* Author
[2024] 3 S.C.R. 127 : 2024 INSC 159
Vinayak Purshottam Dube (Deceased), Through Lrs
v.
Jayashree Padamkar Bhat & Others
(Civil Appeal Nos. 7768-7769 of 2023)
01 March 2024
[B.V. Nagarathna* and Ujjal Bhuyan, JJ.]
Issue for Consideration
Appellants, legal representatives of the original opposite party-a sole
proprietor (since deceased) who had entered into a Development
Agreement with the respondents-complainants, if liable to discharge
the obligations which had to be discharged by him in his personal
capacity based on his skills and expertise.
Headnotes
Consumer Protection – Legal representatives of sole
proprietor-developer (since deceased), if liable for personal
contract of the deceased – Contract Act, 1872 – ss.37, 40
– Code of Civil Procedure, 1908 – s.2(11) – Sole proprietordeveloper entered into a Development Agreement with the
respondents-complainants – Complainants alleged failure
to fulfill payment obligations, breaches of the agreement
including deviations from sanctioned plan, non-construction
of a compound wall, etc. – Sole proprietor died during the
pendency of the matter before NCDRC – NCDRC held that
appellants-legal representatives of the sole proprietor were
liable both w.r.t the monetary payments that he was directed
to pay and also to comply with the other directions issued
– Appellants, if liable to comply with obligations such as
construction to be made and certain approvals etc. to be
obtained on completion of the construction which had to
be performed by sole proprietor-developer in his personal
capacity based on his skills and expertise:
Held: s.37, Contract Act states that a promise made by a promisor
is binding on his representatives in case of his/her death, unless a
contrary intention appears from the contract – Legal representatives
are liable for the debts of their predecessor, but their liability is
limited to the extent of the estate of the deceased inherited by them
– Thus, the representatives of a promisor are bound to perform
128 [2024] 3 S.C.R.
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the promisor’s contract to the extent of the assets of the deceased
falling in their hands – But they are not personally liable under
the contracts of the deceased and are also not liable for personal
contracts of the deceased – When personal considerations are the
basis of a contract they come to an end on the death of either party,
unless there is a stipulation express or implied to the contrary –
This is especially so when the contracts involve exercise of special
skills such as expressed in s.40, Contract Act – A contract involving
exercise of individual’s skills or expertise of the promisor or which
depends upon his/her personal qualification or competency, the
promisor has to perform the contract by himself and not by his/her
representatives – s.2(11), CPC defines a “legal representative –
Legal representatives of a deceased are liable only to the extent
of the estate which they inherit – 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 – Such a position is distinguished
from a position where the estate of the deceased sole proprietor
would become liable to satisfy the decree in monetary terms as a
proprietorship firm is not a separate legal entity as compared to
the proprietor and his estate would become liable only to satisfy a
decree or an order in monetary terms on his demise – In the case
of a personal obligation imposed on a person under the contract
and on the demise of such person, his estate does not become
liable and therefore, the legal representatives who represent the
estate of a deceased would obviously not be liable and cannot be
directed to discharge the contractual obligations of the deceased –
Legal representatives of the deceased opposite party-appellants not
liable to discharge the obligation which had to be discharged by the
deceased opposite party in his personal capacity and hence that
portion of the impugned orders of the NCDRC, State Commission
and District Forum are set aside. [Paras 20, 21, 23, 24, 27, 31]
Proprietary concern – Jurisprudential status – Discussed.
Legal right – Characteristics of, according to Salmond –
Salmond’s classification of proprietary and personal rights;
inheritable and uninheritable rights – Discussed.
