Monday, 21 October 2019

Whether clauses of partnership deed will be automatically binding on legal heirs of deceased partners?

 At this stage, it is to be noticed that once the
partnership comes to an end, by virtue of death of
one of the partners, there will not be any
partnership existing in which legal representatives
of late Smt. Hashmatunnisa Begum could be taken in.
The judgment and decree obtained by late Sri Jai
Narayan Misra against late Smt. Hashmatunnisa Begum,
in pursuance of partnership deed dated 14.04.1982,
cannot bind the legal representatives of late Smt.
Hashmatunnisa Begum, as such, decree is not
executable against them. The legal representatives
of late Smt. Hashmatunnisa Begum are not the
partners of the original partnership deed dated
14.04.1982. When such legal representative are not
parties to the contract, such contract cannot confer
rights or impose obligations arising under it on any
third party, except parties to it. No one but the

parties to the contract can be entitled under it or
born by it. Such principle is known as ‘Privity of
Contract’. When the partnership stands dissolved by
operation of law under Section 42(c) of the Indian
Partnership Act, 1932, the question of execution in
pursuance of the decree does not arise. There cannot
be any contract unilaterally without acceptance and
agreement by the legal heirs of the deceased
partner. If there are any clauses in the agreement,
entered into between the original partners, against
the third parties, such clauses will not bind them,
such of the clauses in the partnership deed, which
run contrary to provisions of Indian Partnership
Act, 1932, are void and unenforceable. Such clauses
are also opposed to public policy.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.3311 OF 2015

S.P. Misra Vs  Mohd. Laiquddin Khan 

Coram:
R.Subhash Reddy,J.
Dated: October 18,2019

1. This civil appeal is filed by the appellants,
in Civil Revision Petition No. 4894 of 2006, dated
09.04.2009, passed by the High Court of Judicature,
Andhra Pradesh at Hyderabad, whereby the High Court
has confirmed the order dated 01.02.2006, in E.A.
No. 6 of 2005 in E.P. No. 122 of 2003 in O.S. No.
580 of 1980, passed by the II Senior Civil Judge,
City Civil Court, Hyderabad.

2. By the aforesaid order, learned II Senior Civil
Judge, City Civil Court, Hyderabad, allowed the
application filed by the respondents, under Section
47 of the Code of Civil Procedure, 1908 (for short,
‘C.P.C.’).
3. All the appellants herein are legal heirs of
late Sri Jai Narayan Misra and all the respondents
herein are legal heirs of late Smt. Hashmatunnisa
Begum. During the life time of late Sri Jai Narayan
Misra and late Smt. Hashmatunnisa Begum, they
entered into a partnership deed dated 14.04.1982. As
stated in the partnership deed, late Smt.
Hashmatunnisa Begum is the owner of open land with
structures, situated in Paigah Compound bearing No.
156-159 ad-measuring 22,253 square meters
approximately. After obtaining exemption from
Government of India, Ministry of Defence, New Delhi,
under Clause 20(1)(b) of the Urban Land (Ceiling and
Regulation) Act, 1976, both the partners have
entered into partnership, for carrying on business
in real estate, by developing the land which forms
the part of Paigah Compound. It appears that a major
portion of the land is already developed, but
dispute is to an extent of 3381 square meters, which
is claimed by the original plaintiff, forming part
of property No.156-159 of Paigah Compound. There
were only two partners, as per the partnership deed.
4. The plaintiff in Original Suit No. 580 of 1988,
filed by late Sri Jai Narayan Misra, died on
04.01.2001, whereas the predecessor of the
respondents, late Smt. Hashmatunnisa Begum, died on
17.05.1996. During the life time, the predecessor of
the appellants late Sri Jai Narayan Misra, has filed
a Suit in O.S No. 580 of 1988, on the file of II
Additional Judge, City Civil Court, Hyderabad,
claiming the following reliefs:
“1. to grant permanent injunction
against the defendant restraining the
defendant and all the persons
claiming through the defendant from
preventing the plaintiff from
carrying out the work of preparing
layout plan, developing the property
and sale thereof, in an extent of
3,381 square meters;
2. to grant mandatory injunction
directing the defendant to sign the
layout and other documents
submitting to the Cantonment Board
for sanction in respect of the land
admeasuring 3,381 square meteres
forming part of Paigah Colony
situated at S.P. Road, Secunderabad,
and for costs.”

