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Dissolution of Partnership Firm – Detailed Analysis The Indian Partnership Act, 1932 governs the rules relating to the formation, operation, and dissolution of a partnership firm. The word ‘dissolution’ means the end or termination of the partnership relationship between all the partners of the firm. When a firm is dissolved, the partnership ceases to exist , the business stops , and the assets of the firm are sold to pay off its liabilities. 1. Meaning of Dissolution Dissolution of Partnership: It means only a change in the relationship between partners. For example, if one partner retires or dies, the firm continues with remaining partners – this is not dissolution of firm. Dissolution of Firm: It means a complete closure of the firm’s business — all partners stop carrying on the business, accounts are settled, and the firm is legally ended. Thus, dissolution of partnership may not dissolve the firm, but dissolution of firm always dissolves the partnership. ...