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ii. Dissolution through Court (Section 44): A partner can apply to the court for
dissolution of the firm on any of these grounds:
a) Insanity of a Partner. If a partner goes insane, the partnership firm can
be dissolved on the petition of other partners. The firm is not automatically
dissolved on the insanity of a partner. The court will act only on the petition
of a partner who himself is not insane.
b) Misconduct by the Partner: When a partner is guilty of misconduct, the
other partners can move the court for dissolution of the firm. The
misconduct of a partner brings bad name to the firm and it adversely
affects the reputation of the concern. The misconduct can be in business
or otherwise. If a partner is jailed for committing a theft, it will also affect
the good name of the firm though it has nothing to do with the business.
c) Incapacity of a Partner: If a partner other than the suing partner
becomes incapable of performing his duties, then partnership can be
dissolved
d) Breach of Agreement: When a partner wilfully commits breach of
agreement relating to business, it becomes a ground for getting the firm
dissolved. Under such a situation it becomes difficult to carry on the
business smoothly.
e) Transfer of Share: If a partner sells his share to a third party or transfers
his share to another person permanently, other partners can move the
court for dissolving the firm.
f) Regular Losses: When the firm cannot be carried on profitably, then the
firm can be dissolved. Though there may be losses in every type of
business but if the firm is incurring losses continuously and it is not
possible to run it profitably, then the court can order the dissolution of the
firm.
g) Disputes among Partners: Partnership firm is based on mutual faith. If
partners do not trust each other, then it will not be possible to run the
business. When the partners quarrel with each other, then the very basis
of partnership is lost and it will be better to dissolve it.