S. P. MISRA & ORS. versus MOHD. LAIQUDDIN KHAN & ANR. on 18 October 2019

[2019] 13 S.C.R. 497

S. P. MISRA & ORS.

v.

MOHD. LAIQUDDIN KHAN & ANR.

(Civil Appeal No. 3311 of 2015)

OCTOBER 18, 2019

[INDU MALHOTRA AND R. SUBHASH REDDY, JJ.]

Indian Partnership Act, 1932 – s.42(c) – Predecessor-in-interest of the appellants and that of the respondents entered intopartnership for carrying on business in real estate, by developingthe land which formed part of Paigah Compound – Predecessor-in-interest of the respondents is the owner of open land withstructures situated in Paigah Compound bearing no.156-159 ad-measuring 22,253 sq. mtrs. approx. – Predecessor of the appellantsfiled suit – Major portion of the land was developed– Dispute to anextent of 3381 sq. mtrs., claimed by the plaintiff, forming part ofProperty No.156-159 of Paigah Compound – Suit decreed –Predecessor of the appellants and the respondents died – Appellantsfiled Execution Petition before the Trial Court – In the ExecutionPetition, respondents filed application u/s.47, CPC, 1908 – Allowed– Challenged by the respondents – Allowed by the High Court – Onappeal, held: Reliefs sought in execution petition are going beyondthe scope of the decree – Executing Court cannot travel beyond thedecree – In the present case, there were only two partners, thepartnership itself stand dissolved, in view of death of a partner –Once the partnership comes to an end, by virtue of death of one ofthe partners, there will not be any partnership existing in whichlegal representatives of late respondents could be taken in – Decreeobtained by late predecessor of the appellants against latepredecessor of the respondents, in pursuance of the partnershipdeed, cannot bind the legal representatives of late respondents, assuch, the decree is not executable against them – When such legalrepresentatives are not parties to the contract, such contract cannotconfer rights or impose obligations arising under it on any thirdparty, except parties to it – Executable decree depend on the rightslitigated by the parties – Original decree was obtained against thepredecessor of the respondents, who was party to partnership deed–

497

A

B

C

D

EF

G

H

AThus, when the partnership stands dissolved statutorily, by operationof law, in view of provision u/s. 42(c) of the 1932 Act, the questionof execution in pursuance of the decree does not arise – No errorcommitted by the High Court by dismissing the Civil Revision Petitionfiled by the appellants – Code of Civil Procedure, 1908 – s.47.

BDismissing the appeal, the Court

HELD : 1.1 In the case on hand, as much as there wereonly two partners, the partnership itself stand dissolved, in viewof death of a partner. It is true that as per the deed of partnership,the partners have agreed, in the event of death of either party,Ctheir respective legal representatives shall automatically becomepartners in the partnership firm and they shall continue to act aspartners of the firm, till the venture envisaged under saidpartnership is completed and such legal representatives whobecome partners shall have the same rights and shall be subjectto same liabilities and responsibilities, as the deceased partner.DOnce the partnership comes to an end, by virtue of death of oneof the partners, there will not be any partnership existing in whichlegal representatives of late predecessor-in-interest of therespondents could be taken in. The judgment and decree obtainedby late predecessor-in-interest of the appellants against lateEpredecessor-in-interest of the respondents, in pursuance ofpartnership deed dated 14.04.82, cannot bind the legalrepresentatives of late predecessor-in-interest of therespondents, as such, decree is not executable against them. Thelegal representatives of late predecessor-in-interest of therespondents are not the partners of the original partnership deedFdated 14.04.82. When such legal representative are not partiesto the contract, such contract cannot confer rights or imposeobligations arising under it on any third party, except parties toit. No one but the parties to the contract can be entitled under itor born by it. Such principle is known as ‘Privity of Contract’.GWhen the partnership stands dissolved by operation of law underSection 42(c) of the Indian Partnership Act, 1932, the question ofexecution in pursuance of the decree does not arise. There cannotbe any contract unilaterally without acceptance and agreementby the legal heirs of the deceased partner. If there are any clausesin the agreement, entered into between the original partners,H

against the third parties, such clauses will not bind them, such ofthe clauses in the partnership deed, which run contrary toprovisions of Indian Partnership Act, 1932, are void andunenforceable. Such clauses are also opposed to public policy.[Paras 16-18] [505-A-G]

