According to Section 39 of the Partnership Act 1932, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm.
This section distinguishes between:
- Dissolution of Partnership → When one or more partners leave or join, but the firm continues
- Dissolution of Firm → When the partnership between all partners comes to an end and the firm ceases to exist
Section 39 specifically defines that when the partnership relationship ends among all partners collectively, it results in the dissolution of the entire firm, meaning the business itself is wound up.
Correct Option: 4 (Section 39)