The partnership between brothers who owned a sugar mill was dissolved in 1944 when one brother filed a lawsuit. This led to litigation over the next several years regarding management of the mill and distribution of profits during receivership. The Supreme Court ultimately ruled that the date of dissolution was when the last summons was served in the 1944 lawsuit, not when it was filed. It restored the original trial court decree and rejected the High Court's ruling that limitation period began when the suit was filed rather than when all parties were served.

1. DISSOLUTION OF PARTNERSHIP FIRM

2. DISTINCTION The action of distinguishing THE PARTNERSHIP ACT Dissolution of partnership Dissolution of firm Few of the partners but not all All the partners of the firm. Extinction of relationship between partners. Complete closure of business

3. Dissolution of Partnership The dissolution of partnership between few of the partners but not all is called dissolution of partnership. Dissolution of firm The dissolution of partnership between all the partners of a firm is called dissolution of firm.

4. EXAMPLE A B C A B C A B C

8. Completion of the adventure

9. Death of partner.

10. Insolvency of partner {Sec 42} BY NOTICE {Sec 42} HAPPENING OF CONTINGENCIES {Sec 40} {Sec 41} COMPULSARY DISSOLUTION BY AGREEMENT The partner ship is at will the firm may be dissolved any time by any partner giving notice to other partners.

11. DISSOLUTION BY COURT ---{sec 44} When a partner becomes of unsound mind; When partner becomes permanently incapable of performing his duties as a partner; When a partner becomes of unsound mind; When a partner commits willful or persistent breach of agreement; PERSISTENT BREACH OF AGREEMENT INSANITY MISSCONDUCT PERMANENT INCAPACITY When the partner sell or transfers his intrest. TRANSFER OF INTREST JUST AND EQUITBLE CONTINUOUS LOSSESS When a business cannot be carried on expect at loss; In addition to the above, the court may order dissolution on any other ground.

13. Right to have firm’s debts settled out of firm’s property:[S49]

14. Rights to personal profits earned after dissolution:[S50]

15. Right to return of premium or premature dissolution:[S51]

18. In paying to each partner rateably what is due to him as capital.

21. When a firm is dissolved.

23. Publication in Official Gazette.

24. Publication in vernacular newspaper circulating in the district where the firm has its principal place of business.

25. In case of an unregistered firm notice to the Registrar of Firms is not necessary.END

26. A CASE ON BANARSI DAS Vs SETH KASHIRM

28. KanshiRam

29. KundanLal

30. Munnalal

31. Devi Chand

33. The property owned by this family is a sugar mill at Bijnor in Uttar Pradesh known as “Sheo Prasad Banarsi Das Sugar Mills.”.

34. After disruption of the family, the brothers decided to carry on the business of the sugar mill as partners instead of members of HUF.

35. The partnership was to be at will and the brothers were to share the profit and losses equally.

37. 1941-44: Kundanlal was the managing partner

38. May 13, 1944: Sheo Prasad (defendant no- 5) instituted a suit in the court of the Subordinate Judge, First Class, Lahore, for dissolution of partnership and rendition of accounts against Kundanlal and joined the other brothers as defendants to the suit.

39. August 3. 1944: The court’s order was dated at this and Mr. P.C. Mahajan, Pleader, as receiver.

40. April 5, 1945: From this date on, High Court appointed Kanshiram as Reciever in place of Mahajan

41. (1944- 45: Kundanlal and his son was asked to work the mills as the agents of the U.P Government for these two years.)

42. 1945-46: lease was renewed by the government of this period.

43. August 28, 1956: Parties, except Devi Chand, made an application to the court at Lahore praying that the receiver be ordered to execute a lease in favour of Banarsidas for a period of five years.

45. This amount was lying with the Receiver.

46. The suggestion made thus was that the amount which was due to Kundanlal and Banarsidas should be withheld as they needed to render accounts.

48. Contentions of Banarsidas Under the Partnership Act, the partners are entitled to have the business of the partnership wound up even though a suit for accounts is barred under Art. 106 of the Limitation Act. Kanshi Ram having been appointed a Receiver by the Court stood in a fiduciary relationship to the other partners and the assets, which were in his possession, must be deemed to have been held by him for the benefit of all the partners. Therefore, independently of any other consideration, he was bound to render accounts. The question of limitation was not raised in the plaint or the grounds of appeal before the High Court and as it is a mixed question of fact and law, it should not have been made the foundation of the decision of the High Court. The Court was wrong in holding that limitation for the suit commenced on May 13, 1944.

49. RATIO DECIDENDI Even assuming, however, that the term "notice" in the provision is wide enough to include within it a plaint filed in a suit for dissolution of partnership, the sub-section itself provides that the firm will be deemed to be dissolved as from the date of communication of the notice. It would follow, therefore, that a partnership would be deemed to be dissolved when the summons accompanied by a copy of the plaint is served on the defendant, where there is only one defendant, and on all defendants, when there are several defendants. Since a partnership will be deemed to be dissolved only from one date, the date of dissolution would have to be regarded to be the one on which the last summons was served.”

50. DECISON The Supreme Court held that the High Court's decision must be set aside and that of the trial court restored. It should be mentioned that some of the parties including the appellant Banarsidas and the plaintiff-respondent, Kundanlal as well as the defendant respondent Kanshi Ram were agreeable to certain variations in the decree. But as there were other parties besides them to whom these variations are not acceptable, it is necessary to decide the appeals on merits. For the aforesaid reasons, the appeals of Banarsidas and Kundanlal were allowed and the decree of the trial court was restored.