The document discusses partnership and dissolution of partnerships under Indian law. It defines a partnership as an agreement between people to share profits from a business. There are two main types of partnerships: general partnerships, where all partners are equally involved and liable, and limited partnerships, where limited partners only contribute capital. Dissolution can occur either through a court order due to issues like a partner's unsound mind or misconduct, or without court interference through agreement, compulsory events, or a partner giving notice. Upon dissolution, the firm's assets must first be used to pay off debts to third parties and any advances to partners, then distributed to partners based on their capital contributions and profit shares.

1. DISSOLUTIONOF
PARTNERSHIP
Aditya Bansal (I004)
Saloni Bansal (I005)
Poulami Bansal (I006)

2. CONTENTS
 Partnership
 Dissolution
 Types of partnerships
 Modes of dissolution
 By court orders
 Without the intervention of the court
 Dissolution of Partnership and Dissolution of Firm
 Settlement of accounts between partners
 Payment of firm debts and separate debts
 Debts of firm vs personal debts of the partners

3. PARTNERSHIP
 As per the Indian PartnershipAct of 1932,
Partnership is the relation between persons who have
agreed to share the profits of a business carried on by all or any of
them acting for all.
 A partnership is a strategic alliance or relationship between two or
more people. Partnerships can be formal, where each party's roles
and obligations are spelled out in a written agreement, or
informal, where the roles and obligations are assumed or agreed
to verbally.
 A partnership firm is at times reconstituted with a change in
partners.This happens either through a retirement or an
admission of one or more partners, with some of the existing
partners continuing. In such a case, for purposes of taxation, the
same partnership firm is regarded as having continued with a
change in constitution. Even if the change has occurred in the
middle of a year, only one assessment is made for the year on the
firm on its income for the entire year.

4. TYPESOF
PARTNERSHIPS
 GENERAL PARTNERSHIP
 A general partnership consists of two or more people who go into
business together and share in the profits.The general partners are
each involved in the business operations and share liability on the
business obligations.
 LIMITED PARTNERSHIP
 A limited partnership consists of one or more general partners and
at least one limited partner.The limited partners contribute capital
to the business, but do not get involved in the everyday functions
and have only a limited liability.
 A silent partner is one who still shares in d profits and losses of the
business, but who is uninvolved in its management, and/or whose
association with the business is not publicly known.

5. DISSOLUTION
 Section 39 of the Indian PartnershipAct, provides that “the
dissolution of the partnership between all the partners of a firm is
called the dissolution of a firm.”
 If one or more partners bring the dissolution but the business is
not brought to a close, then it is called a dissolution of a
partnership.The remaining partners continue the firm’s business.
 It may so happen that instead of a retirement and/or admission of
partners, the existing partnership firm may be dissolved by
executing a deed of dissolution, and a fresh firm is set up under a
deed of partnership, which includes some or all of the partners of
the earlier firm, and which takes over all or some of the assets and
business of the earlier firm.

6. MODES
OF
DISSOLUTION
By order of the court
Without the interference of the court

7. BYORDEROF
THECOURT
A partner may apply to the court for getting the firm dissolved. On getting
such application by any of the partner the court may proceed to order the
dissolution of the firm in the following circumstances:
 If any of the partner becomes of unsound mind.
 If a partner, other than the partner filing the suit is guilty of intentionally
and persistently committing a breach of the partnership agreement.
 If a partner, other than the partner filing the suit has transferred whole of
his interest in the firm to a third party without the consent of the other
partners.
 If a partner, other than the partner filing the suit is guilty of misconduct.
 If a partner, other than the partner filing the suit has become disabled to
perform his duties as a partner.
 If the court is satisfied that the business of the firm cannot be carried on
except a loss.

8. WITHOUT
INTERFERENCE
OFTHECOURT
Dissolution by agreement
Compulsory dissolution
Dissolution due to certain circumstances
Dissolution by notice

9. DISSOLUTION
OF
PARTNERSHIP
AND
DISSOLUTION
OFA FIRM

10. MODEOF
SETTLEMENT
OF
ACCOUNTS
BETWEEN
PARTNERS
 Section 48 of the PartnershipAct provides the following rules:
 Losses, including deficiencies of capital, shall be paid first out of
profits, next out of capital and, lastly, if necessary, by the partners
individually in the proportion in which they were entitled to share
profits.
 The assets of the firm, including any sums contributed by the
partners to make up deficiencies of capital, shall be applied in the
following manner and order:-
 In paying the debts of the firm to third parties.
 In paying to each partner rateably what is due to him from
the firm for advances as distinguished from capital.
 In paying to each partner rateably what is due to him on
account of capital and
 The residue, if any shall be divided among the partners in the
proportions in which they were entitled to share profits.

11. PAYMENT
OF FIRM
DEBTS
AND
SEPARATE
DEBTS
Where there are joint debts due from the firm, and also separate
debts due from any partner, the property of the firm shall be applied
in the first instance in payment of the debts of the firm, and if there
is any surplus, him.The separate property of any partner shall be
applied first in the payment of his separate debts and the surplus ( if
any) in the payment of the debts of the firm.

12. DEBTSOF
FIRM
VERSUS
PERSONAL
DEBTSOF
PARTNERS
• If assets of the firm are not sufficient to pay off the firm’s
creditors, the partners may be required to make contributions
because of the unlimited nature of the liability of the partner.
• In such a case, the partner will have the right to apply his personal
assets in paying off his personal debts first.
• Thereafter, the remaining surplus of personal assets will be used
for making his contribution to satisfy the unsettled portion of
outside creditors.
• It is to be further noted that personal assets of the partner are
individually owned assets excluding the personal property of wife
(Streedhan).

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