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In which of the following situations can the compulsory dissolution of a partnership firm take place?

  1. A
    On the death of a partner
  2. B
    When a partner becomes insane.
  3. C
    When business of the firm becomes illegal.
  4. D
    When the business of the firm cannot be carried on except at a loss

Solution & Step-by-step Explanation

Under Section 41 of the Indian Partnership Act, 1932, a firm is compulsorily dissolved if the business of the firm becomes illegal or prohibited by law.In contrast, insanity or business losses require a partner to apply to the court (dissolution by court under Section 44), and a partner's death is a conditional contingency (Section 42).

Practice this question

Try it yourself before checking the explanation above.

In which of the following situations can the compulsory dissolution of a partnership firm take place?
A
On the death of a partner
B
When a partner becomes insane.
C
When business of the firm becomes illegal.
D
When the business of the firm cannot be carried on except at a loss

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