fresh JHF letter to be obtained signed by all co-parceners

38. JOINT HINDU FAMILY • Liability of the Karta is unlimited but that of the co-parceners is limited to their share in the joint family estate. • On the death of Karta, the eldest surviving co-parcener becomes the Karta. • When Karta is absent for a long time, she/she can authorize the eldest co-parcener to act on behalf of JHF. In such case, ratification has to be obtained at an intervals of 6 months.

39. JOINT HINDU FAMILY • JHF letter to be obtained, signed by Karta and all adult co-parceners. It presumes that the business carried on by the JHF is an ancestral business. It binds the Karta and Co-parceners for the borrowings even if the business turns out to be not an ancestral one. • A coparcener can countermand the payment of a cheque.

40. PARTNERSHIP FIRM • A Partnership is not a legal entity. It is an association of persons • Registration with the Registrar of Firms is optional under Partnership Act. • An unregistered firm cannot sue its debtors/partners but can be sued by its creditors. • Every partner is an agent of other partners

41. PARTNERSHIP FIRM • A minor cannot become a partner in a firm, but he can be admitted to the benefits of the partnership. Such a Minor cannot sigh documents, instruct bank on any matter. • Banks should insist for registration of firm before granting an advance. Subsequent registration will not help

42. PARTNERSHIP FIRM • Ceiling on number of partners • Minimum number of partners : 2 (Partnership Act) • Maximum of number partners (Banking Firm) : 10 (S 11, Companies Act) • Maximum of number partners (non -Banking Firm): 20 (S 11, Companies Act) If the number of partners exceeds the stipulated number, firm would be deemed as an illegal association

43. PARTNERSHIP FIRM • Partnership at will: Any partner can retire from the partnership by giving reasonable notice. • Partnership Deed: is the document creating the partnership – to be signed by all the partners.

44. A partner has the following implied powers (s 19, Partnership Act) • In commercial firms, he can sell/pledge movable goods on account of partnership. • Can borrow money, contract debts etc for the business of the Partnership. • Can draw, make or accept Negotiable Instruments.

45. He has no implied Power for • To mortgage Partnership property • To transfer the business of the property. • To extend guarantees on behalf of the partnership firm unless the partnership business is in the nature of extending guarantees. • To delegate his powers to a third party.

46. JOINT STOCK COMPANIES • A company has a legal status independent of that of the share-holders. It is a artificial person which has perpetual existence.OINT STOCK COMPANIES

47. JOINT STOCK COMPANIES

48. WISH YOU ALL THE BEST