Read the following passage and answer the question.

X, Y, Z were partners sharing profits and losses in the ratio of 4:3:2. Z retired on 1st July, 2021 on which date the capitals of X, Y, Z after all necessary adjustments stood at ₹75,000, ₹65,000 and ₹45,000 respectively. X & Y continued to carry on the business for 6 months without settling the account of Z. During the period of 6 months ended 31st December, 2021, a profit of ₹50,000 is earned by the firm.

Which of the following options is available with partner Z according to section 37?

Either 1 or 2

The correct answer is option 4- Either 1 or 2.

Upon the retirement or death of a partner, the settlement of the outgoing partner's account is governed by the terms specified in the partnership deed. These terms may include various options for payment, such as:
Lump Sum Payment: The retiring partner may receive the entire amount due in a single lump sum payment immediately, as per the agreed terms.
Installment Payments: The payment may be spread out over multiple installments, with or without interest, as agreed upon in the partnership deed.
Partial Cash Payment and Installments: Part of the amount may be paid in cash immediately, and the remaining balance is settled through installments at agreed intervals.

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.