Dissolution of Partnership Firm
Modes of Dissolutions of Firm:
The various ways under which a firm can be dissolved are:-
Dissolution by agreement
: This is a case where all the partners decide to dissolve thefirm & end the business.
: A firm is dissolved on the happening of any of the events:-
insolvency of all the partners
or of all but one.(section:41(a)
y the happening of any event which makes it
for the business of the firmto be carried on or for the partner to continue in the partnership.[section:41(b)]
f the firm is created for a fixed term. Then at the completion of that term.
or insolvency of the partner. [section:42]
partnership is at will
y a partner giving a notice to all other partner of hisintention to dissolve the firm. [section:43]
Dissolution by the
artner has become
unsound of mind
. A friend of such partner or any other partnermay file a suit for dissolution.
artner in any way has become
incapable of performing his duties
as a partner.
here a partner has suffered from paralysis but he is recovering speedily by treatment. Firm cannot be dissolved. Incapacity has to be permanent for
dissolution to take place
That a partner is
guilty of misconduct
which is likely to harm the business. Thenature of the business is to be considered
ambling on the stock exchange.
That the partner willfully or
persistently commits breach of agreement
relating tothe affairs of the firm. The partner so conducts himself that it is not practicable forother partners to continue with the business of the firm.
i) A systemic neglect to account for sums received.
ii) Raising money on firms name for personal use.
iii) Starting rival business
That the partner has in any way
transferred the whole of his interest
in the firm to athird party.
That the business of the firm cannot be carried out.
t has to be
saved from loss