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Dissolution of Partnership Firm

Dissolution of Partnership Firm

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Published by Osama Mir

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Published by: Osama Mir on Jan 28, 2012
Copyright:Attribution Non-commercial

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12/24/2012

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Dissolution of Partnership Firm
Modes of Dissolutions of Firm:
The various ways under which a firm can be dissolved are:-
(A)
 
Dissolution by agreement
: This is a case where all the partners decide to dissolve thefirm & end the business.
(B)
 
C
ompulsory Dissolution
: A firm is dissolved on the happening of any of the events:-
 I.
 
B
y
insolvency of all the partners
or of all but one.(section:41(a)
 II.
 
B
y the happening of any event which makes it
unlawful
for the business of the firmto be carried on or for the partner to continue in the partnership.[section:41(b)]
 III.
 
I
f the firm is created for a fixed term. Then at the completion of that term.
B
y the
death
or insolvency of the partner. [section:42]
 IV.
 
I
f the
partnership is at will
.
B
y a partner giving a notice to all other partner of hisintention to dissolve the firm. [section:43]
 (
C
)
 
Dissolution by the
C
ourt:(a)
 
P
artner has become
unsound of mind 
. A friend of such partner or any other partnermay file a suit for dissolution.
 (b)
 
P
artner in any way has become
incapable of performing his duties
as a partner.
 Example:
 
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
.
(c)
 
That a partner is
guilty of misconduct 
which is likely to harm the business. Thenature of the business is to be considered
Example:
 
G
ambling on the stock exchange.
 (d)
 
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.
 Example
:
i) A systemic neglect to account for sums received.
ii) Raising money on firms name for personal use.
iii) Starting rival business
 
(e)
 
That the partner has in any way
transferred the whole of his interest 
in the firm to athird party.
 (f)
 
That the business of the firm cannot be carried out.
I
t has to be
saved from loss
 

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