Haryana Judicial Service (Civil Judge) Prelims 2010 Previous Year Question Papers with MCQ Answers

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58.

A firm is liable to be compulsorily dissolved under Section 41 of the Indian Partnership Act on adjudication of :

A: all the partners as insolvents
B: all but one of the partners as insolvents.
C: either (A) or (B)
D: neither (A) nor (B).

The answer is: C

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Explanation

According to Section 41 of the Indian Partnership Act, 1932, a firm is dissolved by the adjudication of all the partners or of all the partners but one as insolvent. This means that if all the partners or all but one of the partners are declared unable to pay their debts, the firm ceases to exist. This is done to protect the interests of the creditors and the remaining solvent partner, if any.

Therefore, the correct option is C: either (A) or (B).