1.2 The executable decree depend on the rights litigatedby the parties. In the case on hand, the original decree wasobtained against the predecessor of the respondents, who wasparty to partnership deed. In view of death of one of the partners,the partnership itself stands dissolved statutorily, by operationof law, in view of provision under Section 42(c) of the IndianPartnership Act, 1932. When the respondents are not parties tothe partnership firm, they are not bound by the decree obtainedby the predecessor of the appellant. More so, when it is a case ofthe respondents that they have not derived any assets andliabilities arising out of the partnership firm, decree obtained bythe original plaintiff is not executable against the respondents.During the life time of late predecessor-in-interest of therespondents, she also filed Suit in O.S. No. 1061 of 1990 on thefile of VII Senior Civil Judge, City Civil Court, Hyderabad, fordissolution of partnership firm constituted under deed ofpartnership dated 26.06.1977 and also for rendition of accounts.It is true that same is a different partnership but, parties aresame. In such suit filed by late predecessor-in-interest of therespondents, predecessor of the appellants, filed IA No. 1649 of1997, to dismiss the said suit, claiming that in view of death ofone of the partners, during the pendency of the suit, there is noroom for third party to be introduced. It was the case of latepredecessor-in-interest of the appellants that partnership stooddissolved. However, in a similar situation arising out ofpartnership deed dated 14.04.1982, the appellants claim thedecree is executable against the respondents, who are the legalheirs of the judgment-debtor. The respondents were not partiesto the partnership deed and the partnership stands dissolved, inview of death of one of the partners, the respondents have notderived the benefit of assets of the partnership firm, the decreeobtained by the predecessor of the appellants, is not executableagainst the respondents. The Trial Court rightly allowed the A

B

C

D

EF

G

H

Aapplication filed by the respondents under Section 47 of C.P.C.and there is no error committed by the High Court, in confirmingsuch order by dismissing the Civil Revision Petition filed by theappellants herein. [Paras 21-23] [507-C-H; 508-A]

Prabhakara Adiga v. Gowri and Others (2017) 4 SCCB97 : [2017] 1 SCR 724 – referred to.

Case Law Reference

[2017] 1 SCR 724referred toPara 19

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 3311of 2015.C

From the Judgment and Order 09.04.2009 of the High Court ofAndhra Pradesh at Hyderabad in Civil Revision Petition No. 4894 of2006.

A. Subba Rao, Adv. for the Appellants.

D

B. Adi Narayana Rao, Sr. Adv., Venkateswara Rao Anumolu,Chandra Mohan Anisetty, Advs. for the Respondents.

The Judgment of the Court was delivered by

R. SUBHASH REDDY, J.

E

1. This civil appeal is filed by the appellants, in Civil RevisionPetition No. 4894 of 2006, dated 09.04.2009, passed by the High Courtof Judicature, Andhra Pradesh at Hyderabad, whereby the High Courthas 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 CivilFJudge, City Civil Court, Hyderabad.

2. By the aforesaid order, learned II Senior Civil Judge, City CivilCourt, Hyderabad, allowed the application filed by the respondents, underSection 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 NarayanGMisra and all the respondents herein are legal heirs of late Smt.Hashmatunnisa Begum. During the life time of late Sri Jai NarayanMisra and late Smt. Hashmatunnisa Begum, they entered into apartnership deed dated 14.04.1982. As stated in the partnership deed,late Smt. Hashmatunnisa Begum is the owner of open land with H

structures, situated in Paigah Compound bearing No. 156-159 ad-measuring 22,253 square meters approximately. After obtaining exemptionfrom Government of India, Ministry of Defence, New Delhi, under Clause20(1)(b) of the Urban Land (Ceiling and Regulation) Act, 1976, both thepartners have entered into partnership, for carrying on business in realestate, by developing the land which forms the part of Paigah Compound.It appears that a major portion of the land is already developed, butdispute is to an extent of 3381 square meters, which is claimed by theoriginal plaintiff, forming part of property No.156-159 of PaigahCompound. There were only two partners, as per the partnership deed.