Contract – Contract of service, personal to the promisor and
on his death he is discharged from the contract:
[2024] 3 S.C.R. 129
Vinayak Purshottam Dube (Deceased), Through Lrs
v. Jayashree Padamkar Bhat & Others
Held: A contract of service is also personal to the promisor – This is
because when a person contracts with another to work or to perform
service, it is on the basis of the individual’s skills, competency or other
qualifications of the promisor and in circumstances such as the death
of the promisor he is discharged from the contract – Correspondingly,
duties or obligations which are personal in nature cannot be transmitted
from a person who had to personally discharge those duties, on his
demise, to his legal representatives – Just as a right is uninheritable
and the right personal to him dies with the owner of the right, similarly,
a duty cannot be transferred to the legal representatives of a deceased
if the same is personal in nature. [Paras 21, 22]
Code of Civil Procedure, 1908 – s.50:
Held: Any decree which is relatable to the extent of the property
of the deceased which has come to the hands of the legal
representatives and has not been duly disposed of, the same would
be liable for execution by a decree holder so as to compel the
legal representatives to satisfy the decree – In this context, even
a decree for preventive injunction can also be executed against
the legal representatives of the deceased judgment-debtor if such
a decree is in relation to the property or runs with the property if
there is a threat from such legal representatives. [Para 30]
Words and expressions – “legal representative” – Code of
Civil Procedure, 1908 – s.2(11) – Discussed. [Para 23]
Case Law Cited
Raghu Lakshminarayanan v. Fine Tubes, [2007] 4 SCR
885 : (2007) 5 SCC 103; Ajmera Housing Corporation
vs. Amrit M. Patel (Dead) through LRs, (1998) 6 SCC
500 – relied on.
Custodian of Branches of Banco National Ultramarino
vs. Nalini Bai Naique, [1989] 2 SCR 810 : AIR 1989
SC 1589 – referred to.
Books and Periodicals Cited
Report of the Insolvency Law Committee, Page
No.117-118, Government of India (Ministry of Corporate
Affairs, February, 2020); PJ Fitzgerald, Salmond on
Jurisprudence, Page Nos.220, 221 (Universal Law
Publishing Co. Pvt. Ltd., 12th Edition, 1966) – referred to.
130 [2024] 3 S.C.R.
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List of Acts
Contract Act, 1872; Code of Civil Procedure, 1908; Indian
Succession Act, 1925.
List of Keywords
Consumer Protection; Legal representatives; Personal liability for
personal contracts of the deceased; Obligations to be discharged
in personal capacity; Development Agreement; Sole proprietor;
Special skills; Expertise; Contract of service; Personal obligation;
Injunction; Vinculum juris.
Case Arising From
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7768-7769
of 2023
From the Judgment and Order dated 02.05.2018 of the National
Consumers Disputes Redressal Commission, New Delhi in RA Nos.
26 and 27 of 2017
Appearances for Parties
Aniruddha Deshmukh, Adv. for the Appellants.
Abhishek Yadav, Ruchit Mohan, Braj Kishore Mishra, Advs. for the
Respondents.
Judgment / Order of the Supreme Court
Judgment
Nagarathna, J.
These appeals have been filed by the legal representatives of the
opposite party-sole proprietor against the common final judgment
and order dated 02.05.2018 passed by the National Consumer
Disputes Redressal Commission (hereinafter referred to as “NCDRC”)
in Review Application No.26 of 2017 in Review Petition No.3283
of 2008 and Review Application No.27 of 2017 in Review Petition
No.2794 of 2008.
The NCDRC vide the impugned order dismissed the review
applications while affirming its earlier order dated 31.05.2016 passed
in review petition with reference to the order dated 03.01.2017 passed
by this Court in Special Leave Petition (Civil)… CC Nos.24515-
[2024] 3 S.C.R. 131
Vinayak Purshottam Dube (Deceased), Through Lrs
v. Jayashree Padamkar Bhat & Others
24516 of 2016 granting liberty to the appellants to resort to remedy
of review before the NCDRC.
2. The brief facts giving rise to the present appeal are as follows:
2.1 The appellants herein are the legal heirs of the original opposite
party in the consumer complaint before the District Forum. All
the respondents herein are the complainants.
2.2 For the sake of convenience, the parties shall be referred to
as complainants and opposite party.
2.3 The complainants, Jayashree Padmakar and others, owners
of property CTS Nos.1465/1 and 1465/2, ‘C’ Ward, Kolhapur,
had entered into a Development Agreement dated 30.07.1996
with the opposite party. According to the agreement, the
complainants were entitled to receive eight residential flats and
Rs.6,50,000/- as consideration. Allegedly, the opposite party
failed to fulfill the payment obligations, resulting in payment
of a balance amount and accruing interest at 18% per annum
with effect from 01.04.1997. The complainants alleged breaches
of the agreement, including deviations from sanctioned plan,
non-construction of a compound wall impacting parking and
issues regarding access and unauthorized constructions beyond
sanctioned plan, subsequently sold to third parties. They also
noted defects in the building construction, such as cracks, in
the building, terrace work being not completed and the absence
of provision for electricity meters. Despite notices issued by
the complainants, the opposite party denied the allegations
asserting that the complainants owed them Rs.8,60,000/- for
construction and amenities.
