In a recent judgment by the Delhi High Court, the issue of the survival of cause of action after the dissolution of a partnership firm was examined. The liability of Defendant No 2’s legal heir in relation to the dissolved firm was a key point of contention. The ruling sheds light on the complex legal implications surrounding partnership liabilities post-dissolution. Stay informed about the latest legal developments. #LegalCase #DelhiHighCourt #PartnershipLiability #LegalHeir
Facts
- Defendant No 1 Partnership Firm dissolved on 31.03.2006.
- Applications filed by Sunil Gupta seeking condonation of delay in filing reply to plaintiff’s applications.
- Sunil Gupta is not responsible for the liabilities of defendant No 1.
- Plaintiff filed suit against defendant No 1, impleading defendant No 2 and defendant No 3 as partners.
- Partnership Firm dissolved before institution of the suit, business taken over by defendant No 2 as sole proprietor.
- Defendant No 3’s name deleted from the suit.
- Confusion arises regarding survival of cause of action after defendant No 2’s death.
- Delay of approximately 120 days in moving the application.
- Defendant No 2’s legal heir asserts that no right to sue survives in favor of the plaintiff.
- No liability of partnership claimed as the business was taken over by defendant No 2 as sole proprietor.
- The period of 90 days provided under Article 120 of the Schedule under the Limitation Act, 1963 started from 01.03.2022 and ended on 29.05.2022.
- A delay of 74 days has been condoned for the reasons stated in the applications.
Analysis
- Defendant No 2/J.P. Gupta admitted taking over the Partnership Firm as the sole proprietor.
- Liabilities of a Partnership Firm do not cease to exist upon dissolution.
- Legal heir of Defendant No 2 can be impleaded in the suit.
- Liabilities of the Partnership Firm survive against the partners even after dissolution.
- Liabilities of Defendant No 2 may devolve on his son upon demise.
- In case of the death of the proprietor, the right to sue continues against the legal representatives of the proprietor.
- The real party being sued is the proprietor and not the business.
- The ruling is based on the case of Raghu Lakshminarayanan vs Fine Tubes.
- This principle was upheld in (2007) 5 SCC 103.
- Outstanding liabilities of defendant J.P. Gupta have not been resolved.
- Non-impleadment of his legal heir would result in non-representation of defendant J.P. Gupta’s interest in the Set-off.
- Defendant J.P. Gupta claimed a Set-Off in his Written Statement.
Decision
- Application is allowed.
- Abatement is set aside.
Case Title: BOSCH LIMITED Vs. M/S GUPTAJEE ENGINEERS & ORS. (2024:DHC:3977)
Case Number: CS(OS)-135/2006
