Vinayak Purushottam Dube (D) vs Jayashree Padamkar Bhat 2024 INSC 159 :: [2024] 3 S.C.R. 127 – Contract Law – Obligations Of Builder – Liability Of LRs

Summary: 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 – Allowing appeal, SC held: the legal representatives of the deceased developer are not liable to discharge the obligation which had to be discharged by the deceased opposite party in his personal capacity (Para 31)- 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. (Para 27)

Indian Contract Act, 1872; Section 37,40 – Legal representatives are liable for the debts of their predecessor, but their liability is limited to the extent of the estate of the deceased inherited by them. Therefore, the representatives of a promisor are bound to perform the promisor’s contract to the extent of the assets of the deceased falling in their hands. But they are not personally liable under the contracts of the deceased and are also not liable for personal contracts of the deceased. Therefore, 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. (Para 20) -a contract can be performed vicariously by the legal representatives of the promisor depending upon the subject matter of the contract and the nature of performance that was stipulated thereto. But a contract involving exercise of individual’s skills or expertise of the promisor or which depends upon his/her personal qualification or competency, the promisor has to perform the contract by himself and not by his/her representatives. 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. (Para 21)

Legal Maxim – “actio personalis moritur cum persona” – a personal right of action dies with the person . (Para 18)

Code Of Civil Procedure, 1908; Section 2(11) – the legal representatives of a deceased are liable only to the extent of the estate which they inherit. (Para 23)

Code Of Civil Procedure, 1908; Section 50 – any decree which is relatable to the extent of the property of the deceased which has come to the hands of the legal representatives and has not been duly disposed of, the same would be liable for execution by a decree holder so as to compel the legal representatives to satisfy the decree. In this context, even a decree for preventive injunction can also be executed against the legal representatives of the deceased judgment-debtor if such a decree is in relation to the property or runs with the property if there is a threat from such legal representatives. (Para 29)