How far are Courts Helpful in Dissolving Partnerships?
“A partner can submit an application to a court for disbanding a partnership firm on a number of grounds.”
Partnership firms are becoming the order of the day. But, as is the case with divorces, the rate of partnership dissolutions is also paradoxically on the rise. A partner can submit an application to a court for the disbanding of a firm on any of the following grounds.If a partner goes insane, partnership firm can be broken up on the appeal of other partners. The firm is not dissolved on the lunacy of an associate by itself. The court can pass judgment only on the petition of a partner who himself is not insane.
If a partner indulges in deliberate and persistent misconduct, the partnership can be dissolved via a court. When a partner is on the wrong side of the law, the other partner can knock the doors of court. The wrongdoing of a partner often brings bad name to the firm and it adversely affects the reputation of the concern. So, what’s the fun in running and being a part of such a concern?
The misconduct can be in business or otherwise. If a partner is imprisoned for committing a theft, it also has an effect on the reputation of the firm, though it has nothing to do with the business being undertaken by the firm.
Similarly, if a partner becomes incapable of discharging his duties (due to bad health or otherwise) a partnership can be easily disbanded. When a partner deliberately commits violation of agreement relating to business, it also becomes a ground for the dissolution of the firm.
If a partner puts up for sale his shares or transfers his shares to another person on a permanent basis, another partner can approach the court and get the partnership cancelled.
Another ground is the occurrence of continual losses. Though there may be losses in every type of business but if the firm is incurring losses incessantly and it is not possible to run it gainfully, the court can order the closure of the firm.
A Partnership firm is found on reciprocal faith. The moment quarrels and disagreements become a regular feature in any business firm, the aim of partnership is defeated and disbanding of prior mutual interests is the only viable solution.
Author - DeeKay
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