A firm is dissolved compulsorily under Section 41 of the Indian Partnership Act in the following cases:(A) When all the partners or all but one partner, become insolvent.(B) When the business of the firm becomes illegal.(C) Change in existing profit sharing ratio among partners.(D) When some event has taken place which makes it unlawful for the partners to carry on the business of the firm in partnership.Choose the correct answer from the options given below:
- A(A), (B) and (D) only
- B(A), (B) and (C) only
- C(A), (B), (C) and (D)
- D(B), (C) and (D) only
Solution & Step-by-step Explanation
Section 41 of the Indian Partnership Act, 1932 governs compulsory dissolution:(A): Insolvency of all partners or all but one makes it impossible to maintain a valid partnership contract Compulsory Dissolution.(B) and (D): The occurrence of an event rendering the trade/business operations illegal/unlawful Compulsory Dissolution.(C): A change in the profit-sharing ratio is merely a reconstitution of the partnership, it does not close the firm.Thus, (A), (B), and (D) only are correct.