4. The plaintiff in Original Suit No. 580 of 1988, filed by late SriJai Narayan Misra, died on 04.01.2001, whereas the predecessor of therespondents, late Smt. Hashmatunnisa Begum, died on 17.05.1996. Duringthe 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 restrainingthe defendant and all the persons claiming through the defendantfrom preventing the plaintiff from carrying out the work ofpreparing layout plan, developing the property and sale thereof, inan extent of 3,381 square meters;

2. to grant mandatory injunction directing the defendant to signthe layout and other documents submitting to the CantonmentBoard for sanction in respect of the land admeasuring 3,381 squaremeteres 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 thedefendant be and that are hereby permanently restrained fromcarrying the work of developing the property and sale thereof inrespect of the suit schedule property;

2. the defendant is hereby directed to sign the layout plan andother 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.”

A

B

C

D

E

F

G

H

A6. After death of the original plaintiff, the legal heirs of the plaintiffshave filed Execution Petition before the Trial Court, by claiming thefollowing reliefs:

“1. to direct the J.Dr. No.2 to 4 to sign the layout plan for submittingto the Cantonment Board, Secunderabad for sanction in respectBof the suit schedule property;

2. to sign new/revised layout drawing, earmarking the additionalland for development;

3. to break the existing boundary wall at the appropriate place toenable to have access into the additional land for which layoutCplan is being submitted;

4. to sign a letter to Cantonment Board, undertaking not to claimany water connection for the next 10 years;

5. to sign all other documents that may be required now or inDfuture in connection with the development of the additional land;

6. to join in executing sale deeds and present the memo forregistration, in favour of purchasers of the suit land, all underOrder XXI Rules 32 and 34 and Section 151 C.P.C.”

7. In the following Execution Petition, respondents have filed anEapplication under Section 47 of C.P.C., in E.A. No. 6 of 2005, beforethe Court of II Senior Civil Judge, City Civil Court, Hyderabad, claimingthe 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 theII Senior Civil Judge, City Civil Court, Hyderabad, allowed the applicationfiled under Section 47 of C.P.C. The said Order is challenged by theFrespondents, by way of Civil Revision Petition No. 4894 of 2006, beforethe High Court of Judicature, Andhra Pradesh at Hyderabad. The HighCourt, vide impugned order, confirmed the Order passed by the TrialCourt, holding that the decree obtained against the predecessors of therespondents, namely, late Smt. Hashmatunnisa Begum, is not executableGagainst the legal representatives.

8. We have heard Sri. A.Subba Rao, learned counsel appearingfor the appellants and Sri. B. Adi Narayana Rao, learned senior counselappearing for the respondents, assisted by Sri. Venkateswara RaoAnumolu, Advocate on-record.

H

9. It is contended by Sri. A.Subba Rao, learned counsel appearingfor the appellants that as per the terms of the partnership deed, in theevent of death of either of the party, their legal representatives shallautomatically become partners in the partnership firm and they shallcontinue to act as partners of the firm till the venture envisaged underpartnership is completed and such legal representatives, who becomepartners, shall have same rights and shall be subject to same liabilitiesand responsibilities, as the deceased partner. The relevant clauses of thepartnership deed dated 14.04.1982, read as under:

“This partnership shall not be dissolved till the completion of theventure except by mutual agreement reduced in writing.

The parties hereby expressly and specifically agree that in theevent of death of either party their respective legal representativesshall automatically become partners in the partnership firm andthey shall continue to act as partners of the firm till the ventureenvisaged under this partnership is completed and such legalrepresentatives who become partners shall have the same rightsand shall be subject to the same liabilities and responsibilities asthe deceased partner.”

10. By referring to the contents of the partnership deed, it iscontended by Sri. A. Subba Rao, learned counsel appearing for theappellants that the decree obtained by the predecessor of the appellantsis executable and against the respondents, who are the legalrepresentatives of the original partner. The Trial Court as well as theHigh Court have erroneously held that the decree which has becomefinal, is not executable against the respondents.

11. Learned counsel has placed strong reliance on a judgment ofthis Court, in the case of Prabhakara Adiga v. Gowri and Others[1].

