Question

A and B are partners in a firm. State by giving reasons whether their claims are valid if the partnership deed is silent in the following matters:

1. B had advanced a loan to the firm. He claims interest at the usual interest rate charged by banks. The rate of interest is 12% p.a.
2. A has contributed ₹ 1,00,000, and B ₹ 50,000, as capital. B wants profits to be shared equally.

Answer 1

1. B’s claim for interest at 12% p.a. is not valid. Since the partnership deed is silent, interest on a loan advanced by a partner is allowed only at 6% p.a. as per the Indian Partnership Act, 1932.
2. B’s claim for equal sharing of profits is valid. As the partnership deed is silent, profits are shared equally among partners irrespective of their capital contributions, as per the Indian Partnership Act, 1932.