A, B and C are partners in a firm. They do not have a Partnership Deed. At the end of the first year of the commencement of the firm, they have faced the following problems :
(a) A wants that interest on capital should be allowed to the partners but B and C do not agree.
(b) B wants that the partners should be allowed to draw salary but A and C do not agree.
(c) C wants that the loan given by him to the firm should bear interest @ 10% p.a. but A and B do not agree.
(d) A and B having contributed larger amounts of capital, desire that the profits should be divided in the ratio of their capital contribution but C does not agree.
State how you will settle these disputes if the partners approach you for purpose.
(a) A wants that interest on capital should be allowed to the partners but B and C do not agree.
(b) B wants that the partners should be allowed to draw salary but A and C do not agree.
(c) C wants that the loan given by him to the firm should bear interest @ 10% p.a. but A and B do not agree.
(d) A and B having contributed larger amounts of capital, desire that the profits should be divided in the ratio of their capital contribution but C does not agree.
State how you will settle these disputes if the partners approach you for purpose.
Disputes
Possible Judgements
(a)
A wants that interest on capital should be allowed to the partners but B and C do not agree.
As per Partnership Act, no interest on Capital will be allowed.
Reason: There is no partnership agreement among A, B and C regarding interest on capital.
(b)
B wants that the partners should be allowed to draw salary but A and C do not agree.
No salary will be allowed to any partner.
Reason: There is no partnership agreement.
(c)
C wants that the loan given by him to the firm should bear interest @ 10% p.a. but A and B do not agree.
Interest on partner’s loan (C’s loan) will be allowed at 6% p.a.
Reason: As per Partnership Act, in the absence of partnership agreement, interest on partners loan is allowed at 6% p.a.
(d)
A and B having contributed larger amounts of capital, desire that the profits should be divided in the ratio of their capital contribution but C does not agree.
Profit will be shared equally and not in the capital ratio.
Reason: There is no partnership agreement.
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Disputes |
Possible Judgements |
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(a) |
A wants that interest on capital should be allowed to the partners but B and C do not agree. |
As per Partnership Act, no interest on Capital will be allowed. Reason: There is no partnership agreement among A, B and C regarding interest on capital. |
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(b) |
B wants that the partners should be allowed to draw salary but A and C do not agree. |
No salary will be allowed to any partner. Reason: There is no partnership agreement. |
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(c) |
C wants that the loan given by him to the firm should bear interest @ 10% p.a. but A and B do not agree. |
Interest on partner’s loan (C’s loan) will be allowed at 6% p.a. Reason: As per Partnership Act, in the absence of partnership agreement, interest on partners loan is allowed at 6% p.a. |
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(d) |
A and B having contributed larger amounts of capital, desire that the profits should be divided in the ratio of their capital contribution but C does not agree. |
Profit will be shared equally and not in the capital ratio. Reason: There is no partnership agreement. |
