In which of the following situation compulsory dissolution of partnership can be done?

Compulsory dissolution occurs when the partnership firm must be dissolved by law, leaving no option for the partners to continue.

Under Section 41 of the Indian Partnership Act, 1932, a partnership is compulsorily dissolved when the business of the firm becomes unlawful or illegal.

This means if the activities carried on by the firm become illegal due to a change in law or any other reason, the firm cannot continue operations and dissolution becomes mandatory.

Why other options are incorrect:

Death of a partner (Option 1) causes dissolution of the partnership among all partners, but the remaining partners can choose to continue the business by reconstituting the firm. It is not compulsory dissolution.

Insanity of a partner (Option 2) provides a ground for dissolution by court under Section 44, but it is not automatic or compulsory. Other partners may apply to court, but they can also choose to continue.

Business running at continuous loss (Option 4) is also a ground for dissolution by court under Section 44, but again, this is optional. Partners have the right to continue despite losses if they wish to do so.

The key distinction is that compulsory dissolution leaves no choice to the partners - the law mandates dissolution. This only happens when continuing the business would be unlawful.