
RELEVANT FACTS
The appellant(s) allegedly failed to pay the respondent no.1 investment sum. The respondent had invested Rs. 5 lakhs in the partnership firm, in which the appellant’s spouse was a partner, to be repaid after 120 months with interest at 18% per annum. Respondent No. 1 requested the premature release of the invested funds, but was told to wait until the maturity term. However, when the amount was not refunded even after the maturity period expired, he filed a consumer complaint requesting the same amount.
CASE WAS BROUGHT BY
The respondent No.1 filed a complaint with the DCDRF in Dharwad, Karnataka, saying that he deposited on May 21, 2002. He requested premature payment, but it was denied on the grounds that it would be paid at maturity. The respondent No.1 waited for the maturity and claimed again, but the payment was not made, prompting him to submit a notice on 12.02.2014 requesting the opposite parties to make the payment. However, because the payment was not made, a complaint was filed with the DCDRF citing inadequacy in service.
ARGUMENTS
The appellants asserted before the Supreme Court that the transaction to invest in the partnership firm was commercial, and hence the consumer complaint seeking recovery of respondent no. 1’s investment could not be maintained under the 1986 Act. The appellants also maintained that the complainant could not seek recovery of the investment because respondent no.1 was a partner in the firm at the time of investment. Respondent no.1 asserted that the appellants’ reluctance to repay the investment constituted a deficit of service, and so the complaint was valid. It was also the argument of respondent No.1 that the appellants herein inherited the estate of the Managing Partner Basavaraj Uppin and hence cannot avoid the need to make the amount owed to respondent No.1.
OBSERVATIONS MADE BY SUPREME COURT
The court found force in the appellant’s arguments and concluded that the case seeking recovery of the investment would not be viable under the previous act. The court recognized that respondent no.1 would not gain from the complaint because he was a partner in the partnership firm at the time he made the investment.
“In our considered opinion, once there was a registered partnership deed dated 27.05.1996, there is no further document placed on record by the complainant-respondent No.1 regarding the dissolution of the said registered deed which continued till the time when the investment was made by the complainant respondent No.1 on 21.05.2002 and hence the complainant respondent No.1 would be deemed to be partner of the firm.”, the court observed.”
Also,
“It was a commercial transaction (investment) and therefore also would be outside the purview of the 1986 Act. Commercial disputes cannot be decided in summary proceeding under the 1986 Act but the appropriate remedy for recovery of the said amount, if any, admissible to the complainant respondent No.1, would be before the Civil Court. The complaint was thus not maintainable.”, the Bench comprising Justices Vikram Nath and Satish Chandra Sharma said.
The aforementioned statement was made in the judgment signed by Justice Vikram Nath while determining the civil appeal filed by the appellants (legal heirs of the firm’s partner) against the decision of the National Consumer Dispute Redressal Commission (NCDRC).
Liability of a Deceased Partner Does Not Pass to Its Legal Heirs
The appellants’ claim that they cannot avoid the Managing Partner’s obligation because they are the Managing Partner’s legal heirs was also denied by the court. Respondent no. 1 was the complainant in this case. The court declared that upon the death of a partner, the person’s legal heirs are not responsible for any obligations of the firm.
“there was no evidence on record to show that a fresh partnership deed was executed reconstituting the firm in which the present appellants had become partners so as to take upon themselves the assets and liabilities of the firm. The law is well settled that legal heirs of a deceased partner do not become liable for any liability of the firm upon the death of the partner.”, the court observed.
The appeal was granted and the complaint brought by the complainant/respondent No. 1 was set aside on the basis of the aforementioned premise.
CASE TITLE: ANNAPURNA B.UPPIN & ORS. VERSUS MALSIDDAPPA & ANR.
Name: Riya Shukla, COURSE: LL.M. (ONE YEAR), COLLEGE: MUIT, Noida, INTERN UNDER LEGAL VIDHIYA.
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