Dissolution of a partnership firm means that the business is discontinued and closed, ending the economic relationship among the partners. There are several modes of dissolution, including mutual agreement of all partners, compulsory dissolution due to insolvency or unlawful business, dissolution by notice from a partner in a partnership at will, and dissolution upon an event specified in the partnership deed such as expiry of term or death of a partner. A court may also order dissolution if a partner becomes mentally incapacitated, permanently incapable of duties, guilty of misconduct, or for other equitable reasons.

1. DISSOLUTION OF
PARTNERSHIP FIRM

2. What is Dissolution of firm?
Dissolution of firm means business of firm is discontinued
i.e closed and the firm is wound up I.e dissolved. As a
result economic relationship among the partners ends.
●According to SECTION 39 of the Partnership Act, 1932 “
Dissolution of the firm means dissolution of partnership
among all the partners in the firm.”

3. Modes of Dissolution of firm
1. Mutual Agreement - A firm may be dissolved when all the partners agree
for its dissolution.
2. Compulsory Dissolution – A firm may be completely dissolved:
(A) When all the partners or all the partners except one become insolvent.
(B) When the business of the firm becomes unlawful.
3. By Notice- In case Partnership is at will, the firm may be dissolved by any
partner giving notice in writing to all other partners of his intention to
dissolve the firm.

4. 4. On happening of an event- A firm may be dissolved in any of the following
events, if the Partnership Deed so provides:
A. On expiry of the term for which the firm was constituted
B. On completion of the venture
C. On death of a partner
D. On adjudication of a partner as insolvent
5. Dissolution by Court- Court may pass order for the Dissolution of the firm
when:
A. A partner becomes a person of unsound mind.
B. A partner becomes permanently incapable of performing his duties as a
partner.
C. A partner is found guilty of misconduct, which is likely to affect the
business of the firm
D. When Court is satisfied that the dissolution of firm is justified and
equitable due to some other reasons.