Question:
Which of the following will result in dissolution of a partnership firm?
Which of the following will result in dissolution of a partnership firm?
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Unlawful business operations result in compulsory dissolution of the firm under partnership law, while other events like death or insolvency only affect the partnership unless stated otherwise.
Updated On: Jul 15, 2025
- Death of a partner.
- Insolvency of a partner.
- When the business of the firm becomes illegal.
- Expiry of the period of partnership.
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The Correct Option is C
Solution and Explanation
Step 1: Under Section 41 of the Indian Partnership Act, 1932, compulsory dissolution of a firm occurs when:
- All partners (or all but one) become insolvent, or
- The business of the firm becomes unlawful/illegal.
Step 2: Let's examine each option: - (A) Death of a partner\(\Rightarrow\) Dissolution of partnership (not necessarily firm)
- (B) Insolvency of a partner\(\Rightarrow\) Can result in dissolution of partnership, not necessarily firm unless deed provides
- (C) Illegality of business\(\Rightarrow\) Compulsory dissolution of firm
- (D) Expiry of period\(\Rightarrow\) This leads to dissolution of partnership (may be continued by agreement)
Step 3: Therefore, only option (C) leads to compulsory dissolution of the firm.
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