Skip to content

CA Foundation · Business Laws · The Indian Partnership Act, 1932

Sagar, Tina and Umesh are partners. Umesh is adjudicated insolvent. Which statement correctly describes the effect on the firm and on Umesh's position as a partner?

Umesh ceases to be a partner on the date of the adjudication order. The firm is dissolved on this event unless the partnership contract provides otherwise, so Sagar and Tina may continue the business only if their agreement allows it.

  1. AUmesh continues as a partner but cannot take part in management
  2. BUmesh ceases to be a partner on the date of the order of adjudication, and the firm is dissolved unless the contract provides otherwiseCorrect
  3. CUmesh ceases to be a partner only after one year
  4. DUmesh remains a partner and the firm is automatically dissolved

Explanation

A partner who is adjudicated insolvent ceases to be a partner on the date the order of adjudication is made, whether or not the firm is dissolved. The firm is dissolved only if the contract does not say otherwise. Sagar and Tina may continue if the deed so provides.

Did you get it right without looking?

One question tells you little. A timed set on The Indian Partnership Act, 1932 shows your real accuracy, how long you take and where you lose marks.

Practise The Indian Partnership Act, 1932Free diagnostic mock

More The Indian Partnership Act, 1932 questions