At the suit of a partner, the court may order a partnership firm to be dissolved on 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.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → A, B, C & D
Dissolution by court is the one mode of dissolution that needs a partner to file a suit. The court then acts on the grounds in the Partnership Act, and all four listed here are among them.
A. When a partner becomes insane. Correct. An insane partner cannot take part in the business or contract for it, so the firm cannot go on as agreed.
B. When a partner becomes permanently incapable of performing his duties as a partner. Correct. The others would carry his work for good while he keeps his share of profit.
C. When a partner is guilty of misconduct which is likely to adversely affect the business of the firm. Correct. The firm trades on its name, and a partner’s conduct is the firm’s conduct.
D. When a partner persistently commits breach of partnership agreement. Correct. The agreement holds the firm together, and repeated breach makes it unworkable.
The Act names three more grounds: transfer of a partner’s whole interest to a third party, a business that can be carried on only at a loss, and any ground on which the court finds dissolution just and equitable.
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