Professional Documents
Culture Documents
Partnership results from a contract and is governed by the Partnership Act 1932. The
partnership is also governed by the general provision of the Indian Contract Act on such
matters where the Partnership Act is silent. It is expressly mentioned that the provision of
India Contract Act which is not repealed will be applicable on Partnership until and unless
such provision is in contrary to any provision of Partnership Act, 1932.
The Indian Partnership Act 1932 defines a partnership as a relation between two or more persons
who agree to share the profits of a business run by them all or by one or more persons acting for
them all.
When the partnership between all the partners of a firm is dissolved, then it is called dissolution
of a firm. It is important to note that the relationship between all partners should be dissolved for
the firm to be dissolved.
Object of study:
● To understand the significance of partnership act
● To understand the provisions for dissolution partnership firm
Literature Review:
The researcher has taken information from various books, web sources, case laws, articles
and case laws.
Books –
Mulla, The Sale of Goods Act & The Indian Partnership Act, 11th ed
Web sources –
https://advance.lexis.com
Research Methodology:
The study is based upon doctrinal field of research.
Types of research:
This research is an explanatory study.
Research question:
The dissolution of partnership between all the partners of a firm is called the dissolution of the
firm.
The Indian Partnership Act, 1932 recognises the difference between a dissolution of the firm and
a mere retirement of a partner. On dissolution each partner is paid his share of the profits, if any,
whereas on the retirement, death or adjudication of one partner, a dissolution does not
necessarily follow, for it may be a term in the partnership agreement that the firm should be
continued by the other partners.
A firm is dissolved,—
(a)by the adjudication of all the partners or of all the partners but one as insolvent, or
(b)by the happening of any event which makes it unlawful for the business of the firm to
be carried on or for the partners to carry it on in partnership:
Provided that, where more than one separate adventure or undertaking is carried on by the firm the illegality of one or more
shall not of itself cause the dissolution of the firm in respect of its lawful adventures and undertakings.
The expression in the marginal note is not accurate. It is intended to connote a dissolution by
operation of law on the happening of certain events. It is also intended to emphasise the
distinction between dissolutions by other methods, e.g., (i) by agreement (section 40), (ii) in
accordance with the contract (section 42), (iii) by giving of a notice in the case of a partnership at
will (section 43), and (iv) by court (section 44).
(a)that a partner has become of unsound mind, in which case the suit may be brought as
well by the next friend of the partner who has become of unsound mind as by any other partner;
(b)that a partner, other than the partner suing, has become in any way permanently
incapable of performing his duties as partner;
(c)that a partner, other than the partner suing, is guilty of conduct which is likely to affect
prejudicially the carrying on of the business, regard being had to the nature of the business;
(d)that a partner, other than the partner suing, wilfully or persistently commits breach of
agreements relating to the management of the affairs of the firm or the conduct of its business, or
otherwise so conducts himself in matters relating to the business that it is not reasonably
practicable for the other partners to carry on the business in partnership with him;
(e)that a partner, other than the partner suing, has in any way transferred the whole of his
interest in the firm to a third party, or has allowed his share to be charged under the provisions of
rule 49 of order XXI of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908) or has
allowed it to be sold in the recovery of arrears of land revenue or of any dues recoverable as
arrears of land revenue due by the partner;
(f)that the business of the firm cannot be carried on save at a loss; or
(g)on any other ground which renders it just and equitable that the firm should be
dissolved.