Partnership Firm Dissolution:
Dissolution is the process of bringing an end to a partnership firm. There are various reasons that can lead to the dissolution of a partnership firm. Let's discuss the options given in the question and determine which one(s) are correct.
A: All partners have become insolvent:
- If all partners become insolvent, it means they are unable to pay their debts.
- Insolvency of all partners can lead to the dissolution of a partnership firm.
- This option is a valid reason for the compulsory dissolution of a partnership firm.
B: Firm's business has become unlawful:
- If the business of the partnership firm becomes unlawful due to changes in laws or regulations, it can lead to the dissolution of the firm.
- Operating an unlawful business is not legally acceptable, and therefore, the partnership firm may be compulsorily dissolved.
- This option is also a valid reason for the compulsory dissolution of a partnership firm.
C: The fixed term has expired:
- A partnership firm can be formed for a fixed term as mentioned in the partnership agreement.
- If the fixed term mentioned in the agreement expires, it does not compulsorily lead to the dissolution of the firm.
- The partners may choose to continue the partnership by renewing the agreement or dissolve the firm if they wish to do so.
- This option alone does not lead to compulsory dissolution.
D: In cases (a) and (b) only:
- This option is the combination of options A and B.
- As discussed earlier, both options A and B are valid reasons for the compulsory dissolution of a partnership firm.
- Therefore, option D is the correct answer.
In conclusion, a partnership firm is compulsorily dissolved when all partners become insolvent or when the firm's business becomes unlawful. The fixed term expiration does not necessarily lead to compulsory dissolution unless the partners decide to dissolve the firm. Therefore, option D, "In cases (a) and (b) only," is the correct answer.

Partnership Firm Dissolution
In a partnership firm, there are various reasons that can lead to its compulsory dissolution. Let's discuss the reasons mentioned in the question in detail:

All partners have become insolvent:
- If all partners of a firm become insolvent, it means they are unable to pay off their debts. This situation can greatly affect the firm's ability to carry on its business operations effectively. In such a scenario, the firm may be compulsorily dissolved to protect the interests of creditors and other stakeholders.

Firm's business has become unlawful:
- If the nature of the firm's business activities becomes unlawful due to changes in regulations or laws, it can lead to the compulsory dissolution of the firm. Operating an illegal business can have serious legal consequences, and the firm may be required to dissolve to avoid further legal issues.

Fixed term has expired:
- In some cases, partnership firms are established for a specific period of time. Once the fixed term of the partnership agreement expires, the firm is automatically dissolved. This is a common scenario where the partnership is formed for a specific project or purpose with a predetermined end date.
Therefore, based on the reasons mentioned in the question, a partnership firm is compulsorily dissolved in cases where all partners have become insolvent and the firm's business has become unlawful. These situations can significantly impact the firm's ability to operate ethically and sustainably, leading to its compulsory dissolution.