Suman, having10% share in the property of 200 lakh of a firm retires from the firm on 31st March, 2023. The firm continues with the business…

According to section 37 of the Indian Partnership Act,1932, Where any member of a firm has died or otherwise ceased to be 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. In the instant case, Suman is entitled to claim either interest on her share in the property i.e.1,20,000 (6% of 20Lakh) or a share of the profits i.e.1 Lakh (10% of 10Lakh) from the firm for the use of her share in the property. Therefore, claim of Suman of 3Lakh is not valid.