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SSOLUTION OF FIRM
According to sec.4 of the Indian Partnership Act 1932,“Partnership is the relation between persons who have agreed to share the profits of a business carried on by all of them or any of them acting for all.”Persons who have entered into partnership are called individually‘partners’and collectively a‘firm’.Dissolution of a firm means a firm ceases to exist. Therelationship existing between the partners discontinues. The whole firm isdissolved and the partnership terminates. The dissolution of partnership between all the partners of the firm is called the
‘DISSOLUTION OF THEFIRM’
[sec.39].Dissolution puts an end to the right of the partners to existas a going concern and is followed by its liquidation.Dissolution of a firm is different from dissolution of partnership. Dissolution of partnership involves a change in the relationshipof partners and a new firm is reconstituted.For eg:- A, B and C are partners in the firm and C retires.The partnership between A, B and C comes to an end and partnership between A and B comes into being. Thus retirement of a partner does notdissolve the firm. It merely severs the relation between retiring partner andcontinuing partners.
MODES OF DISSOLUTION
Dissolution of a firm may be brought about either by:-