Right of outgoing partner in certain cases to share subsequent profits
Commencement. 1932-10-01 (except section 69) 1933-10-01
Section 37 of the Indian Partnership Act, 1932 deals with right of outgoing partner in certain cases to share subsequent profits. 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 The Act was enacted on 08 Apr 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 where by 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.
Section 37, The Indian Partnership Act, 1932 (Act 9 of 1932).
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Pamuru Vishnu Vinodh Reddy vs Chillakuru Chandrasekhara Reddy
Court's Decision & Legal Precedent
Where a partner retires from a partnership firm with the consent of all other partners and agrees to sell his share, the relevant date for ascertaining the value of the retiring partner's share is the date on which he ceased to be a partner (the retirement date), not the date on which a court-appointed Commissioner subsequently values the share. The unpaid value of the share constitutes a debt due from the continuing partners to the retiring partner, and the retiring partner is entitled to interest at six per cent per annum on the unpaid amount from the date of retirement as per Section 37 of the Indian Partnership Act. Non-payment of the agreed consideration does not negate the legal effect of retirement but merely creates a debt obligation.
On this section: Provides that an outgoing partner is entitled to share of profits made since cessation or interest at six per cent per annum on the amount of his share in the property of the firm. The Court applied this section to determine that the relevant date for valuation is the date of cessation (5.4.1971) and that interest at six per cent per annum is payable on the unpaid share value from that date.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 37
What have the courts held on Section 37 of the Indian Partnership Act?
Pamuru Vishnu Vinodh Reddy vs Chillakuru Chandrasekhara Reddy (17 Feb 2003) is the leading judgment on this section among those set out below: Provides that an outgoing partner is entitled to share of profits made since cessation or interest at six per cent per annum on the amount of his share in the property of the firm. The Court applied this section to determine that the relevant date for valuation is the date of cessation (5.4.1971) and that interest at six per cent per annum is payable on the unpaid share value from that date.
How do I find court cases under Section 37 of the Indian Partnership Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Partnership Act 37, section 37 Partnership Act, section 37 of the Indian Partnership Act. People searching for it also type indian partnership act 1932 section 37 and section 37 of indian partnership act 1932 class 12. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Pamuru Vishnu Vinodh Reddy vs Chillakuru Chandrasekhara Reddy (17 Feb 2003).
When was Section 37 of the Indian Partnership Act enacted?
Section 37 of the Indian Partnership Act, cited as Partnership Act 37, was enacted on 08 Apr 1932 as Act 9 of 1932. It is in force as at the date shown on this page.
Other sections of this Act
- 58. Application for registration591 words
- 30. Minors admitted to the benefits of partnership552 words
- 69. Effect of non-registration515 words
- 44. Dissolution by the Court290 words
- 71. Power to make rules259 words
- 6. Mode of determining existence of partnership210 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.