Dissolution of Partnership Firm Class 12 | Maharashtra Board New Syllabus
DISSOLUTION OF PARTNERSHIP FIRM
The term dissolution means coming to an end or discontinuation. The dissolution of
the firm implies a complete breakdown of the partnership relation among all the
partners.
The dissolution of partnership among all partners of a firm is called dissolution of the firm.
(i) Dissolution by Agreement: A firm is dissolved in case
- all the partners give consent or
- as per the terms partnership agreement.
(ii) Compulsory dissolution : A firm is dissolved compulsorily in the following cases
- When all the partners or all excepting one partner becomes insolvent or of unsound mind.
- The business becomes unlawful.
- When all the partners except one decided to retire from the firm.
- When all the partners or all excepting one partner die.
- A firm is also dissolved compulsorily if the partnership deed includes any
- Provision regarding the happening of the following events (a) expiry of the period for which the firm was formed, (b) completion of the specific venture or project for which the firm was formed.
(iii) Dissolution by Notice: In case of a partnership at will, the firm may be dissolved if any one of the partners gives a notice in writing to the other partners.
(iv) Dissolution by Court: A court may order a partnership firm to be dissolved in the following cases:
(a) When a partner becomes of unsound mind
(b) When a partner becomes permanently incapable of performing
his/her duties as a partner,
(c) When partner deliberately and consistently commits a breach of agreements
relating to the management of the firm;
(d) When a partner’s conduct is likely to adversely affect the business of the
firm;
