Legal representatives of the deceased developer are not liable to discharge the deceased’s obligations which were primarily based on his skills and expertise – Supreme Court
Case Title – Vinayak Purshottam Dube (deceased) vs Jayashree Padamkar Bhat & Others
Case No. – Civil Appeal Nos.7768-7769 of 2023
Decided On – March 01, 2024
Quoram – Justice B.V. Nagarathna and Justice Ujjal Bhuyan
The issue involved in this case was regarding the extent of liability of legal heirs in fulfilling obligations of the deceased developer, a sole proprietor under a development agreement.
In the case of Vinayak Purshottam Dube (deceased) vs Jayashree Padamkar Bhat & Others the appeals have been filed by the legal representatives of the opposite party-sole proprietor against the common final judgment passed by the NCDRC.
Facts of the Case
In this case, the appellants were the legal heirs of the original opposite party in the consumer complaint before the District Forum and the respondents were the complainants. The complainants, Jayashree Padmakar and others, owners of property had entered into a Development Agreement with the opposite party and according to the agreement, the complainants were entitled to receive eight residential flats and Rs.6,50,000/- as consideration.
The opposite party failed to fulfill the payment obligations and hence, the complainants alleged breaches of the agreement. Despite notices issued by the complainants, the opposite party denied the allegations and refused to take actions in that regard.
They filed a complaint before the District Consumer Forum. The District Forum considering the Development Agreement between the parties, it held that the opposite party was to be liable to pay an amount of Rs. 1,65,000/- and 1,85,000/- along with interest rate of 18% and an amount of Rs.1,50,000/- at the time of conveyance. Being aggrieved by its order; both parties approached the State Commission.
The State Commission partly modified the order by setting aside the directions to pay Rs. 1.85 lakhs and Rs. 1.65 lakhs as the said claims were held to be time-barred but upheld the direction to pay Rs. 1.5 lakhs. The State Commission also placed reliance on some other clauses of the Development Agreement and directed the opposite party to fulfil their obligations.
Then, a revision petition was filed before the NCDRC (National Consumer Disputes Redressal Commission). During the pendency of the petition before the NCDRC, the original opposite party – Vinayak Purushottam Dube died and his legal representatives i.e., his wife and two sons were brought on record, who are the appellants before this Court. The NCDRC disagreed with the finding and conclusion of the State Commission with respect to the time-barred transaction. Hence, it upheld the directions of District Forum ordering for the payments of Rs. 1.85 lakhs and Rs. 1.65 lakhs along with interest. The NCDRC also upheld the directions given by the State Commission with respect to fulfillment of their obligations.
The NCDRC, on pursuance of the review petition upheld its earlier findings. Further, NCDRC refused to accept the contention of the appellants-opposite party and held that the death of a developer has no effect upon the obligations of the developer under the Development Agreement and the same have to be executed by the legal heirs of the developer.
Legal provisions
Section 37 of Indian Contract Act, 1872 – Obligation of parties to Contract
Section 40 of Indian Contract Act, 1872 – Person by whom promise is to be performed
Section 2(11) of Code of Civil Procedure, 1908 – Legal Representative
Section 50 of Code of Civil Procedure, 1908 – The holder of the decree may apply to the Court to execute it against the legal representative of the deceased, if judgment-debtor dies before the enforcement of the decree.
Section 306 of the Indian Succession Act, 1925 – Demands and rights of action of or against deceased survive to and against executor or administrator. Legal Maxim – “actio personalis moritur cum persona” – a personal right of action dies with the person.
Submissions on behalf of the Appellants
The learned counsel submits that it not poossible for the legal representatives (wife and sons) to follow the directions of the District Forum and State Commission as they were issued personally against the opposite party who is a deceased now.
He contended that the original opposite party had skills and expertise to comply with the said directions as a developer. But, on his demise, his legal representatives, namely, his widow and two sons cannot be compelled to carry out those directions as they neither possess the necessary skills nor expertise to execute the same. Hence, the counsel submits that the clauses in the Development agreement which placed rights and obligations on Vinayak cannot be enforced against his legal heirs in pursuance of his demise.
Submissions on behalf of the Complainants
The Learned Counsel submits that the Complainants will have no recourse if the said directions are not enforced by the opposite part. He contended that the NCDRC
was justified in directing the legal representatives of the deceased opposite party to take steps for also complying with those directions.
Issue – The Question before the Court was whether the legal representatives can be made liable to comply with those obligations under the Development Agreement on the demise of the original opposite party
Courts Observation and Analysis
The Supreme Court examined the nature of the obligations under the development agreement. It distinguished between proprietary rights (inheritable and having economic value) and personal rights (non-transferable and ending with the individual).
The Court referred to Section 306 of the Indian Succession Act, 1925, and Sections 37 and 40 of the Indian Contract Act, 1872, highlighting that personal obligations dependent on an individual’s skills or competencies are not transferable to legal heirs.
Legal precedents, including Raghu Lakshminarayanan vs. Fine Tubes and Ajmera Housing Corporation vs. Amrit M. Patel, were cited to underline those obligations requiring personal performance by the deceased cannot be enforced against legal heirs.
The Court further said that where the decree or order is not against the estate of a deceased sole proprietor but based on the skills and expertise of the sole proprietor, the obligations which had to be performed by the sole proprietor would come to an end on his demise and the same cannot be imposed on his legal heirs or representatives.
Judgement
The Supreme Court ruled that while the legal heirs are responsible for monetary obligations from the deceased’s estate, they are not liable for personal obligations that were specific to the developer’s skills or expertise. Thus, the Court held that the legal representatives of the deceased developer are not liable to discharge the obligations which had to be discharged by the deceased opposite party in his personal capacity. Consequently, the Court set aside the NCDRC’s orders imposing personal obligations on the legal heirs but upheld the monetary liabilities to be settled from the estate.
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Judgement Reviewed by – Keerthi K
