State the provisions of the Indian Partnership Act, 1932 that apply in the absence of a Partnership Deed.

Question

Accepted Answer

Section 13 of the Indian Partnership Act, 1932 lays down the mutual rights and duties of partners that apply automatically wherever the partners have not agreed otherwise (either because there is no Partnership Deed, or because the deed is silent on that particular point):

1. **Sharing of profits and losses** — partners share profits and losses EQUALLY, irrespective of the capital contributed or the amount of work actually done by each partner [Section 13(b)].
2. **Interest on capital** — no partner is entitled to interest on the capital they have contributed [Section 13(c)].
3. **Interest on drawings** — no interest is charged on a partner's drawings.
4. **Remuneration** — no partner is entitled to any salary, commission, or other remuneration for taking part in the conduct of the firm's business, however much work that partner actually does [Section 13(a)].
5. **Interest on a partner's loan** — a partner who has advanced money to the firm as a genuine LOAN, over and above their agreed share of capital, is entitled to interest on that loan at 6% per annum [Section 13(d)] — the one item where the Act does provide for a positive rate by default.
6. **Indemnity** — the firm must indemnify a partner for payments and liabilities properly incurred in the ordinary conduct of business or in an emergency [Section 13(e)], and a partner must indemnify the firm for any loss caused by that partner's own wilful neglect or fraud [Section 13(f)].

> [!ANSWER]
> In the absence of a Partnership Deed, Section 13 of the Indian Partnership Act, 1932 provides: profits/losses shared equally; no interest allowed on capital; no interest charged on drawings; no salary/commission to any partner; but interest on a partner's genuine loan to the firm (beyond capital) is allowed at 6% p.a.

Matter	Rule in the absence of an agreement
Profit-sharing ratio	Equal among all partners
Interest on capital	Not allowed
Interest on drawings	Not charged
Salary/commission to partners	Not allowed
Interest on a partner's loan to the firm	Allowed at 6% p.a.

Q.State the provisions of the Indian Partnership Act, 1932 that apply in the absence of a Partnership Deed.

Concept understanding — Partnership Deed and Rules in the Absence of a Deed

Q.State the provisions of the Indian Partnership Act, 1932 that apply in the absence of a Partnership Deed.

🎓Unlock everything free for 14 days

Unlock everything free for 14 days