In which of the following situation compulsory dissolution of partnership can be done?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → When business of the firm becomes illegal.
"Compulsory Dissolution: A firm is dissolved compulsorily in the following cases:
(a) when all the partners or all but one partner, become insolvent, rendering them incompetent to sign a contract;
(b) when the business of the firm becomes illegal; or
(c) when some event has taken place which makes it unlawful for the partners to carry on the business of the firm in partnership, e.g., when a partner who is a citizen of a country becomes an alien enemy because of the declaration of war with his country and India."
Note: There is some ambiguity in the question. The question should have been "In which of the following situation compulsory dissolution of partnership firm can be done?".