Question:
Under Section 37 of Indian Partnership Act, 1932, what is the right of outgoing partner if amount remains unpaid?
Under Section 37 of Indian Partnership Act, 1932, what is the right of outgoing partner if amount remains unpaid?
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Section 37 always gives choice → interest OR profit share (not both).
Updated On: Jun 17, 2026
- Interest @ 12% only
- Interest @ 6% or share of profits attributable
- Only share in profits
- No interest or profit
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The Correct Option is B
Solution and Explanation
Concept:
Section 37 of the Indian Partnership Act deals with rights of outgoing partners when settlement of dues is delayed. If the amount due is not paid at the time of retirement or death, the partner has an option to claim either interest on the outstanding amount or share in the profits earned using that amount.
Step 1: Understand legal protection.
Law protects outgoing partner from delayed settlement losses.
Step 2: Two available options.
Partner can claim:
• Interest @ 6% p.a. OR
• Share of profits attributable to unpaid capital
Step 3: Final interpretation.
Partner chooses whichever is more beneficial. Final Answer: Either option (B)
Step 1: Understand legal protection.
Law protects outgoing partner from delayed settlement losses.
Step 2: Two available options.
Partner can claim:
• Interest @ 6% p.a. OR
• Share of profits attributable to unpaid capital
Step 3: Final interpretation.
Partner chooses whichever is more beneficial. Final Answer: Either option (B)
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