The partnership firm of A, B & C was dissolved on 31st March 2021. B demands that his loan of ₹50000 should be paid before the payment of capital of the partners. But A & C demand that capital should be paid before B's loan. Who is correct?

B

The assets of the firm, including any sum contributed by the partners to make up deficiencies of capital, shall be applied in the following manner and order:
(i) In paying the debts of the firm to the third parties;
(ii) In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e. partner’ loan);
(iii) In paying to each partner proportionately what is due to him on account of capital; and
(iv) the residue, if any, shall be divided among the partners in their profit sharing ratio