5. The said Suit was decreed on 14.07.1993, by the
Trial Court, granting the following reliefs:
“1. the defendant and all the
persons claiming through the
defendant be and that are hereby
permanently restrained from carrying
the work of developing the property
and sale thereof in respect of the
suit schedule property;
2. the defendant is hereby directed
to sign the layout plan and other
documents for submitting to the
Cantonment Board, Secunderabad for
sanction in respect of the suit
schedule property;
3. Each party shall bear their own
costs.”
6. After death of the original plaintiff, the legal
heirs of the plaintiffs have filed Execution
Petition before the Trial Court, by claiming the
following reliefs:
“1. to direct the J.Dr. No.2 to 4 to
sign the layout plan for submitting
to the Cantonment Board, Secunderabad
for sanction in respect of the suit
schedule property;
2. to sign new/revised layout
drawing, earmarking the additional
land for development;
3. to break the existing boundary
wall at the appropriate place to
enable to have access into the
additional land for which layout plan
is being submitted;

4. to sign a letter to Cantonment
Board, undertaking not to claim any
water connection for the next 10
years;
5. to sign all other documents that
may be required now or in future in
connection with the development of
the additional land;
6. to join in executing sale deeds
and present the memo for
registration, in favour of purchasers
of the suit land, all under Order XXI
Rules 32 and 34 and Section 151
C.P.C.”
7. In the following Execution Petition, respondents
have filed an application under Section 47 of
C.P.C., in E.A. No. 6 of 2005, before the Court of
II Senior Civil Judge, City Civil Court, Hyderabad,
claiming the relief, to dismiss the Execution
petition, as the decree is void and un-executable.
By a well reasoned Order, dated 01.02.2006, passed
by the II Senior Civil Judge, City Civil Court,
Hyderabad, allowed the application filed under
Section 47 of C.P.C. The said Order is challenged by
the respondents, by way of Civil Revision Petition
No. 4894 of 2006, before the High Court of
Judicature, Andhra Pradesh at Hyderabad. The High
Court, vide impugned order, confirmed the Order

passed by the Trial Court, holding that the decree
obtained against the predecessors of the
respondents, namely, late Smt. Hashmatunnisa Begum,
is not executable against the legal representatives.
8. We have heard Sri. A.Subba Rao, learned counsel
appearing for the appellants and Sri. B. Adi
Narayana Rao, learned senior counsel appearing for
the respondents, assisted by Sri. Venkateswara Rao
Anumolu, Advocate on-record.
9. It is contended by Sri. A.Subba Rao, learned
counsel appearing for the appellants that as per the
terms of the partnership deed, in the event of death
of either of the party, their legal representatives
shall automatically become partners in the
partnership firm and they shall continue to act as
partners of the firm till the venture envisaged
under partnership is completed and such legal
representatives, who become partners, shall have
same rights and shall be subject to same liabilities
and responsibilities, as the deceased partner. The
relevant clauses of the partnership deed dated
14.04.1982, read as under:

“This partnership shall not be
dissolved till the completion of the
venture except by mutual agreement
reduced in writing.
The parties hereby expressly and
specifically agree that in the event
of death of either party their
respective legal representatives
shall automatically become partners
in the partnership firm and they
shall continue to act as partners of
the firm till the venture envisaged
under this partnership is completed
and such legal representatives who
become partners shall have the same
rights and shall be subject to the
same liabilities and responsibilities
as the deceased partner.”
10. By referring to the contents of the partnership
deed, it is contended by Sri. A. Subba Rao, learned
counsel appearing for the appellants that the decree
obtained by the predecessor of the appellants is
executable and against the respondents, who are the
legal representatives of the original partner. The
Trial Court as well as the High Court have
erroneously held that the decree which has become
final, is not executable against the respondents.
11. Learned counsel has placed strong reliance on a
judgment of this Court, in the case of Prabhakara
Adiga v. Gowri and Others1.
1 (2017) 4 SCC 97

