Neil, Kapil, and Sunil started a furniture business in partnership. After one year of operations, they began exporting contraband items hidden inside blank spaces within the furniture. As authorities found out about the illegal business operations of the firm, the legal system will compel them for:
- AChanging partners
- BDissolution by Agreement
- CTo continue business by imposing fine
- DCompulsory Dissolution
Solution & Step-by-step Explanation
Under Section 41(b) of the Indian Partnership Act, 1932, a firm undergoes Compulsory Dissolution if an event happens which makes it unlawful for the business of the firm to be carried on or for the partners to carry it on in partnership. Carrying out an illegal drug/contraband operation forces an immediate compulsory closure by legal mandate.