2.4 Seeking a resolution of the ongoing breaches under the
Consumer Protection Act, the complainants pursued their
legal recourse to address the deadlock by filing Complaint
No.184 of 2005 before the District Consumer Forum, Kolhapur.
Their prayers for relief were several: they demanded payment
of outstanding dues inclusive of interest; reimbursement of
expenses incurred and compensation for the mental distress
caused to them. Additionally, they sought structural rectification,
emphasizing on the removal of unauthorized constructions;
rectification of construction defects; completion of pending work
132 [2024] 3 S.C.R.
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and the provision of essential amenities as initially agreed
upon.
2.5 In his version, the original opposite party disputed the existence
of any consumer relationship, denied breaches and argued for
the resolution of contractual disputes through the civil court. The
opposite party claimed that the complaint was time-barred and
sought its dismissal with compensatory costs of Rs.10,000/-.
2.6 The District Consumer Forum at Kolhapur, vide order dated
16.10.2006, on perusal of various supporting documents,
including the Development Agreement, building plans, notices,
replies, certificates, estimates, receipts and affidavits partly
allowed the Consumer Complaint No.184 of 2005 filed against
the opposite party. The District Forum observed that as per the
Development Agreement between the parties, the transaction
between the parties was not one of sale and purchase of property
but of development of property. Since the services regarding
construction are covered by the Consumer Protection Act, the
dispute was held to be a consumer dispute. Further, the District
Forum refused to take into consideration the points raised by
the complainants regarding defects in construction, amenities
and facilities due to lack of evidence provided in that regard.
However, the opposite party was found to be liable to pay to
the complainants an amount of Rs. l,65,000/- along with interest
at the rate of 18% per annum with effect from 01.05.1997 till
payment; an amount of Rs. 1,85,000/- along with interest at the
rate of 18% per annum with effect from 31.08.1997 till payment;
and an amount of Rs.1,50,000/- at the time of conveyance.
2.7 Both the parties challenged the order of the District Forum before
the Consumer Disputes Redressal Commission, Maharashtra
State, Mumbai (for short, “the State Commission”). The State
Commission, vide its common judgment dated 08.04.2008 in
First Appeal Nos.2570 of 2006 and 1115 of 2007, partly modified
the order of the District Forum 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. However, the State Commission placed reliance
on some other clauses of the Development Agreement such
as clause 4(k), to hold that the building was incomplete and
that the opposite party was liable to get the construction of the
[2024] 3 S.C.R. 133
Vinayak Purshottam Dube (Deceased), Through Lrs
v. Jayashree Padamkar Bhat & Others
compound wall and give separate access in terms of Schedule-II
of the Development Agreement. The opposite party was further
directed to obtain and handover the Completion Certificate to
the complainants; to execute the Conveyance Deed and to
give electricity connections to the complainants for which they
had already paid Rs.15,000/- to the developer-opposite party.
2.8 The complainants as well as the opposite party approached the
NCDRC by filing Revision Petition Nos.3283 of 2008 and 2794
of 2008. 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, vide order dated 31.05.2016, again partly modified the
order of the State Commission. The NCDRC disagreed with the
finding and conclusion of the State Commission with respect
to the time-barred transaction of Rs. 1.85 lakhs and Rs. 1.65
lakhs, by observing that the limitation of the said claims had to
be adjudged by looking at the transaction between the parties
as a whole, which established a continuous cause of action
in the matter. The NCDRC upheld the directions given by the
State Commission with respect to the Completion Certificate;
Conveyance Deed; Electricity Connection, etc., since the
developer did not challenge any part of those directions as the
same were in accordance with the Development Agreement. In
other words, the NCDRC upheld the order of payment of 1.65
lakhs and 1.85 lakhs along with interest as directed by the
District Forum, and also upheld the slew of directions issued
by the State Commission to the developer-opposite party.
3. The appellants-opposite party thereafter approached this Court by
preferring Special Leave Petition (Civil)…. CC Nos.24515-24516
of 2016 to challenge the order of the NCDRC dated 31.05.2016 in
Revision Petition Nos.3283 of 2008 and 2794 of 2008. This Court,
vide order dated 03.01.2017, refused to interfere with the view taken
by the NCDRC and disposed of the same by granting liberty to the
appellants-opposite party herein to resort to the remedy of review
before the National Commission.
