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P1 C7 DISSOLUTION OF PARTNERSHIP — Elements of Account STD 12 Commerce — Question

Gujarat BoardEnglish MediumSTD 12 CommerceElements of AccountP1 C7 DISSOLUTION OF PARTNERSHIP3 Marks
Question
Explain methods of dissolution without the interference of court.
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Answer

There are two method for dissolution of partnership firm:
  • $(i)$ Normal Dissolution $(ii)$ Dissolution by the court.
  • $(1)$ Normal Dissolution/Dissolution without interference of Court: It is as under:
  • $(i)$ By agreement:
  • When all partners agree to dissolve the firm, partnership firm can be dissolved at any point of time. It is voluntary dissolution.
  • $(ii)$ Dissolution on happenings of certain contingencies:
  • $(a)$ If arrangement for a fixed term, by the expiry of that term.
  • $(b)$ If arrangement to carry out specific aim, by the completion thereof.
  • $(iii)$ Dissolution by notice:
  • Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm.
  • $(iv)$ Dissolution as per act: In the following conditions compulsory dissolution is taken place by the act.
  • $(a)$ When all the partners of the firm become insolvent, or except one, all partners become insolvent.
  • $(b)$ When business of firm becomes illegal, this also brings dissolution of a partnership firm. E.g. If a firm doing business of Tobacco and government put restriction through law on this business, then this business automatically become illegal and dissolve.
  • $(c)$ When any partner becomes mental weak or due to his death. Partnership is going to end and firm dissolve.
  • $(v)$ Dissolution as per contract:
Dissolution of a partnership firm can be done on the basis of predetermined contract between the partners.

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