Step 1: Understanding the Question:
The question asks for the specific legal term used under Section 39 of the Indian Partnership Act, 1932, to describe the situation where the partnership relationship ends between every single member of a firm.
This topic falls under the legal framework governing the lifecycle of a business partnership, specifically focusing on its termination.
Step 2: Key Formulas and Approach:
The approach involves a literal interpretation of the statutory definition provided in the Indian Partnership Act, 1932.
There is no mathematical formula, but the legal equivalence is:
\[ \text{Total Dissolution of Relations} = \text{Dissolution of Firm} \]
The key is to distinguish between the "Dissolution of Partnership" (where the firm might continue with remaining partners) and "Dissolution of Firm" (where the business entity itself ceases to exist).
Step 3: Detailed Explanation:
Legal Definition: Section 39 of the Act explicitly states that the dissolution of partnership between all the partners of a firm is called the "dissolution of the firm".
Cessation of Business: Unlike a simple reconstitution where the business continues, the dissolution of a firm implies that the business activities of the partnership come to a complete halt.
Process of Winding Up: Once a firm is dissolved, it enters a phase where all assets are sold off, and all liabilities are paid from the proceeds. The remaining balance, if any, is distributed among the partners according to their capital accounts.
Contrast with Reconstitution: In an admission, retirement, or death of a partner, the "partnership" is dissolved and a new one is formed (reconstitution), but the "firm" continues its existence. However, under Section 39, when the tie between all partners breaks, the firm's identity is extinguished.
Settlement of Accounts: While settlement of accounts (Section 48) is a necessary consequence of dissolution, it is not the name of the act of ending the partnership itself.
Step 4: Final Answer:
Based on the explicit legal terminology provided in Section 39 of the Indian Partnership Act, 1932, the ending of the relationship between all partners is defined as the Dissolution of the Firm.
Thus, the correct option is (C).