Aryan Singh Chouhan, author of this article is a fourth-year student at Institute of Law, Nirma University, Ahmedabad. His main interests lie in arbitration and corporate law.
In its recent judgment, the Hon’ble supreme
court of India has mandated that a simple clause in the partnership deed does
not make it mandatory for the legal heirs of the deceased to follow it. The Hon’ble court
in the present case of S.P.Misra vs Mohd.Laiquddin Khan had to decide on two
fundamental issues:-
1- Whether a clause in partnership deed
concerning legal heirs binds their legal heir?
2- If a decree that is against the
predecessor, can it be executed against their legal heirs?
The basic facts which raised the first
issue was that Late Sri Jay Narayan Mishra and Late Smt. Hashmatunnisa Begum
formed a partnership and in the partnership clause, they had a clause that if a
partner dies then their legal heir would have to join the partnership with the
same right and obligations that their predecessor had.
The respondents (legal heirs of
Hashmatunnisa Begum ) went to court to make this clause void and dissolute the
partnership
The court said that in the present case
the partnership deed was signed between two people and their legal
representatives were not the parties to the contract who made the deed but
merely a third party on whom rights and obligations were imposed and it is
wrong since according to the contract of privity, a contract can confer rights
and obligations only on the parties to it and not on any third party.
Thus, the Hon’ble court held
that the clause in partnership deed was contrary to the statutory provisions of
the Indian Partnership Act, so it is void.
Moving on, the court looked upon the
facts of the case which raised the second issue, where the appellants (legal
heirs of Jay Narayan Mishra) filed a suit against Hashmatunnisa Begum and the court
gave the decree in favour of appellants but before they can enforce it against
hashmatunnisa begum, she died and appellants filed an execution decree against
legal heirs of respondents and the respondents said that the appellants cannot
file an execution decree against them as they were not the party to the
contract.
Court taking the respondents side said
that since the respondents were not the party to the deed and the decree was
against their predecessor it cannot be enforced against them
Critical Analysis of the Judgment
1- Whether a clause in partnership deed
concerning legal heirs binds their legal heir?
Any registered partnership firm in
India is governed by the Indian Partnership Act, 1932 and according to the
section 42(c) of the act there is provision for dissolution of partnership when
a partner dies, it says that a partnership would be dissolved when a partner
dies unless there is a specific provision in the deed that contains the
provision for the existence of the partnership firm even after the partner
dies, but it also says that when there is a partnership between 2 people and if
one partner dies after then it will dissolute the partnership. The court in
MSV Narayanan Chettiar v. MSM Umayal Achi held that
“Where there are only two partners and one of them dies then it would
dissolute the partnership and no legal heir can join the partnership in place
of their predecessor in such a case as when the partner dies, the partnership
ends then and there and if the legal heir wants to join then he had to make a
new partnership deed with fresh rights and liabilities”
The doctrine of privity of contract
also protects the third party from the rights imposed and obligations conferred
in a contract of which they are not a party. In the present case, the deed was
signed between Late Sri Jay Narayan Mishra and Late Smt. Hashmatunnisa Begum
and their legal heirs were not the parties to contract so any right and
duty can’t be imposed on them.
Thus, firstly the partnership dissolved
when the partner died and secondly since the legal heirs were not the
parties to contract they need to follow the deed against their will. So, the court
was right in its decision to make it on the will of the legal heir to
accept the deed or not.
2- If a decree that is against the
predecessor, can it be executed against their legal heirs?
An execution decree is not defined any statute,
but it simply means that it is a process for enforcing or giving effect to the
judgment of the court and it is completed when the judgment creditor gets it an
award.
Section 50 of CPC says that where the
judgment debtor dies without performing his part as ordered in a decree than
the same be executed against the legal representative of the deceased.
But it can be only to the extent of the
property of deceased which has come in the hands of the legal representative
and has not been duly disposed of.
In Prabhakara Adiga v. Gowri one
of the important case where the court tried to answer the question of whether an
execution decree can be maintained against legal
representatives and the court said that
the maxim “actio personalis moritur cum persona” which means that a
personal right of action dies with the person has a very limited application
and that sec 50 CPC would bind the legal representative of deceased to follow
the execution decree.
Also, in Kathiyammakutty Umma vs Thalakkadath Kattil Karappan court held the same view
that if a judgment debtor dies so the decree can be enforced against its legal
representative.
By seeing the judiciary’s view and the statutory provision it can be said that if the judgment debtor dies without fulfilling the decree then, in that case, it can be enforced against its legal representative and in the present case the Hon’ble supreme court has not seen the provisions of law and that it has erred in its judgment relating the enforceability of an execution decree against the legal representatives of deceased on the reason that if they are not a party to contract then why should a decree be enforced against them but they had clearly ignored the provisions of law present and accordingly, an execution decree can be enforced against the legal heirs of a deceased if the deceased died without fulfilling its obligation.
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