Section 39 of the Partnership Act, 1932 states that 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 → Changes in the relationship among some partners (the firm may continue)
- Dissolution of Firm → Complete termination when partnership dissolves between ALL partners (the firm ceases to exist)
When the partnership relationship ends among all partners simultaneously, it results in the complete winding up of the firm's affairs and closure of business operations.