New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    According to Indian Partnership Act, 1932 What

    entitlement does an outgoing partner or their estate have if the surviving partners continue the business without a final settlement of accounts?
    A No entitlement to any share of profits Correct Answer Incorrect Answer
    B Full entitlement to all profits made since the partner ceased to be a partner Correct Answer Incorrect Answer
    C Entitlement to a share of profits attributable to the use of their share of the firm's property at the rate of six percent interest. Correct Answer Incorrect Answer
    D Entitlement to interest at the rate of six percent per annum on the amount of their share in the property of the firm Correct Answer Incorrect Answer
    E Entitlement to the full value of their share in the property of the firm Correct Answer Incorrect Answer

    Solution

    Section 37 of Indian Partnership Act, 1932 Where any member of a firm has died or otherwise ceased to be a partner, and the surviving or continuing partners carry on the business of the firm with the property of the firm without any final settlement of accounts as between them and the outgoing partner or his estate, then, in the absence of a contract to the contrary, the outgoing partner or his estate is entitled at the option of himself or his representatives to such share of the profits made since he ceased to be a partner as may be attributable to the use of his share of the property of the firm or to interest at the rate of six per cent. per annum on the amount of his share in the property of the firm: Provided that whereby contract between the partners an option is given to surviving or continuing partners to purchase the interest of a deceased or outgoing partner, and that option is duly exercised, the estate of the deceased partner, or the outgoing partner or his estate, as the case may be, is not entitled to any further or other share of profits; but if any partner assuming to act in exercise of the option does not in all material respects comply with the terms thereof, he is liable to account under the foregoing provisions of this section.

    Practice Next

    Relevant for Exams: