(i) Describe any four mutual rights and liabilities of partners in a partnership firm with reference to the provisions of the Indian Partnership…

(i) Mutual rights and liabilities of Partners (Section 13 of the Indian Partnership Act,1932): Subject to contract between the partners, they are entitled to: Right to Remuneration [Section 13(a)]: No partner is entitled to receive any remuneration in addition to his share in the profits of the firm for taking part in the business of the firm. But this rule can always be varied by an express agreement, or by a course of dealings, in which event the partner will be entitled to remuneration. Right to Share Profits [Section 13(b)]: Partners are entitled to share equally in the profits earned and so contribute equally to the losses sustained by the firm. The amount of a partner’s share must be ascertained by enquiring whether there is any agreement in that behalf between the partners. If there is no agreement then you should make a presumption of equality and the burden of proving that the shares are unequal, will lie on the party alleging the same. Interest on Capital [Section 13(c)]: The following elements must be there before a partner can be entitled to interest on moneys brought by him in the partnership business: (i) an express agreement to that effect, or practice of the particular partnership or (ii) any trade custom to that effect; or (iii) a statutory provision which entitles him to such interest. Interest on Advances [Section 13(d)]: If a partner makes an advance to the firm in addition to the amount of capital to be contributed by him, in such a case, the partner is entitled to claim interest thereon @6% per annum. While interest on capital account ceases to run on dissolution, the interest on advances keep running even after dissolution and up to the date of payment. Right to be Indemnified [Section 13(e)]: Every partner has the right to be indemnified by the firm in respect of payments made and liabilities incurred by him in the ordinary and proper conduct of the business of the firm as well as in the performance of an act in an emergency for protecting the firm from any loss, if the payments, liability and act are such as a prudent man would make, incur or perform in his own case, under similar circumstances. Right to indemnify the firm [Section 13(f)]: A partner must indemnify the firm for any loss caused to it by willful neglect in the conduct of the business of the firm. (ii) Dissolution by the Court: According to Section 44 of the Indian Partnership Act,1932 the Court may, at the suit of the partner, dissolve a firm on any of the following grounds: Insanity/Unsound Mind: Where a partner (not a sleeping partner) has become of unsound mind, the court may dissolve the firm on a suit of the other partners or by the next friend of the insane partner. Temporary sickness is no ground for dissolution of firm. Permanent Incapacity: When a partner, other than the partner suing, has become in any way permanently incapable of performing his duties as partner, then the court may dissolve the firm. Such permanent incapacity may result from physical disability or illness etc. Misconduct: Where a partner, other than the partner suing, is guilty of misconduct which is likely to affect prejudicially the carrying on of business, the court may order for dissolution of the firm, by giving regard to the nature of business. It is not necessary that misconduct must relate to the conduct of the business. The important point is the adverse effect of misconduct on the business. In each case nature of business will decide whether an act is misconduct or not. Persistent Breach of Agreement: Where a partner other than the partner suing, willfully or persistently commits breach of agreements relating to the management of the affairs of the firms or the conduct of its business, or otherwise so conduct himself in matters relating to the business that it is not reasonable practicable for other partners to carry on the business in partnership with him, then the court may dissolve the firm at the instance of any of the partners. Following comes in to category of breach of contract: EmbezzlementKeeping erroneous accountsHolding more cash than allowedRefusal to show accounts despite repeated request etc. Transfer of Interest: Where a partner other than the partner suing, has transferred the whole of his interest in the firm to a third party or has allowed his share to be charged or sold by the court, in the recovery of arrears of land revenue due by the partner, the court may dissolve the firm at the instance of any other partner. Continuous/ Perpetual Losses: Where the business of the firm cannot be carried on, except at a loss in future, the court may order for its dissolution. Just and Equitable Grounds: Where the court considers any other ground to be just and equitable for the dissolution of the firm, it may dissolve a firm. The following are the cases for the just and equitable grounds: Deadlock in the management.Where the partners are not in talking terms between them.Loss of substratum.Gambling by a partner on a stock exchange.