12. On the other hand, it is the contention of Sri. B. Adi NarayanaRao, learned senior counsel appearing for the respondents that as therewere only two partners and on death of one of the partners, partnershipstands dissolved, in view of the provision under Section 42(c) of thePartnership Act, 1932. It is submitted that when the right litigated uponis readable, only in such event, decree can be executed. It is submittedthat respondents were not the partners in the partnership deed and if,any clause in the partnership deed which runs contrary to statutory 1 (2017) 4 SCC 97

A

B

C

D

E

F

G

H

1 (2017) 4 SCC 97

A

B

C

D

E

F

G

H

Aprovisions are void, such clauses are against the public policy. It issubmitted that when the partnership itself stands dissolved on death ofone of the partners, the appellants claiming right under a decree obtainedby the original partner, cannot be executed against the respondents.

13. In this case, it is not in dispute that as per the original partnershipBdeed there were only two partners, namely, late Smt. HashmatunnisaBegum, who is the owner of the land/predecessor of the respondentsand late Sri Jai Narayan Misra, who is the predecessor of the appellantsherein.

14. From the Suit filed in O.S. No. 580 of 1988, the original plaintiffChas obtained a decree on 14.07.1993 from the Trial Court, which grantedthe reliefs as under:

“1. the defendant and all the persons claiming through thedefendant be and that are hereby permanently restrained fromcarrying the work of developing the property and sale thereof inDrespect of the suit schedule property;2. the defendant is hereby directed to sign the layout plan andother 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.”

E

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 reliefssought in Execution Petition are going beyond the scope of the decree.It is fairly well-settled that, the Executing Court cannot travel beyondthe decree. The only question which fell for consideration before theFTrial Court in E.A. No. 6 of 2005, was whether the decree obtained bythe predecessor of the appellants, can be executed against the appellantsor not. Section 42 of the Partnership Act, 1932, deals with the situationsof dissolution of partnership, on happening of certain contingencies. Asper the said provision, subject to contract between the partners, a firm isdissolved when:G

(a) if constituted for a fixed term, by the expiry of that term; (b) if constituted to carry out one or more adventures orundertakings, by the completion thereof;

(c) by the death of a partner; and

H

(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 haveagreed, in the event of death of either party, their respective legalrepresentatives shall automatically become partners in the partnershipfirm and they shall continue to act as partners of the firm, till the ventureenvisaged under said partnership is completed and such legalrepresentatives who become partners shall have the same rights andshall be subject to same liabilities and responsibilities, as the deceasedpartner.

18. At this stage, it is to be noticed that once the partnership comesto an end, by virtue of death of one of the partners, there will not be anypartnership existing in which legal representatives of late Smt.Hashmatunnisa Begum could be taken in. The judgment and decreeobtained by late Sri Jai Narayan Misra against late Smt. HashmatunnisaBegum, in pursuance of partnership deed dated 14.04.1982, cannot bindthe legal representatives of late Smt. Hashmatunnisa Begum, as such,decree is not executable against them. The legal representatives of lateSmt. Hashmatunnisa Begum are not the partners of the originalpartnership deed dated 14.04.1982. When such legal representative arenot parties to the contract, such contract cannot confer rights or imposeobligations arising under it on any third party, except parties to it. No onebut the parties to the contract can be entitled under it or born by it. Suchprinciple is known as ‘Privityof Contract’. When the partnership standsdissolved by operation of law under Section 42(c) of the IndianPartnership Act, 1932, the question of execution in pursuance of thedecree does not arise. There cannot be any contract unilaterally withoutacceptance and agreement by the legal heirs of the deceased partner. Ifthere are any clauses in the agreement, entered into between the originalpartners, against the third parties, such clauses will not bind them, suchof the clauses in the partnership deed, which run contrary to provisionsof Indian Partnership Act, 1932, are void and unenforceable. Such clausesare also opposed to public policy.

19. In the case of Prabhakara Adiga v. Gowri and Others[1], onwhich strong reliance is placed by Sri. A.Subba Rao, learned counselappearing for the appellants, would not render any assistance to support A

B

C

D

E

F

G

H

Ahis case, having regard to facts of the case on hand and the rights litigatedin the Suit in O.S. No. 580 of 1988, before the II Senior Civil Judge, CityCivil Court, Hyderabad. In the case of Prabhakara Adiga[1], plaintiffwas allotted suit scheduled propertyin a registered partnership deedand he was in possession thereof. The defendant, on partition in thefamily, had been allotted a portion of the land. When there wasBinterference on the suit scheduled property, which fell to the share ofplaintiff, as per the registered partnership deed, a suit for permanentinjunction was filed.

