Question

Under Section 37 of Indian Partnership Act, 1932, what is the right of outgoing partner if amount remains unpaid?

• A. Interest @ 12% only
• B. Interest @ 6% or share of profits attributable
• C. Only share in profits
• D. No interest or profit

Hint:

Section 37 always gives choice → interest OR profit share (not both).

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
Section 37 of the Indian Partnership Act, 1932, protects the interest of a retiring or deceased partner whose final settlement amount is retained in the business by the remaining partners.
Step 2: Detailed Explanation:
If the amount due to an outgoing partner is not paid immediately, the partner is entitled to choose one of two options:
1. Interest at 6% per annum on the amount due until the date of payment.
2. A share of the profits earned by the firm that is attributable to the use of their share of the property.
This ensures the outgoing partner is compensated for the use of their capital after they have technically ceased to be a partner.
Step 3: Final Answer:
The correct right is (B) Interest @ 6% or share of profits attributable.