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Dissolution of firm project report

Dissolution of firm project report



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Published by kamdica
Dissolution of firm project report
Dissolution of firm project report

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Published by: kamdica on Oct 19, 2009
Copyright:Attribution Non-commercial


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For more Notes, Presentations, Project Reports visit – a2zmba.blogspot.comhrmba.blogspot.commbafin.blogspot.com
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
[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. 
 Dissolution of a firm may be brought about either by:-
Voluntary acts of the partners i.e. without the interference of the courtOr ii.Order of the court.
Dissolution without order of the Court (Sec. 40 to 43)Dissolution by order of the Court (Sec. 44)By agreement(Sec 40)By compulsorydissolution(Sec. 41)On the happening of Certain contingencies(Sec 42)By notice(Sec. 43)
On partner  being of UnsoundmindPermanentincapacityof a partner Misconductof a partner affecting businessWillful or PersistentBreachesof Agreement
Transfer or sale of wholeinterestof a partner Businessof thefirmCannot beCarriedonSave at alossCourt beingsatisfied onany other equitableground
A. By voluntary acts of the partners or without interference of the court:
1. By agreement :- [sec.40]A firm may be dissolved-i.with the consent of all the partners; oii.in accordance with the contract between the partners. The contractmay be express or implied.2.By compulsory dissolution or by operation of law :- [sec.41]i.By the adjudication of all the partners or of all partners but one asinsolventA partner on being adjudicated insolvent ceases to be a partner of the firm. [sec.34 (1)]. Thus if all the partners are adjudicated insolventthe firm ceases to exist. Similarly, if all but one partner is adjudgedinsolvent then too a firm will cease to exist, for there must be at least two partners to constitute the firm.ii.By the happening of an event which makes it unlawful for the business of the firm to be carried on i.e. business of the firm becoming unlawful.For eg: A and B carry on a lottery business which is not prohibited on itsformation but subsequently it is prohibited. The firm is dissolved.However, when more than one separate adventure or undertaking is carried on by the firm, the illegality of one or more shallnot by itself cause the dissolution of the firm in respect of its lawfuladventure and undertaking.3. On the happening of certain contingencies :- [sec.42]

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