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Synopsis

The Supreme Court has held that legal representatives of a deceased developer are not liable to discharge the obligations which had to be performed by him in his personal capacity.

A bench of Justices B V Nagarathna and Ujjal Bhuyan said 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.

"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," the bench said.

The apex court explained the legal position while setting aside a portion of the judgment of the National Consumer Disputes Redressal Commission, state commission and the district, acting on appeals filed by legal representatives of Vinayak Purushottam Dube.

The matter arose out of alleged breaches of development agreement entered into between complainants and the opposite party, leading to filing of complaint under the Consumer Protection Act.

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.

The NCDRC upheld the order of payment of Rs 1.65 lakhs and Rs 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.

In its review order, the NCDRC 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. 

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 appellants contended they 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 personally against the opposite party who is since deceased. 

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, they said.

The complainants said they 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.

The bench, however, said 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.

"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," the bench said.

"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," the bench added.

Referring to the Code of Civil Procedure, the bench said the legal representatives of a deceased are liable only to the extent of the estate which they inherit.

The court thus held 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.

The bench, however, said the direction for payments should be made by the legal representatives from the estate of the deceased opposite party.