Dissolution

The Act also provides that a partnership firm may be dissolved under the following circumstances namely,

·         as a result of any agreement between all the partner

·         by adjudication of all the partners or all partners but one as insolvent, or

·         by the happening of an event which makes it unlawful for the business of the firm to be carried on in partnership or

·         subject to agreement between the parties,

on the happening of any of the following events such as -

·         efflux of time,

·         completion of the adventure,

·         death of a partner, and

·         insolvency of a partner.

In these last four cases the partnership agreement may provide whether the firm will be dissolved or not on the happening of any of the four events. Even if the deed provides that the partnership will not be dissolved on the death or insolvency of a partner, it does not mean that on the death or insolvency of a partner he ceases to have interest in the partnership property. In such case his interest in the partnership property will survive to his heirs in case of his death and to his assignees in case of insolvency. In the absence of a term in the deed of partnership to that effect, it cannot be that, the partnership shall continue, and notwithstanding the death of a partner it will operate to extinguish his proprietary rights in the assets of the Firm.

A partnership can also be dissolved by the Court under the circumstances mentioned in section 44 of the Act. Where the partnership  is 'at will' the partnership can be dissolved by any partner or partners giving notice of his/their intention to dissolve the firm.

Types of partnership

The result of this summary of the Act is that a partnership is generally created by agreement between the partners. A partnership can be formed between

·         one or more Individuals or

·         between an Individual and a person representing a H.U.F. or

·         between an Individual and other partner representing his firm, or

·         between two partnership firms or

·         between a Limited Company or a Corporation and an Individual or partnership firm  or

·         between a partnership and a H.U.F.

·         between members of HUF in their individual and independent capacity

·         between a HUF and a member of that HUF independently.

Partnership under Companies Act

Section 4 of the Companies Act, 1956, provides that the number of partners in a firm shall not exceed 20, and a partnership having more than 20 persons will be illegal.

When there is partnership between two firms all the partners of each firm will he taken into account for the purpose of this provision but if a partnership is between the Karta or any member of HUF on the one hand and another individual or Individuals on the other, the members of the joint family will not be taken into account. A Hindu Undivided family carrying on business as such, not being a partnership, S 11 of the Companies Act will not apply even if the members of that family are more than 20. But where two or more Hindu Undivided families are carrying on business in partnership the number of the members of those families except minors will be taken into account for the purpose of S. 11 of the Companies Act.