If there is no specific agreement regarding the payment terms, Section 37 of the Indian Partnership Act, 1932 is applicable. Under this section, the outgoing partner has the option to choose one of the following methods of settlement: Option 1: The outgoing partner can receive interest at a rate of 6% per annum on the amount due, calculated until the date of payment. Option 2: Alternatively, the outgoing partner can opt to receive their share of profits earned with their money, based on the capital ratio. Once all adjustments, including the partner's share of goodwill, accumulated profits, losses, revaluation gains/losses, and any other relevant factors, have been made, the total amount due to the retiring partner is ascertained. If the firm is capable of making the payment immediately, the amount is paid to the retiring partner without delay. However, if the firm is unable to make the full payment immediately, the amount due is transferred to the retiring partner's Loan Account. Subsequently, as and when the firm is able to make the payments, the amounts are debited from the Loan Account and credited to the retiring partner's account accordingly. This ensures that the retiring partner eventually receives the full amount owed to them over time as per the agreed terms. The firm acts as a debtor to the retiring partner until the outstanding amount is fully settled. By adhering to the terms of the partnership deed or the provisions of Section 37, the settlement of the retiring partner's account is carried out in a fair and transparent manner, ensuring that the retiring partner receives their rightful share promptly or over a defined period as agreed upon by all parties involved. |