An interesting question arose before the Supreme Court in the case of Regional Director, E.S.I.C. v. Ramanuja Match Industries, (1985) 1 SCC 218, 221, as to whether a partner of a partnership firm can be considered as an employee of the firm, if he is drawing wages from the firm and is working for it?
The Supreme Court rejected such contention and held that the status of a partner qua the firm with reference to the provisions of the Partnership Act, 1932, the concept of “employer” and “employee” and the importance of the definition of “wages” as also various Indian and foreign decisions are clearly indicative of the principle that a partner who belongs to the class of employer cannot rank as employee merely because he also works for wages for the partnership.
The Court observed that in common parlance the status of a partner qua the firm is different from employees working under the firm. It may be that a partner is being paid some remuneration for any special attention which he devotes but that would not involve any change of status and bring him within the definition of employee.
The Supreme Court held that in a partnership firm, which is not a legal entity, each partner acts as an agent of the other. The position of a partner qua the firm is thus not that of a master and a servant or employer and employee, which concept involves an element of subordination but that of equality. The partnership business belongs to the partners and each one of them is an owner thereof.
Thus, it is clear from the above judgment of the Supreme Court that a partner cannot be considered as an employee of the partnership firm, even if he works for the firm and gets wages for such work. He is, in fact, one of the owners of the firm.
