Q.In the absence of any agreement among the partners, interest on the balance left unpaid to a retiring partner (transferred to his Loan Account) is payable, under the Indian Partnership Act, 1932, at:

The Indian Partnership Act, 1932 protects a retiring partner whose money is left with the firm even without a specific agreement on interest.

The correct option is (b) 6% per annum.

When a retiring partner's dues are left unpaid and transferred to a Loan Account, and the partnership deed is silent on what rate of interest should be paid on it, the matter is not left unresolved — Section 37 of the Indian Partnership Act, 1932 steps in. It entitles the retiring (or, on death, the deceased) partner to interest at 6% per annum on the amount outstanding, from the date he ceased to be a partner until the date of final payment — or, at his own option, to such share of the firm's subsequent profits as is attributable to the continued use of his money in the business, whichever he prefers. In HSC practice, the 6% figure is what is almost always used unless the question states some other agreed rate.

Why the other options are wrong: …

Students often confuse this statutory default rate with an interest-on-capital or interest-on-drawings rate agreed elsewhere in the same problem — Section 37's 6% applies specifically to a retiring/deceased partner's …