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A Report on Procedure of Winding up Partnership Firm


According to sec.4 of the Indian Partnership Act 1932,“Partnership is the relation between persons who have agreed to share the profits of a business carried on by all of them or any of them acting for all.” Persons who have entered into a partnership are called individually ‘partners’ and collectively a ‘firm’. Dissolution of a firm means a firm ceases to exist. The relationship existing between the partners discontinues. The whole firm is dissolved and the partnership terminates. The dissolution of partnership between all the partners of the firm is called the


[sec.39].Dissolution puts an end to the right of the partners to existing as a going concern and is followed by its liquidation. Dissolution of a firm is different from the dissolution of a partnership. Dissolution of the partnership involves a change in the relationship between partners and a new firm is reconstituted. For eg:- A, B and C are partners in the firm and C retires. The partnership between A, B and C come to an end and partnership between A and B comes into being. Thus retirement of a partner does not dissolve the firm. It merely severs the relation between retiring partner and continuing partners.

The entire procedure for bringing a lawful end to a life of a company is divided into two stages. These two stages are winding up and dissolution. Winding up of a company is defined as a process by which the life of a company is brought to an end and its property administered for benefit of its members and creditors. It is the last stage, putting an end to a life of a company. The main purpose of winding up is to realize the assets and make the payments of company’s debts fairly. Thus, winding up is the process by which management of a company’s affairs is taken out of its directors, its assets are realized by a liquidator and its debts are discharged out of proceeds of realization.


The project aims to learn different methods of winding up of partnership firm

Objectives of the study are

  1. To learn the difference between the dissolution of partnership and dissolution of the firm.
  2. To learn about Dissolution without the intervention of Court
  3. To learn about Dissolution on the happening of a contingent event.
  4. To learn about Dissolution by notice.
  5. To learn about Dissolution by Court.


In this project, we are going to learn about different types of winding up of a partnership firm

Primary data is data gathered for the first time by the researcher. It is the raw form of data and thoroughly studied and hence a helpful tool for secondary data. Here the method used for collection of primary data is by using reference of the website.

The referred websites in this project are used as a source of data for this project. Most of the content is collected from these websites. The authenticity of this information cannot be taken seriously and thus keeping that in mind most of that data might be true or fake.


  1. Dissolution by Agreement:

Partnership arises from contract and can come to an end by contract. Therefore, the firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners.

  1. Dissolution by Notice:

Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing of his intention to dissolve the firm. The firm is dissolved from the date mentioned in the notice as the date of dissolution. An individual partner is empowered to bring an end to the firm.

  1. Dissolution on the happening of certain contingencies:

Subject to contract between the partners, a firm can be dissolved on the happening of following circumstances :

  1. Expiry of the term when constituted for a fixed term.
  2. Completion of the venture or undertaking when the firm constituted to carry on a venture or undertaking.
  3. Death of a partner.
  4. Adjudication of a partner as an insolvent.

The partnership agreement may provide that the firm will not be dissolved in any of the above circumstances.

  1. Compulsory Dissolution:

A firm is compulsorily dissolved under any of the following circumstances :

  • When all the partners or all but one are adjudged insolvent.
  • When the business of the firm becomes unlawful because of the happening of some event.

5.Dissolution by the Court:

When the partners are having a difference of opinion regarding the dissolution of the firm on certain grounds, a suit can be filed by any partner in the court to dissolve the firm. Depending upon the merits of the matter, the court may order for dissolution of the firm. Under Section 44 of the Act, the court may dissolve the firm on the following grounds :

  • Insanity:

When.a partner becomes insane, the court may order to dissolve the firm. The suit can be filed by any of the other partners or even by any friend of the insane partner.

  • Permanent incapacity:

When a partner becomes permanently incapable of doing his duties as a partner, the court may dissolve the firm. The suit for dissolution must be filed by a partner other than the incapacitated partner.

  • Misconduct:

When a partner, other than the partner suing is guilty of misconduct and such misconduct is likely to affect the carrying on of the business, the court may dissolve the firm. The misconduct may be outside the business (punishment for an offense, adultery of a partner etc.

  • Persistent breach of agreement:

When a partner persistently or willfully commits the breach of an agreement or conducts himself in such a manner that it is impossible on the part of other partners to carry on the business with him, the court may dissolve the firm. Maintaining wrong accounts, taking away the books of accounts, continuous quarreling with other partners are good grounds.

  • Transfer of interest:

When a partner transfers his whole interest in the firm to a third party or all his shares are sold or attached by the court under a decree, the court may dissolve the firm.

  • Continuous losses:

When the business cannot be carried on except at a loss, the court may dissolve the firm.

  • Any other ground:

The court may dissolve the firm on any other ground where the court considers it just and equitable to wind up the business.



  1. https://blog.ipleaders.in/comparative-analysis-winding-company-companies-act-1956-companies-act-2013-insolvency-bankruptcy-code-2016/
  2. http://www.legalservicesindia.com/article/article/dissolution-of-partnership-firm-1063-1.html
  3. http://www.preservearticles.com/201101153419/procedures-for-dissolution-of-partnership-firm-in-india.html

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  1. No need to write case study and problems in this topic right??

  2. Thanks brother.

  3. This website is very helpful for every HSC students

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