5. Dissolution by the Court—According to S. 44 at the suit of a partner, the court may dissolve a firm on any of the seven following grounds, namely— .

(a) Insanity—It may be noted that where one of the partners had become a person of unsound mind, any partner, including the insane, may apply for dissolution. Insanity renders the partner incapable of performing his duties as a partner and is, therefore, a good ground for putting an end to the firm. Dissolution may be necessary both to protect the interest of the insane and of the other partners also.

(b) Permanent Incapacity-It is to be noted that where any partner, other than the partner suing, has become permanently incapable of performing his duties as a partner, any partner may apply for dissolution. The incapaulity may be due to illness, mental or physical, but it should be of a permanent nature. For Example; in Whitwell Vs. Arthur (1865), a partner suffered from an attack of paralysis and that would have been a good ground for dissolution but for the fact that the medical evidence showed that the attack was only temporary and he was already improving.

(c) Misconduct-Where a partner, other than the partner suing, is guilty of conduct which is likely to affect prejudicially the business of the firm the court may order dissolution. It is not necessary that the misconduct should be connected with the business of the firm. Its only connection with the firm need’be that it will damage the business prospects of the firm. Thus, conviction for travelling without ticket, or for breach of trust is sufficient, but misconduct in personal life may not be so.

(d) Persistent Breach of Agreement—Where a partner, other than the partner suing, persistently commits breach of agreements relating to the management of the firm or otherwise so conducts himself in matters relating to the business that it is not reasonably practicable for the other partners to carry on the business in partnership with him. Any conduct which is destructive of mutual confidence between the partners is sufficient. “Keeping erroneous accounts and not entering receipts refusal to meet on matters of business, continued quarrelling, and such state of animosity as precludes all reasonable hope of reconciliation and friendly cooperation, have been held sufficient to justify a dissolution.”

(e) Transfer of Interest—When a partner, other than the partner suing, has transferred the whole of his interest in the’ firm’to a third party, or has allowed his interest to be charged or has allowed it to be sold in, the recovery of arrears of land revenue, or of any dues recoverable as arrears of land revenue, the court may order dissolution.

(f) Perpetual Losses—It may be noted that when the business of the firm cannot be carried on except at a loss the court may dissolve it. Since the whole object of a partnership is to make profits and if that object cannot be fulfilled, therefore, it is useless for the firm to continue the business.

(g) Just and Equitable—It may be noted that where on any other ground the court thinks it just and equitable that the firm should be dissolved. The expression, “just and equitable” gives the court a very wide discretionary power, which is not to be fettered by any rules to order dissolution whenever in the circumstances it seems to be desirable.