4. Thereafter, the appellants-opposite party filed Review Application
No.26 of 2017 and the complainants filed Review Application No.27
134 [2024] 3 S.C.R.
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of 2017, both before the NCDRC and the order of review proceeding
is assailed in the present case. The NCDRC, vide order dated
02.05.2018, upheld its earlier findings on the question of limitation,
status of complainants as consumers and the relief being in excess
of the payment made by the complainants. Further, NCDRC refused
to accept the contention of the appellants-opposite party that after
the death of the original owner, the legal representatives are not
accountable for the liabilities under the agreement. In paragraph 12
of the order, the NCDRC 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. The relevant part of the said paragraph 12 is
extracted as under:
“12. Further, we have no reason to agree with the
contention raised by the review applicant that after the
death of the original owner, the legal representatives are
not accountable for the liabilities under the agreement.
In the eventuality of death of the developer, it cannot be
stated that various clauses of the development agreement
between the parties becomes redundant or the complainant
is not entitled to seek execution of the provisions of the
development agreement. Such execution has to be made
by the legal heirs of the developer only.”
5. The legal representatives of the opposite party being aggrieved by
the aforesaid reasoning of the NCDRC have preferred these appeals.
6. We have heard learned counsel Sri Aniruddha Deshmukh for
the appellants and learned counsel Sri Abhishek Yadav for the
respondents and perused the material on record.
7. The controversy in these appeals is in a very narrow compass. No
doubt, the complainants succeeded before the District Forum, the
State Commission as well as the NCDRC. During the pendency
of the revision preferred by the original opposite party before the
NCDRC, the original opposite party died. His legal representatives
i.e. his widow and two sons were brought on record. In fact, the
complainants also had preferred their Revision Petition. The NCDRC
reasoned that the legal representatives of the opposite party were
liable both with regard to the monetary payments that the original
opposite party was directed to pay and also liable to comply with
[2024] 3 S.C.R. 135
Vinayak Purshottam Dube (Deceased), Through Lrs
v. Jayashree Padamkar Bhat & Others
the other directions issued by the District Forum as modified by the
State Commission and thereafter modified by the NCDRC.
8. Learned counsel for the appellants submitted that the appellants as
the legal representatives of the deceased opposite party are willing
to make the payment as directed. But as far as the other set of the
directions are concerned, it is not permissible for them to comply
with them inasmuch as the said directions were issued by the District
Forum as well as the State Commission personally against the
opposite party who is since deceased. Those directions are with regard
to construction of compound wall so as to give separate access in
terms of Schedule II of the Development Agreement; to obtain and
handover completion certificate to the complainants-respondents;
to execute the conveyance deed and to give electricity connection
and such other directions.
9. Learned counsel for the appellants contended that the aforesaid
directions cannot now be complied with by the legal representatives
of the deceased - original opposite party inasmuch as those were
personal directions as issued against the original opposite party. He
contended that the original opposite party was having the proprietorship
concern and therefore, the estate of the deceased proprietor would
be liable insofar as the satisfaction of the compensatory payments
only but not for complying the other directions issued which cannot
now fall on his legal representatives to comply. It was 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 and further, they are not continuing
the proprietorship concern of the original opposite party which has
now been wound up on the demise of the sole proprietor. Therefore,
learned counsel for the appellants-opposite party contended that the
various clauses of the Development Agreement which had placed
duties and obligations on the original opposite party, who is since
deceased, cannot now be enforced against and performed by his
legal representatives or heirs.
10. Per contra, learned counsel for the complainants–respondents
submitted that no doubt the legal representatives of the original
opposite party would comply with the directions for payments from
136 [2024] 3 S.C.R.
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out of the estate of the deceased opposite party but the complainants
would be left high and dry insofar as the other obligations which had
to be discharged by the opposite party and therefore, the NCDRC
was justified in directing the legal representatives of the deceased
opposite party to take steps for also complying with those directions.
11. Having heard learned counsel for the respective parties, we note
that admittedly the original opposite party was in the business of
real estate and as a developer, had entered into the Development
Agreement dated 30.07.1996 with the complainants. According to
the complainants-respondents herein, they were entitled to eight
residential flats and there were various other terms and conditions
of the said Development Agreement which imposed an obligation
on the original opposite party.
