Question

Under which of the following cases, the Court can order the dissolution of a partnership firm?
(A) When a partner persistently commits breach of partnership agreement.
(B) When a partner has transferred the whole of his interest in the firm to a third party.
(C) By the death of a partner.
(D) When the business of the firm cannot be carried on except at a loss.
Choose the correct answer from the options given below:

• A. (A), (B) and (C) only
• B. (A), (B) and (D) only
• C. (A), (B), (C) and (D)
• D. (A), (C) and (D) only

Hint:

Death of a partner dissolves the firm automatically, so it is not a court ground under Section 44.

Answer 1

The Correct Option is B

Step 1: Recall the rule
Under Section 44 of the Indian Partnership Act, 1932, a court can dissolve a firm on the suit of a partner. The grounds include unsound mind of a partner, permanent incapacity, misconduct, persistent breach of agreement, transfer of whole interest to a third party, business running only at a loss, and just and equitable grounds.

Step 2: Check statement (A)
Persistent breach of the partnership agreement is a ground under Section 44. So (A) is TRUE.

Step 3: Check statement (B)
If a partner transfers the whole of his interest to a third party, the court can dissolve the firm. So (B) is TRUE.

Step 4: Check statement (C)
Death of a partner is not a ground for court dissolution. The firm is dissolved by the death of a partner automatically under Section 42, unless the partnership deed says otherwise. So (C) is FALSE.

Step 5: Check statement (D)
If the business cannot be carried on except at a loss, the court may order dissolution. So (D) is TRUE.

Step 6: Match with the options
Only (A), (B) and (D) are true, which is option 2.

Final Answer:
The court can dissolve the firm in cases (A), (B) and (D). This is option 2. \[ \boxed{\text{Option 2}} \]