Question

On dissolution of the firm, partner A demands that his loan of ₹ 1,00,000 should be paid before payment of Capitals of the partners, whereas partners B and C demand that Capitals should be paid before the payment of A’s loan. State the order of payment.

Answer 1

According to Section 48 of the Indian Partnership Act, 1932, loans advanced by partners are settled prior to the repayment of their capital contributions.