12. The question is: what would happen to the obligations imposed
personally on the original opposite party on his demise? No doubt, the
estate of the original opposite party would be liable for any monetary
decree or directions for payment issued in the present case. However,
what about the obligations which had to be performed under the
Development Agreement such as certain construction to be made
and certain approvals etc. to be obtained by him on completion of
the construction. Can the legal representatives be liable to comply
with those obligations under the Development Agreement on the
demise of the original opposite party?
13. In this regard, it is necessary to discuss the jurisprudential status of
a proprietary concern. In a report of the Insolvency Law Committee
submitted in February, 2020, the definition of ‘Proprietorship Firms’
reads as under:
“2. DEFINITION OF ‘PROPRIETORSHIP FIRMS’
2.2 Proprietorship firms are businesses that are owned,
managed and controlled by one person. They are the
most common form of businesses in India and are based
in unlimited liability of the owner. Legally, a proprietorship
is not a separate legal entity and is merely the name
under which a proprietor carries on business. [Raghu
Lakshminarayanan vs. Fine Tubes (2007) 5 SCC 103.]
Due to this, proprietorships are usually not defined in
statutes. Though some statutes define proprietorships,
[2024] 3 S.C.R. 137
Vinayak Purshottam Dube (Deceased), Through Lrs
v. Jayashree Padamkar Bhat & Others
such definition is limited to the context of the statute. For
example, Section 2 (haa) of the Chartered Accountants Act,
1949 defined a ‘sole proprietorship’ as “an individual who
engages himself in practice of accountancy or engages
in services…”. Notably, ‘proprietorship firms’ have also
not been statutorily defined in many other jurisdictions.”
[Source: Report of the Insolvency Law Committee, Page
No.117-118, Government of India (Ministry of Corporate
Affairs, February, 2020).]
14. According to Salmond, there are five important characteristics of a
legal right:
1. It is vested in a person who may be distinguished as the owner
of the right, the subject of it, the person entitled, or the person
of inherence.
2. It avails against a person, upon whom lies the correlative duty.
He may be distinguished as the person bound, or as the subject
of duty, or as the person of incidence.
3. It obliges the person bound to an act or omission in favour of
the person entitled. This may be termed the content of the right.
4. The act or omission relates to something (in the widest sense
of that word), which may be termed the object or subject matter
of the right.
5. Every legal right has a title, that is to say, certain facts or events
by reason of which the right has become vested in its owner.
[Source: PJ Fitzgerald, Salmond on Jurisprudence, Page
No.221 (Universal Law Publishing Co. Pvt. Ltd., 12th
Edition, 1966)]
15. Salmond also believed that no right can exist without a corresponding
duty. Every right or duty involves a bond of legal obligation by which
two or more persons are bound together. Thus, there can be no
duty unless there is someone to whom it is due; there can be no
right unless there is someone from whom it is claimed; and there
can be no wrong unless there is someone who is wronged, that is
to say, someone whose right has been violated. This is also called
as vinculum juris which means “a bond of the law”. It is a tie that
legally binds one person to another. [Source: PJ Fitzgerald, Salmond
138 [2024] 3 S.C.R.
Digital Supreme Court Reports
on Jurisprudence, Page No.220 (Universal Law Publishing Co. Pvt.
Ltd., 12th Edition, 1966)].
16. Salmond’s classification of proprietary and personal rights are
encapsulated as under:
Proprietary Rights Personal Rights
1 Proprietary rights means a
person’s right in relation to
his own property. Proprietary
rights have some economic
or monetary value.
Personal rights are
rights arising out of any
contractual obligation or
rights that relate to status.
2 Proprietary rights are
valuable.
Personal rights are not
valuable in monetary terms.
3 Proprietary rights are not
residual in character.
Personal rights are the
residuary rights which
remain after proprietary
rights have been subtracted.
4 Proprietary rights are
transferable.
Personal rights are not
transferable.
5 Proprietary rights are the
elements of wealth for man.
Personal rights are merely
elements of his well-being.
6 Proprietary rights possess
not merely judicial but also
economic importance.
Personal rights possess
merely judicial importance.
[Source: PJ Fitzgerald, Salmond on Jurisprudence, Page No.238
(Universal Law Publishing Co. Pvt. Ltd., 12th Edition, 1966)].
17. Salmond’s classification of inheritable and uninheritable rights is
stated as under:
Inheritable Rights Uninheritable Rights
A right is inheritable if it
survives the owner.
