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 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: 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]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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