Dissolution of a partnership firm may be ordered by the court on the following grounds:

(A) when a partner becomes insane.

(B) when a partner becomes permanently incapable of performing his duties as partner.

(C) when a partner acts in good faith

(D) when it is regarded just and equitable by the court.

Choose the correct answer from the options given below:

According to the Indian Partnership Act, 1932 (Section 44), a court can order dissolution of a partnership firm on specific grounds.

Let's examine each ground:

(A) When a partner becomes insane - This is a valid ground. Insanity of a partner affects the partnership's ability to function as partners need sound mental capacity to make business decisions.

(B) When a partner becomes permanently incapable of performing his duties as partner - This is a valid ground. Permanent incapacity (such as serious illness or disability) prevents the partner from fulfilling partnership obligations.

(C) When a partner acts in good faith - This is NOT a valid ground. Acting in good faith is actually a desirable quality expected from partners. The court orders dissolution when partners act in breach of duty or misconduct, not when they act in good faith.

(D) When it is regarded just and equitable by the court - This is a valid ground. This is a general discretionary power given to courts to dissolve a partnership when circumstances make it fair and reasonable to do so.

The valid grounds for court-ordered dissolution are (A), (B), and (D) only.

The correct answer is Option 2.