Could You Tell Me On What Grounds A Firm May Be Dissolved?

A firm may be dissolved with the consent of all partners. The consent of majority is not enough to dissolve a partnership firm. A compulsory dissolution takes place when all the partners are declared insolvent, when all except one of the partners are declared insolvent and when the business carried on by the firm becomes unlawful. When the partnership is at will, any partner giving notice in writing to all the other partners of his intention to dissolve the firm may dissolve the firm. A notice of dissolution once given cannot be withdrawn without the consent of other partners. The firm is dissolved from the date mentioned in the notice. If no date is mentioned, it dissolves from the date of the communication of the notice.

On a suit of by a partner, the court decided about the dissolution of a firm if there is difference of opinion between the partners regarding the dissolution. For example, when one of the partners has become insane, some of the partner, while the other partner are insisting on the dissolution of the firm. Under these circumstances the court may or may not order for the dissolution of the firm. When a partner except the partner suing, is guilty of misconduct, which is may affect the reputation of the firm. For example, a partner is sent to jail for moral misconduct. When a partner, except the partner suing, commits breach of agreement relating to the management of the affairs of the firm. For example taking away the books of accounts, using firm's money for his private debts.