Tag: dissolution of firm

Partnership completely depends on trust and good faith. A partner acts as both agent and principal. If a partner misconduct then it can affect the image of firm. On the basis of this, any partner other than who is guilty of misconduct can file a suit for dissolution.  

Partnership is an agreement between two or more than two persons. Minimum two persons are required for partnership. In this after the death of X, only Y left. No single person can continue the partnership. So the firm stands dissolved.

Dissolution of partnership is different from dissolution of firm. Dissolution of partnership does not necessarily involves dissolution of firm. But if there is dissolution of firm then it will lead to dissolution of partnership, because in dissolution of firm all assets are sold, liabilities are paid and business ceases to exist. 

Registration of partnership is not compulsory under law. But if partnership firm is not registered, it can not enforce its claims against a third party in the court of law. So, to file a suit against a client registration is compulsory. 

A partnership firm is dissolved when all partners become insolvent or all except one become insolvent. In the case of death of partner also , court may order to dissolve the firm. A partnership firm gets automatically dissolved after expiry of fixed period of time for which partnership firm is formed. But partnership firm can not be dissolved due to marriage of any partner, because marriage does not affect the working of firm. 

If a partner has become permanently incapable of performing his duties as a partner then another partner can sue for dissolution of firm. Incapable of performing his duties can be due to any reason like going abroad for long time or imprisonment of partner for a long time. As a partner would not be able to perform his duties, the court may order for dissolution. 

A joint Hindu Family is a type of organisation in which all the members of a Hindu Undivided Family manage and control the business under the direction of head of the family. In this all the members become coparcener. It comes into existence by operation of Hindu law.  The existence of Joint Hindu Family is not affected by the death of a coparcener because remaining coparcener can continue the business. 

Dissolution can be done by suing the other partners and bringing the case to the court. According to Section 44 , if court finds it just and equitable then court may order for dissolution. Reason could be insolvency of a partner, Death of partner, when a partner becomes of unsound mind etc. 

Section 72 lays down the manner and the cases in which the public notice of certain matter relating to partnership firm is to be given. According to this section, If on dissolution of a registered firm a public notice is not given, the partners shall continue to be liable to third parties for any act done by any of them which would have been an act of the firm done before dissolution.  

In case  of partnership at will a partner can dissolve it by giving notice of dissolution to other partners. The notice should be communicated to other partners as mentioned in agreement and if not mentioned then mode of communication should be reasonable. The notice should be clear and should not be confusing.