In a recent decision, the Supreme Court held that the legal heirs of a deceased partner are not responsible for the liabilities of the firm following the partner’s demise. This crucial ruling stemmed from a case under the Consumer Protection Act of 1986, where the complainant sought to recover investments from the legal heirs of a deceased partner. It was the specific case of the appellants that they were never a part of the partnership firm either as partners or in any other capacity. By an unregistered deed of partnership dated 16.02.1994, the firm was constituted which included the complainant ( respondent No.1 ), husband and father of the appellants, and three others. Later on, by another unregistered deed of partnership, the firm was reconstituted wherein three partners have resigned from the firm which included the complainant.

The surviving partners were the husband of appellant and father of appellant. The case revolved around the complainant’s attempt to retrieve their investment from the appellants, who were the legal heirs of the deceased partner. The complainant argued that since the legal heirs inherited the estate of the deceased partner, they should be held accountable for the outstanding payment. The judgment highlighted the absence of evidence indicating that the legal heirs had entered into a new partnership agreement, thereby assuming the assets and liabilities of the firm. The Bench noted, “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.”

Justice Vikram Nath and Justice Satish Chandra Sharma, in the judgment, affirmed this legal principle, stating, “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 ruling provides clarity and guidance on the legal framework surrounding partnership liabilities after the death of a partner. Further, it was concluded that, “For all the reasons recorded above, we are of the view that the District Forum, the State and the National Commissions fell in error in allowing the complaint and upholding it in appeal and revision. The appeal is accordingly allowed. The impugned orders are set aside and the complaint is dismissed.”