Dissolution by Court happens:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → When a partner becomes insane
A firm can be dissolved in five ways: by agreement, compulsorily, on certain contingencies, by notice and by the court. The court acts only on the suit of a partner and only on the grounds the Act lists, the first of which is that a partner has become insane.
Why the other options are incorrect
Option (1) Death of a partner — Incorrect. Death dissolves the firm on the happening of a contingency (subject to the contract); no court order is needed.
Option (2) With the consent of all partners — Incorrect. That is dissolution by agreement, done by the partners themselves.
Option (4) When the adjudication of a partner as an insolvent — Incorrect. A partner being declared insolvent is again a contingency that dissolves the firm without the court.
NCERT (2026-27 edition): |