When both the debts of the firm and private debts of a partner co-exist, the Property of the firm as per Section 49 of the Indian Partnership Act, shall apply:
(A) Payment of debts of the firm first.
(B) The surplus, if any, shall be divided among the partners as per their claims, which can not be utilised for payment of their private liabilities.
(C) The surplus, if any, shall be divided among the partners as per their claims, which can be utilised for payment of their private liabilities.
(D) Payment of private debts of the partners first.
Choose the correct answer from the options given below.
When both the debts of the firm and private debts of a partner co-exist, the Property of the firm as per Section 49 of the Indian Partnership Act, shall apply:
(A) Payment of debts of the firm first.
(B) The surplus, if any, shall be divided among the partners as per their claims, which can not be utilised for payment of their private liabilities.
(C) The surplus, if any, shall be divided among the partners as per their claims, which can be utilised for payment of their private liabilities.
(D) Payment of private debts of the partners first.
Choose the correct answer from the options given below.
Solution
Section 49 keeps the two sets of debts separate. Firm property is applied first to the firm's debts, so (A) is correct, and any surplus is then divided among the partners according to their claims and becomes their private property, available to meet their private liabilities, so (C) is correct. Private property, conversely, goes first to private debts.
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