Question consists of two statements, namely, Assertion (A) and Reason (R). Select the correct answer.
Assertion (A): If, in a partnership firm, a partner is found guilty of misconduct, the firm can be dissolved by the other partners.
Reasoning (R): Court may pass the order for the dissolution of the firm when a partner is found guilty for any act which is likely to adversely affect the business of the firm.
Answer & explanation
Correct answer: option 2
Dissolution by Court: At the suit of a partner, the court may order a partnership firm to be dissolved on any of the following grounds:
(a) when a partner becomes insane;
(b) when a partner becomes permanently incapable of performing his duties as a partner
(c) when a partner is guilty of misconduct which is likely to adversely affect the business of the firm;
(d) when a partner persistently commits breach of partnership agreement;
(e) when a partner has transferred the whole of his interest in the firm to a third party;
(f) when the business of the firm cannot be carried on except at a loss; or
(g) when, on any ground, the court regards dissolution to be just and equitable