A right is uninheritable if it dies
with the owner.
[Source: PJ Fitzgerald, Salmond on Jurisprudence, Page Nos.415
& 442 (Universal Law Publishing Co. Pvt. Ltd., 12th Edition, 1966)].
18. On a reading of the above, it is clear, when it comes to personal
rights (as opposed to a proprietary rights) are rights arising out of any
[2024] 3 S.C.R. 139
Vinayak Purshottam Dube (Deceased), Through Lrs
v. Jayashree Padamkar Bhat & Others
contractual obligations or the rights that relate to status. Such personal
rights are not transferable and also not inheritable. Correspondingly,
Section 306 of the Indian Succession Act, 1925 (for short, “1925
Act”) applies the maxim “actio personalis moritur cum persona” (a
personal right of action dies with the person) which is limited to a
certain class of cases and would apply when the right litigated is
not heritable. By the same logic, a decree holder cannot enforce
the same against the legal representatives of a deceased judgment
debtor unless the same survives as against his legal representatives.
Section 306 of the 1925 Act reads as under:
“Section 306 – Demands and rights of action of or
against deceased survive to and against executor or
administrator.—
All demands whatsoever and all rights to prosecute or
defend any action or special proceeding existing in favor of
or against a person at the time of his decease, survive to
and against his executors or administrators; except causes
of action for defamation, assault, as defined in the Indian
Penal Code, 1860 (45 of 1860) or other personal injuries
not causing the death of the party; and except also cases
where, after the death of the party, the relief sought could
not be enjoyed or granting it would be nugatory.”
19. We may also advert to Sections 37 and 40 of the Indian Contract
Act, 1872, which read as under:-
“37. Obligation of parties to contracts.—The parties
to a contract must either perform, or offer to perform,
their respective promises, unless such performance is
dispensed with or excused under the provisions of this
Act, or of any other law.
Promises bind the representatives of the promisors in case
of the death of such promisors before performance, unless
a contrary intention appears from the contract.
x x x
40.Person by whom promise is to be performed.—If it
appears from the nature of the case that it was the intention
of the parties to any contract that any promise contained
140 [2024] 3 S.C.R.
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in it should be performed by the promisor himself, such
promise must be performed by the promisor. In other
cases, the promisor or his representatives may employ a
competent person to perform it.”
20. Section 37 of the aforesaid Act states that a promise made by
a promisor is binding on his representatives in case of his/her
death, unless a contrary intention appears from the contract. Legal
representatives are liable for the debts of their predecessor, but
their liability is limited to the extent of the estate of the deceased
inherited by them. Therefore, the representatives of a promisor are
bound to perform the promisor’s contract to the extent of the assets
of the deceased falling in their hands. But they are not personally
liable under the contracts of the deceased and are also not liable
for personal contracts of the deceased. Therefore, when personal
considerations are the basis of a contract they come to an end on
the death of either party, unless there is a stipulation express or
implied to the contrary. This is especially so when the contracts
involve exercise of special skills such as expressed in Section 40
of the Indian Contract Act, 1872.
21. Thus, a contract can be performed vicariously by the legal
representatives of the promisor depending upon the subject matter
of the contract and the nature of performance that was stipulated
thereto. But a contract involving exercise of individual’s skills or
expertise of the promisor or which depends upon his/her personal
qualification or competency, the promisor has to perform the contract
by himself and not by his/her representatives. A contract of service
is also personal to the promisor. This is because when a person
contracts with another to work or to perform service, it is on the
basis of the individual’s skills, competency or other qualifications of
the promisor and in circumstances such as the death of the promisor
he is discharged from the contract.
22. Correspondingly, duties or obligations which are personal in
nature cannot be transmitted from a person who had to personally
discharge those duties, on his demise, to his legal representatives.
Just as a right is uninheritable and the right personal to him dies
with the owner of the right, similarly, a duty cannot be transferred
to the legal representatives of a deceased if the same is personal
in nature.
