Bose, Sarkar and Chatterjee are partners in a firm and do not have a partnership deed. Bose introduced further capital of Rs. 5,00,000 on 1st October, 2021. Whereas Chatterjee took a loan of Rs. 50,000 from the firm on 1st October, 2021. Disputes have arisen among them on the following issues: (a) Bose demands interest @ 10% p.a. on Rs. 5,00,000 being his extra capital. (b) Sarkar desires that his son Deep should be admitted as partner and he will give his half of his share. Bose and Chatterjee do not agree. (c) Bose and Sarkar are of the view that Chatterjee should be charged interest on loan from the firm at the lending rate of the banks, which is 12% p.a. (d) Sarkar has withdrawn Rs. 50,000 from the firm for his personal use. Bose and Chatterjee are of the view that Sarkar should be charged interest @ 10% p.a. You are required to give solution to each issue of dispute.

SOLUTION

In the absence of Partnership Deed, the provisions of Indian Partnership Act, 1932 will apply as follows;

(a) Interest will not be allowed on extra capital introduced by Bose,

(b) Deep cannot be admitted as Bose and Chatterjee don’t agree, no partner has right to admit any one as a partner,

(c) Interest will not be charged from Chatterjee as rate of interest was not agreed.

(d) Interest on drawings will not be charged on Sarkar’s drawings.