Dissolving a partnership is quite common in India due to disputes came in the relations of partners. According to Section 39 of the Indian Partnership Act states the dissolution of the partnership between all partners which implies the complete breakdown of the partnership among all partners.
Cancellation of partnership firm can be done in different ways. One easy way is to do it by preparing an agreement with mutual consent after considering the terms mentioned in earlier partnership firm.
Another way is to with the intervention of court. A court can order the dissolution of the partnership firm if
- any partner has become insane
- any partner has become incapable of performing his duties and responsibilities as mentioned in agreement
- any partner voluntarily commits breach of the partnership deed
- any other reasonable reason to be considered for dissolution of partnership
Third way is dissolution due to contingencies like expiry of partnership period, on the completion of the venture of firm, on the death of any partner, if any partner gets insolvent, etc.
In other words, the way a partnership firm is formed for a reason, dissolution of that firm also carries a reason. It all depends on the reasons which compel to end a partnership. But important is to end it in a right way and with the consent of all partners.