12. On the other hand, it is the contention of Sri.
B. Adi Narayana Rao, learned senior counsel
appearing for the respondents that as there were
only two partners and on death of one of the
partners, partnership stands dissolved, in view of
the provision under Section 42(c) of the Partnership
Act, 1932. It is submitted that when the right
litigated upon is readable, only in such event,
decree can be executed. It is submitted that
respondents were not the partners in the partnership
deed and if, any clause in the partnership deed
which runs contrary to statutory provisions are
void, such clauses are against the public policy. It
is submitted that when the partnership itself stands
dissolved on death of one of the partners, the
appellants claiming right under a decree obtained by
the original partner, cannot be executed against the
respondents.
13. In this case, it is not in dispute that as per
the original partnership deed there were only two
partners, namely, late Smt. Hashmatunnisa Begum, who
is the owner of the land/predecessor of the

respondents and late Sri Jai Narayan Misra, who is
the predecessor of the appellants herein.
14. From the Suit filed in O.S. No. 580 of 1988, the
original plaintiff has obtained a decree on
14.07.1993 from the Trial Court, which granted the
reliefs as under:
“1. the defendant and all the persons
claiming through the defendant be and
that are hereby permanently
restrained from carrying the work of
developing the property and sale
thereof in respect of the suit
schedule property;
2. the defendant is hereby directed
to sign the layout plan and other
documents for submitting to the
Cantonment Board, Secunderabad for
sanction in respect of the suit
schedule property;
3. Each party shall bear their own
costs.”
15. From a perusal of the relief sought for in the
Execution Petition, by the legal heirs of the
original plaintiff, itself makes it clear that
reliefs sought in Execution Petition are going
beyond the scope of the decree. It is fairly wellsettled
that, the Executing Court cannot travel
beyond the decree. The only question which fell for
consideration before the Trial Court in E.A. No. 6

of 2005, was whether the decree obtained by the
predecessor of the appellants, can be executed
against the appellants or not. Section 42 of the
Partnership Act, 1932, deals with the situations of
dissolution of partnership, on happening of certain
contingencies. As per the said provision, subject to
contract between the partners, a firm is dissolved
when:
(a) if constituted for a fixed term, by the expiry
of that term;
(b) if constituted to carry out one or more
adventures or undertakings, by the completion
thereof;
(c) by the death of a partner; and
(d) by the adjudication of a partner as an
insolvent.
16. In the case on hand, as much as there were only
two partners, the partnership itself stand
dissolved, in view of death of a partner.
17. It is true that as per the deed of partnership,
the partners have agreed, in the event of death of
either party, their respective legal representatives
shall automatically become partners in the

partnership firm and they shall continue to act as
partners of the firm, till the venture envisaged
under said partnership is completed and such legal
representatives who become partners shall have the
same rights and shall be subject to same liabilities
and responsibilities, as the deceased partner.
18. At this stage, it is to be noticed that once the
partnership comes to an end, by virtue of death of
one of the partners, there will not be any
partnership existing in which legal representatives
of late Smt. Hashmatunnisa Begum could be taken in.
The judgment and decree obtained by late Sri Jai
Narayan Misra against late Smt. Hashmatunnisa Begum,
in pursuance of partnership deed dated 14.04.1982,
cannot bind the legal representatives of late Smt.
Hashmatunnisa Begum, as such, decree is not
executable against them. The legal representatives
of late Smt. Hashmatunnisa Begum are not the
partners of the original partnership deed dated
14.04.1982. When such legal representative are not
parties to the contract, such contract cannot confer
rights or impose obligations arising under it on any
third party, except parties to it. No one but the

parties to the contract can be entitled under it or
born by it. Such principle is known as ‘Privity of
Contract’. When the partnership stands dissolved by
operation of law under Section 42(c) of the Indian
Partnership Act, 1932, the question of execution in
pursuance of the decree does not arise. There cannot
be any contract unilaterally without acceptance and
agreement by the legal heirs of the deceased
partner. If there are any clauses in the agreement,
entered into between the original partners, against
the third parties, such clauses will not bind them,
such of the clauses in the partnership deed, which
run contrary to provisions of Indian Partnership
Act, 1932, are void and unenforceable. Such clauses
are also opposed to public policy.
19. In the case of Prabhakara Adiga v. Gowri and
Others1, on which strong reliance is placed by Sri.
A.Subba Rao, learned counsel appearing for the
appellants, would not render any assistance to
support his case, having regard to facts of the case
on hand and the rights litigated in the Suit in O.S.
No. 580 of 1988, before the II Senior Civil Judge,
City Civil Court, Hyderabad. In the case of

