Vinayak Purshottam Dube (Deceased) through LRs. Vs. Jayashree Padamkar Bhat [Supreme Court, March 1, 2024]
Background
This Supreme Court case addressed whether the legal representatives (LRs) of a deceased sole proprietor are liable to fulfill contractual obligations arising from a Development Agreement that were personal in nature. Vinayak Purshottam Dube, the original opposite party and sole proprietor, had entered into a Development Agreement with the complainants, promising them flats and cash consideration. Alleging breach of contract and deficiencies in construction, the complainants approached consumer forums for relief. During the pendency of the proceedings, Dube died, and his wife and sons were brought on record as his LRs.
Proceedings and Lower Court Findings
The District Forum and State Commission directed the developer to perform certain obligations and pay amounts to the complainants. The National Consumer Disputes Redressal Commission (NCDRC) upheld these directions and held the LRs liable for the performance of both monetary and personal obligations under the contract.
Key Legal Issue
The central issue before the Supreme Court was whether legal representatives of a deceased sole proprietor can be compelled to discharge contractual obligations that are personal in nature, such as those requiring the deceased’s individual skills or expertise, or whether their liability is limited to the extent of the estate inherited from the deceased.
Supreme Court’s Findings
The Court clarified that under Sections 37 and 40 of the Indian Contract Act, 1872, and Section 306 of the Indian Succession Act, 1925, personal obligations that depend on the promisor’s skills or expertise cease upon their death. Legal representatives cannot be compelled to perform such personal obligations.
However, legal representatives are liable for monetary claims or obligations only to the extent of the estate inherited from the deceased. If a decree is passed against the deceased, it can be executed against the estate in the hands of the LRs, but not beyond that.
The Court distinguished between obligations that “run with the property” (such as certain injunctions or property-related decrees) and purely personal obligations. Only the former can bind legal representatives if they relate to inherited property and the LRs are in possession of it.
Decision and Outcome
The Supreme Court allowed the appeal, setting aside the NCDRC’s finding that the LRs were liable for personal obligations of the deceased. The Court held that the LRs’ liability is limited to the estate received and does not extend to personal contractual obligations of the deceased sole proprietor.
Significance
This judgment reaffirms the principle that heirs are not personally bound to fulfill the deceased’s contractual obligations that are personal in nature, but can be held liable for monetary claims only to the extent of the estate inherited. The decision clarifies the scope of legal representatives’ liability in consumer and contract disputes involving deceased parties.
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