Partnership is compulsorily dissolved when the partners of the firm become ________. (Fill in the blank by choosing correct option)
a) Solvent
b) Insolvent
c) Creditor
d) None of these
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partnership is compulsory dissolved when the partners of the firm become solvent
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Answer:
A partnership is compulsorily dissolved when the partners of the firm become Insolvent.
Explanation:
Under Section 41 of Partnership Act, a partnership is compulsory to dissolve for the following reasons:
1) if the partners become insolvent, be it in the case of all partners or all but one partner.
2) in case of any illegal business, which may occur due to changed situations or any other circumstance, after a partnership is formed.
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