Prabhakara Adiga1, plaintiff was allotted suit
scheduled property in a registered partnership deed
and he was in possession thereof. The defendant, on
partition in the family, had been allotted a portion
of the land. When there was interference on the suit
scheduled property, which fell to the share of
plaintiff, as per the registered partnership deed, a
suit for permanent injunction was filed.
20. In the aforesaid case, after suffering decree
for permanent injunction, judgment-debtor died. When
the heirs of the judgment-debtor in violation of the
decree for permanent injunction tried to forcibly
dispossesess the decree-holder, decree-holder filed
the Execution Petition. The Executing Court held
that heirs of the judgment-debtor were not bound by
the decree. When such order is questioned before the
High Court, the Writ Petition is allowed. The High
Court held that decree of permanent injunction
cannot be enforced against the legal heirs of
judgment-debtor, as an injunction does not travel
with the land. This Court, by referring to provision
under Section 50 of C.P.C. read with Order 21 Rule
32 of C.P.C, has held that such a decree can be

executed against the legal representatives. But, at
the same time, the paragraph 25 of the judgment,
which is relied on by Sri. B. Adi Narayana Rao,
learned senior counsel appearing for the
respondents, reads as under:
“25. In our considered opinion the
right which had been adjudicated in
the suit in the present matter and
the findings which have been recorded
as basis for grant of injunction as
to the disputed property which is
heritable and partible would enure
not only to the benefit of the legal
heir of decree-holders but also would
bind the legal representatives of the
judgment-debtor. It is apparent from
Section 50 CPC that when a judgmentdebtor
dies before the decree has
been satisfied, it can be executed
against legal representatives.
Section 50 is not confined to a
particular kind of decree. Decree for
injunction can also be executed
against legal representatives of the
deceased judgment-debtor. The maxim
“actio personalis moritur cum
persona” is limited to certain class
of cases as indicated by this Court
in Girijanandini Devi v. Bijendra
Narain Choudhary [Girijanandini Devi
v. Bijendra Narain Choudhary, AIR
1967 SC 1124] and when the right
litigated upon is heritable, the
decree would not normally abate and
can be enforced by legal
representatives of decree-holder and
against the judgment-debtor or his
legal representatives. It would be
against the public policy to ask the
decree-holder to litigate once over

again against the legal
representatives of the judgmentdebtor
when the cause and injunction
survives. No doubt, it is true that a
decree for injunction normally does
not run with the land. In the absence
of statutory provisions it cannot be
enforced. However, in view of the
specific provisions contained in
Section 50 CPC, such a decree can be
executed against legal
representatives.”
21. From a reading of the aforesaid judgment, it is
clear that the executable decree depend on the
rights litigated by the parties. In the case on
hand, the original decree was obtained against the
predecessor of the respondents, who was party to
partnership deed. In view of death of one of the
partners, the partnership itself stands dissolved
statutorily, by operation of law, in view of
provision under Section 42(c) of the Indian
Partnership Act, 1932. When the respondents are not
parties to the partnership firm, they are not bound
by the decree obtained by the predecessor of the
appellant. More so, when it is a case of the
respondents that they have not derived any assets
and liabilities arising out of the partnership firm,

decree obtained by the original plaintiff is not
executable against the respondents.
22. It is also to be noticed that during the life
time of late Smt. Hashmatunnisa Begum, she also
filed Suit in O.S. No. 1061 of 1990 on the file of
VII Senior Civil Judge, City Civil Court, Hyderabad,
for dissolution of partnership firm constituted
under deed of partnership dated 26.06.1977 and also
for rendition of accounts. It is true that same is a
different partnership but, parties are same. In such
suit filed by late Smt.Hashmatunnisa Begum,
predecessor of the appellants Late Sri Jai Narayan
Misra, filed IA No. 1649 of 1997, to dismiss the
said suit, claiming that in view of death of one of
the partners, during the pendency of the suit, there
is no room for third party to be introduced. It was
the case of late Sri Jai Narayan Misra that
partnership stood dissolved. However, in a similar
situation arising out of partnership deed dated
14.04.1982, the appellants claim the decree is
executable against the respondents, who are the
legal heirs of the judgment-debtor. As much as, we
are of the view that the respondents were not

parties to the partnership deed and that the
partnership stands dissolved, in view of death of
one of the partners, the respondents have not
derived the benefit of assets of the partnership
firm, the decree obtained by the predecessor of the
appellants, is not executable against the
respondents herein.
23. In view of the same, we are of the view that the
Trial Court has rightly allowed the application
filed by the respondents under Section 47 of C.P.C.
and there is no error committed by the High Court,
in confirming such order by dismissing the Civil
Revision Petition filed by the appellants herein.
24. We do not find any merit in this appeal so as to
interfere in the impugned well reasoned order.
25. This civil appeal is, accordingly, dismissed,
with no order as to costs.
...................J.
[Indu Malhotra]
....................J.
[R. Subhash Reddy]
New Delhi;
October 18,2019

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