The statement accurately reflects the legal position of an outgoing partner (a partner who retires from the firm) under the Indian Partnership Act, 1932. The Act provides specific provisions to define the rights and liabilities of a partner upon retirement, balancing the interests of the retiring partner, the continuing partners, and third parties.

Retirement of a Partner: Retirement of a partner means the cessation of a partner's membership in the firm without the dissolution of the firm itself. The firm continues with the remaining partners. The Indian Partnership Act, 1932, addresses two key aspects concerning an outgoing partner: their right to share in subsequent profits and their liability for acts of the firm after retirement.

1. Right to Share Subsequent Profits (Section 37): Section 37 of the Indian Partnership Act, 1932, deals with the rights of an outgoing partner in certain cases to share subsequent profits. It states that 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:

• Share of Profits: 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
• Interest: Interest at the rate of six percent per annum on the amount of his share in the property of the firm.

This provision is based on the principle that the continuing partners should not be unjustly enriched by using the capital contribution of the outgoing partner without compensating them. The outgoing partner (or their estate) has the option to choose between a share of profits or interest, depending on which is more beneficial. This right continues until the final settlement of accounts and payment of the outgoing partner's share.

2. Not Liable for Acts of the Firm After Retirement (Section 32): Section 32 of the Indian Partnership Act, 1932, primarily governs the liability of a retiring partner. It states:

• Cessation of Future Liability: A partner may retire from a firm with the consent of all other partners, or in accordance with an express agreement by the partners, or where the partnership is at will, by giving notice in writing to all the other partners of his intention to retire. Upon retirement, a retiring partner is discharged from any liability to any third party for acts of the firm done after his retirement.

• Public Notice Requirement: However, for this discharge from future liability to be effective against third parties who dealt with the firm before retirement, a 'public notice' of the retirement must be given. Until such public notice is given, the retiring partner remains liable to third parties who deal with the firm on the belief that he is still a partner. This is based on the doctrine of 'holding out' or 'ostensible authority.'

• Exception for Existing Liabilities: It is crucial to note that retirement does not discharge the outgoing partner from any liability incurred before the date of retirement. For existing liabilities, the retiring partner remains liable unless there is an agreement with the third party and the continuing partners (known as novation) that he will be discharged from such liability.

Conclusion: Thus, the Indian Partnership Act, 1932, strikes a balance. While an outgoing partner retains a right to claim a share of profits or interest on their capital if it continues to be used by the firm (preventing unjust enrichment of continuing partners), they are simultaneously relieved of liability for future acts of the firm, provided proper public notice of their retirement is given. This ensures clarity and fairness for all parties involved – the retiring partner, the continuing partners, and third parties dealing with the firm.