[2024] 3 S.C.R. 141
Vinayak Purshottam Dube (Deceased), Through Lrs
v. Jayashree Padamkar Bhat & Others
In Raghu Lakshminarayanan vs. Fine Tubes, (2007) 5
SCC 103, while distinguishing a juristic person such as a
company, a partnership or an association of persons from
a proprietary concern, it was observed that a person who
carries on business in the name of a business concern, but
he being a proprietor thereof, would be solely responsible
for conduct of its affairs. A proprietary concern is not
a company. Further, a proprietary concern is only the
business name in which the proprietor of the business
carries on the business. A suit by or against a proprietary
concern is by or against the proprietor of the business. In
the event of the death of the proprietor of a proprietary
concern, it is the legal representatives of the proprietor who
alone can sue or be sued in respect of the dealings of the
proprietary business which is by representing the estate
of the deceased proprietor. The real party who is being
sued is the proprietor of the said business. Therefore, if
a proprietor had to carry on certain obligations personally
under a contract, the same cannot be fastened on his
legal representatives.
23. Further, Section 2(11) of the Code of Civil Procedure, 1908 (for short,
“CPC”) defines a “legal representative” to mean a person who in
law represents the estate of a deceased person, and includes any
person who intermeddles with the estate of the deceased and where
a party sues or is sued in a representative character the person on
whom the estate devolves on the death of the party so suing or
sued. Thus, the legal representatives of a deceased are liable only
to the extent of the estate which they inherit.
In Custodian of Branches of Banco National Ultramarino vs.
Nalini Bai Naique, AIR 1989 SC 1589, it was observed that the
expression “legal representative” as defined in the CPC is applicable
to proceedings in a suit. It means a person who in law represents
the estate of a deceased person and includes any person who
intermeddles with the estate of the deceased and where a party
sues or is sued in a representative character the person on whom
the estate devolves on the death of the party so suing or sued.
The definition is inclusive in character and its scope is wide as it is
not confined to legal heirs only, instead, it stipulates a person who
may or may not be a heir, competent to inherit the property of the
142 [2024] 3 S.C.R.
Digital Supreme Court Reports
deceased or he should represent the estate of the deceased person.
It includes heirs as well as persons who represent the estate even
without title, either as executors or administrators in possession of
the estate of the deceased. All such persons would be covered by
the expression “legal representative”. If there are many heirs, those
in possession bona fide, without there being any fraud or collusion,
are also entitled to represent the estate of the deceased.
24. The aforesaid judgment refers to representation of an estate of a
deceased person which would devolve on his legal representatives
and where the decree has to be executed vis-à-vis such an estate.
In such a case, the heirs of the deceased judgment debtor would
be under a legal obligation to discharge their duties to satisfy the
decree or an order from the estate of a deceased.
But in the case of sole proprietorship, which is a common form of
business in India, when a legal obligation arises under a contract
which has to be discharged personally by the sole proprietor, who
is since deceased, had entered into the agreement, such as, in the
case of a Development Agreement in the instant case, can such
obligations be imposed on his legal representatives or heirs who are
not parties to the Development Agreement and where the obligations
under such an agreement per se cannot be fulfilled inasmuch as
they neither have the skills nor the expertise to do so and those
obligations depend purely on the skills and expertise of the deceased
sole proprietor? In other words, 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, we are of the view that
in the latter case, 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. We reiterate
that such a position is distinguished from a position where the estate
of the deceased sole proprietor would become liable to satisfy the
decree in monetary terms. This is because a proprietorship firm is
not a separate legal entity as compared to the proprietor and his
estate would become liable only to satisfy a decree or an order in
monetary terms on his demise.
In this context, the following terms of the Development Agreement
dated 30.07.1996 would clearly indicate that the obligations on the
opposite party were to be carried out personally by him:
[2024] 3 S.C.R. 143
Vinayak Purshottam Dube (Deceased), Through Lrs
v. Jayashree Padamkar Bhat & Others
“NOW THIS AGREEMENT WINESSETH AND IS
AGREED BY AND BETWEEN THE PARTIES HERETO
AS FOLLOWS:
1.1 The owners hereby grant to the developer sole and
exclusive development rights in respect of the property
bearing C.S. No. C. 1465 situated in ‘C’ Ward, Laxmipuri
Kolhapur -416002 in the form of license to enter upon the
said property in the capacity of the licensee of the owners
for the sole purpose of developing the said property and
selling the offices/premises / shops to the extent and
in the manner stipulated hereafter and upon the terms
and conditions agreed by the between the parties hereto
and set out here below in this agreement. Subject to
clause No. 2. the license hereby granted is irrevocable
till the entire property is developed and all the premises
constructed thereon are sold out. It is however, hereby
expressly understood that the right of entry granted under
this clause is for the sole purpose of developing the said
property selling all premises (except those to be allotted
to owners) including the shop/s basement/offices therein
and common restricted areas or facilities as the case may
be and such entry shall not be construed to mean that
the owners have placed the developer in legal or physical
possession of the said property.
x x x
16. The developer undertakes to comply with and carry
out all the legal and contractual obligations that may be
entered into for the construction of the buildings and for
the sale of the various premises in the said buildings.
