Choose combination of statements that are true about dissolution-
(A) Dissolution of partnership can not take place without intervention of the court.
(B) Court can order a firm to be dissolved when a partner becomes insane.
(C) A firm is compulsorily dissolved when a partner decide to retire.
(D) A partnership is dissolved when there is a death of a partner.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (B) and (D) only
The dissolution of partnership (the relationship among the partners changes) is different from the dissolution of the firm (the business itself is closed). A firm may be dissolved by the partners themselves or by the court.
(A) Dissolution of partnership can not take place without intervention of the court. Incorrect. Most dissolutions happen without the court — by agreement, compulsorily, on contingencies or by notice. The court is only one of the five ways.
(B) Court can order a firm to be dissolved when a partner becomes insane. Correct. Insanity of a partner is the first ground on which the court may order dissolution on a partner's suit.
(C) A firm is compulsorily dissolved when a partner decide to retire. Incorrect. Retirement ends the partnership, not the firm; the remaining partners carry on. Compulsory dissolution comes from insolvency of all (or all but one) partners or from the business becoming illegal.
(D) A partnership is dissolved when there is a death of a partner. Correct. Death breaks the existing agreement, so the partnership is dissolved, even if the firm continues with the others.
NCERT (2026-27 edition):
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