{"id":19796,"date":"2019-06-17T19:00:49","date_gmt":"2019-06-17T13:30:49","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=19796"},"modified":"2019-06-27T16:10:12","modified_gmt":"2019-06-27T10:40:12","slug":"dissolution-of-partnership-firm","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/dissolution-of-partnership-firm\/","title":{"rendered":"Dissolution of Partnership Firm as per Companies Act, 2013"},"content":{"rendered":"

The Indian Partnership Act 1932 deals with dissolution of partnership of firm. Section 39 of the Indian Partnership Act, provides that “the dissolution of the partnership between all the partners of a firm is called “dissolution of a firm.” It implies the complete breakdown of all the relation between all the partners as well as realizing the assets and the liabilities of the firm and sharing the gain and loss between the partners. <\/p>\n\n\n\n

\"Dissolution<\/figure>\n\n\n\n

There\nare different ways through which a firm may be dissolved which are mentioned as\nfollows:<\/p>\n\n\n\n

  1. Dissolution by agreement (Section – 40)<\/li>
  2. Compulsory Dissolution ( Section – 41)<\/li>
  3. Contingent Dissolution ( Section – 42)<\/li>
  4. Dissolution by notice ( Section -43)<\/li>
  5. Dissolution through court ( Section – 44)<\/li><\/ol>\n\n\n\n

    Dissolution of Partnership by Agreement under Section – 40<\/strong><\/h2>\n\n\n\n

    The firm is not a separate legal entity and is represented through partners and a partnership firm<\/a> may be dissolved with the consent of all the partners. The condition precedent would be if all the partners agree to dissolve the partnership or a contract has been made for dissolution of partnership then it will be dissolved by necessary intimation to the Registrar of firms.<\/p>\n\n\n\n

    \"Dissolution<\/figure><\/div>\n\n\n\n

    Compulsory Dissolution under Section – 41<\/strong><\/h2>\n\n\n\n

    A Partnership firm<\/a> can be\ndissolved compulsorily by the Registrar of firm due to two reasons which are as\nfollows: <\/p>\n\n\n\n

    1. By adjudication of all partner but one as\ninsolvent<\/li>
    2. By happening of any event which makes it\nunlawful for the business of the firm to be carried on.<\/li><\/ol>\n\n\n\n

      It is also provided that if a firm has more than one undertaking and unlawfulness of one undertaking does not affect then the firm will not dissolve.<\/p>\n\n\n\n

      Contingent Dissolution of Firm under section – 42         <\/strong><\/h2>\n\n\n\n

      Under\nthis case a firm will be dissolved on the happening of certain events. Hence,\nthe dissolution of firm depends on the happening or non- happening of following\nevent. This type of dissolution is also known as contingent dissolution.<\/p>\n\n\n\n

      1. If the time period for which firm was constituted\nhas been expired.<\/li>
      2. If the firm was constituted for one or more\npurposes, adventures or undertaking and it has been completed.<\/li>
      3. By the death of a partner<\/li>
      4. By adjudication of a partner as insolvent<\/li><\/ol>\n\n\n\n

        Therefore,\ncontingent dissolution of firm depends on these four events only. The above\nlist is exhaustive in nature. It is discretion of the Registrar of firm to\ndecide whether to dissolve the firm.<\/p>\n\n\n\n

        Dissolution by Notice under Section – 43<\/strong><\/h2>\n\n\n\n

        Under\nthis type of dissolution of firm the partnership can be dissolved by any\npartner by giving notice to all other partners of his intention of dissolving\nthe firm. This type of dissolution can only happen in case of partnership at\nwill. Partnership will dissolve on the date mentioned on the notice or in case\nno date is mentioned on the notice then on the date of communication of notice\nto all the partners.<\/p>\n\n\n\n

        This section gives power to partners to dissolve the firm if no agreement is made. Also, any partner can exit from the partnership and extinguish its assets and liabilities from the firm.<\/p>\n\n\n\n

        Dissolution through Court under Section – 44<\/strong><\/h2>\n\n\n\n

        Under\nthese cases a firm shall be dissolved by the court only. Following are the\ninstances in which a firm can be dissolved by court:<\/p>\n\n\n\n