The developer further undertakes to indemnify and keep
indemnified the owners from and against any action either
civil or criminal suit proceedings, damages, penalties or
any other similar actions which may be initiated, made or
ledged by any person or persons by reason of the failure
of the developer to comply with, carry out or perform any
such legal and contractual obligations.”
25. In this regard, it would be useful to illustrate that in a general sense,
an injunction is a judicial mandate operating in personam by which
144 [2024] 3 S.C.R.
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upon certain established principles of equity, a party is required to
do or refrain from doing a particular thing. On the other hand, a
direction to pay money either by way of final or interim order is not
considered to be an injunction. An order of injunction is normally
issued against a named person and is addressed to the defendant
personally and on his demise the cause of action would come to
an end insofar as such a person who is since deceased even if it
relates to a proprietary right unless his legal representatives are also
causing a threat in which case the cause of action would continue
vis-à-vis the legal representatives also.
26. Therefore, if the estate of the deceased becomes liable then the legal
representatives who in law represent the estate of a deceased person
or any person who intermeddles with the estate of the deceased
and where a party sues or is sued in a representative character,
the person on whom the estate devolves on the death of the party
so suing or sued is liable to the extent the estate has devolved.
Hence, what is crucial is that the estate of a deceased person which
becomes liable and the legal representatives must discharge their
liability to a decree holder or a person who has been granted an
order to recover from the estate of the deceased which they would
represent and not beyond it.
27. But in the case of a personal obligation imposed on a person under
the contract and on the demise of such person, his estate does not
become liable and therefore, the legal representatives who represent
the estate of a deceased would obviously not be liable and cannot
be directed to discharge the contractual obligations of the deceased.
28. In Ajmera Housing Corporation vs. Amrit M. Patel (Dead) through
LRs, (1998) 6 SCC 500, this Court observed that the defendants in
the said case had no privity of contract with the plaintiff therein and
the contract had been entered into on the basis of the skills and
capacity of the party to perform under the contract and the rights
and duties were also personal to the party who had to discharge the
obligations under the contract. In the circumstances, it was observed
that the legal representatives of the builder under the contract had
neither the capacity nor the special skills to discharge the obligations
of the deceased.
29. This position is also clear on a reading of Section 50 of the CPC
which states as under:
[2024] 3 S.C.R. 145
Vinayak Purshottam Dube (Deceased), Through Lrs
v. Jayashree Padamkar Bhat & Others
“Section.50:- (1) Where a judgment-debtor dies before the
decree has been fully satisfied, the holder of the decree
may apply to the Court which passed it to execute the
same against the legal representative of the deceased.
(2) Where the decree is executed against such legal
representative, he shall be liable only to the extent of the
property of the deceased which has come to his hands
and has not been duly disposed of; and, for the purpose of
ascertaining such liability, the Court executing the decree
may, of its own motion or on the application of the decreeholder, compel such legal representative to produce such
accounts as it thinks fit.”
30. Thus, any decree which is relatable to the extent of the property of the
deceased which has come to the hands of the legal representatives
and has not been duly disposed of, the same would be liable for
execution by a decree holder so as to compel the legal representatives
to satisfy the decree. In this context, even a decree for preventive
injunction can also be executed against the legal representatives
of the deceased judgment-debtor if such a decree is in relation to
the property or runs with the property if there is a threat from such
legal representatives.
31. In view of the aforesaid discussion, we hold that the legal
representatives of the deceased opposite party-appellants herein are
not liable to discharge the obligation which had to be discharged by
the deceased opposite party in his personal capacity and hence that
portion of the impugned orders of the NCDRC, State Commission and
District Forum are set aside. Needless to observe that the direction
for payments shall be made by the legal representatives from the
estate of the deceased opposite party if not already satisfied.
32. The appeals are allowed in the aforesaid terms.
33. Parties to bear their respective costs.
Headnotes prepared by: Divya Pandey Result of the case:
Appeals allowed.
