Consumer -Rs.5 lakhs invested in the partnership firm – Commercial transaction for profit / gain – Claim against legal heirs of deceased partner

The respondent no.1 original complainant filed complaint before Dharwad District Consumer Forum.   He had invested Rs.5 lakhs in the partnership  of M/s. Annapurneshwari Cotton Co., Amargol, Hubli, on 21.5.2002 repayable in 120 instalments with interest at 18% per annum. The respondent no.1 sought premature payment but it was denied.   On maturity, the respondent no.1 claimed payment but same was not made.  Legal notice dated 12.2.2014 was issued by the complainant and thereafter, the complaint was made.

Appellant No.1 is the widow of Managing Partner Basavaraj and appellans nos.2 to 4 are his sons.  Basavaraj was Managing Partner and the respondent no.2 (original opposite party no.1) was partner to the extent of 10 per cent. Managing Partner died on 13.3.2003 and after his death, his legal heirs appellants had taken over business of the firm.

The appellants – legal heirs of deceased Managing Partner were never a part of the partnership firm either as partners or in any other capacity.

HELD that the investment made by the complainant was for deriving benefit of interest on the same at the rate of 18% per annum.   It would be, therefore, investment for profit / gain.   It was a commercial transaction and therefore, also would be outside the purview of the Consumer Protection Act, 1986.    Commercial disputes cannot be decided in summary proceedings under 1986 Act but the appropriate remedy for recovery of said amount would be before Civil Court.  The complaint was not maintainable.

Legal heirs of deceased partner do not become liable for any liability of the firm on the death of the partner. Investment in the firm was made on 21.5.2002.  Managing Partner died in 2003.   There was no evidence on record to show that a fresh partnership deed was executed reconstituting the firm in which the appellants had become partners to take upon themselves the assets and liabilities of the firm. Thus, the status of the firm would cease to exist or would stand disssolved.

Civil Appeal No.      Of 2024 arising out of SLP (Civil) No.11757 of 2022 of Annapurna B. Uppin and others   Vs. Malsiddappa and another