Question

Prince and Deepak are partners in a firm. Prince worked hard for the firm and that’s why he demanded salary. Deepak was busy in his personal work so he was not able to take part in business activities of the firm.

Deepak doesn't agree with this demand. He insisted that it was not decided in the past to give any salary to any partner. This resulted in a dispute among themselves. There was no way to overcome this dispute. Even none of them can go to court to get some relief legally. Answer the following from the above situation:

(i)What type of partners Deepak and Prince are?

(ii)Give reason due to which they can’t resolve the dispute.

(iii)Give a reason due to which they can’t not go to court and get some legal remedy for the same.​

Answer 1

In the absence of Partnership Deed, provisions of the Indian Partnership Act, 1932 shall apply to settle the disputes:
(i) Salary is not payable to any partner. Therefore, X is not entitled to any salary.
(ii) Interest on capital is not payable to any partner in the absence of Partnership Deed. Therefore, X and Y will not get interest on their capitals. Interest on loan is payable @ 6%p.a. Thus, X will get interest on loan @ 6%p.a.
(iii) A person cannot be introduced as partner without the consent of all the partners. Therefore, Z cannot be admitted into partnership because Y objects to it.
(iv) Profits shall be shared equally between X and Y after deducting interest on loan of X @ 6% p.a. on Rs.10,000.

Answer 2

Answer:

1) partnership

2) he insisted that it was not decided in the past to give any salary to any partner