Question

29.Rahul is sole owner of his business of running shoe manufacturing factory.

The main objective of the business is earning profit. He took loan of Rs. 20

lakhs from Gupta Finance company for the expansion of his business.

Because of continuous losses however, he was not able to repay the loan on

time. Assets of the business were not enough for repaying liabilities in full.As

a result, the finance company asked him to repay the loan. He refused to do

so on the ground that the loan was taken by his business and not by him for

his personal use. The company filed a case against him. The court give

decision in favour of the company on the ground that Rahul was operating as

the sole proprietorship and a sole proprietor did not have separate entity

distinct from his own. The court further stated that Rahul had unlimited

liability and held him liable to pay the loan even by selling his personal

property if needbe.


Q-2. What type of liability is enjoyed by Mr. Rahul.​

Answer 1

Answer:

unlimited liability

Explanation:

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