20. In the aforesaid case, after suffering decree for permanentinjunction, judgment-debtor died. When the heirs of the judgment-debtorCin violation of the decree for permanent injunction tried to forciblydispossesess the decree-holder, decree-holder filed the Execution Petition.The Executing Court held that heirs of the judgment-debtor were notbound by the decree. When such order is questioned before the HighCourt, the Writ Petition is allowed. The High Court held that decree ofDpermanent injunction cannot be enforced against the legal heirs ofjudgment-debtor, as an injunction does not travel with the land. ThisCourt, by referring to provision under Section 50 of C.P.C. read withOrder 21 Rule 32 of C.P.C, has held that such a decree can be executedagainst the legal representatives. But, at the same time, the paragraph25 of the judgment, which is relied on by Sri. B. Adi Narayana Rao,Elearned senior counsel appearing for the respondents, reads as under:

“25. In our considered opinion the right which had been adjudicatedin the suit in the present matter and the findings which have beenrecorded as basis for grant of injunction as to the disputed propertywhich is heritable and partible would enure not only to the benefitFof the legal heir of decree-holders but also would bind the legalrepresentatives of the judgment-debtor. It is apparent from Section50 CPC that when a judgment-debtor dies before the decree hasbeen satisfied, it can be executed against legal representatives.Section 50 is not confined to a particular kind of decree. DecreeGfor injunction can also be executed against legal representativesof the deceased judgment-debtor. The maxim “actio personalismoritur cum persona” is limited to certain class of cases asindicated by this Court in Girijanandini Devi v. Bijendra NarainChoudhary [Girijanandini Devi v. Bijendra Narain Choudhary, AIR1967 SC 1124] and when the right litigated upon is heritable, the H

decree would not normally abate and can be enforced by legalrepresentatives of decree-holder and against the judgment-debtoror his legal representatives. It would be against the public policyto ask the decree-holder to litigate once over again against thelegal representatives of the judgment-debtor when the cause andinjunction survives. No doubt, it is true that a decree for injunctionnormally does not run with the land. In the absence of statutoryprovisions it cannot be enforced. However, in view of the specificprovisions contained in Section 50 CPC, such a decree can beexecuted against legal representatives.”

21. From a reading of the aforesaid judgment, it is clear that theexecutable decree depend on the rights litigated by the parties. In thecase on hand, the original decree was obtained against the predecessorof the respondents, who was party to partnership deed. In view of deathof one of the partners, the partnership itself stands dissolved statutorily,by operation of law, in view of provision under Section 42(c) of theIndian Partnership Act, 1932. When the respondents are not parties tothe partnership firm, they are not bound by the decree obtained by thepredecessor of the appellant. More so, when it is a case of the respondentsthat they have not derived any assets and liabilities arising out of thepartnership firm, decree obtained by the original plaintiff is not executableagainst 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 onthe file of VII Senior Civil Judge, City Civil Court, Hyderabad, fordissolution of partnership firm constituted under deed of partnership dated26.06.1977 and also for rendition of accounts. It is true that same is adifferent partnership but, parties are same. In such suit filed by lateSmt.Hashmatunnisa Begum, predecessor of the appellants Late Sri JaiNarayan 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 pendencyof the suit, there is no room for third party to be introduced. It was thecase of late Sri Jai Narayan Misra that partnership stood dissolved.However, in a similar situation arising out of partnership deed dated14.04.1982, the appellants claim the decree is executable against therespondents, who are the legal heirs of the judgment-debtor. As muchas, we are of the view that the respondents were not parties to thepartnership deed and that the partnership stands dissolved, in view of A

B

C

D

E

F

G

H

Adeath of one of the partners, the respondents have not derived the benefitof assets of the partnership firm, the decree obtained by the predecessorof the appellants, is not executable against the respondents herein.

23. In view of the same, we are of the view that the Trial Courthas rightly allowed the application filed by the respondents under SectionB47 of C.P.C. and there is no error committed by the High Court, inconfirming such order by dismissing the Civil Revision Petition filed bythe appellants herein.

24. We do not find any merit in this appeal so as to interfere in theimpugned well reasoned order.

C

25. This civil appeal is, accordingly, dismissed, with no order as tocosts.

D

Divya Pandey

Appeal dismissed.

E

F

G

H