Annapurna B. Uppin vs. Malsiddappa [April 5, 2024]
Background
The dispute arose from a complaint filed by Malsiddappa, who invested ₹5 lakhs in a partnership firm, Annapurneshwari Cotton Co., with the expectation of receiving 18% interest per annum, repayable after 120 months. After the death of the Managing Partner, Basavaraj Uppin, in March 2003, Malsiddappa sought premature repayment, which was denied. Upon maturity, payment was still not made, leading to a consumer complaint alleging deficiency in service against the surviving partners and legal heirs of the deceased partner.
Consumer Forum Proceedings
The District Consumer Disputes Redressal Forum (DCDRF) allowed the complaint, holding the appellants (legal heirs) jointly and severally liable to pay the claimed amount.
Appeals to the State Commission (SCDRC) and National Commission (NCDRC) were dismissed, upholding the DCDRF's order.
The appellants then approached the Supreme Court.
Key Legal Issues
Maintainability under Consumer Protection Act (CPA), 1986:
Whether a dispute arising from a commercial investment in a partnership firm falls within the scope of the CPA.
Liability of Legal Heirs:
Whether legal heirs of a deceased partner can be held liable for the liabilities of the partnership firm after the partner’s death.
Supreme Court’s Analysis and Ruling
Commercial Nature of Transaction:
The Supreme Court held that the investment made by the complainant was for profit/gain (18% interest), making it a commercial transaction. Such disputes are outside the purview of the Consumer Protection Act, 1986, which is meant for consumer disputes, not commercial investments.
Status of Complainant:
Since there was a registered partnership deed and no evidence of its dissolution before the investment, the complainant was deemed a partner, not a consumer. The appropriate remedy for recovery of the amount, if any, was before a civil court, not a consumer forum.
Liability of Legal Heirs:
The Court reaffirmed that legal heirs of a deceased partner do not automatically become liable for the partnership’s liabilities unless they expressly assume such liabilities or the firm is reconstituted with them as partners. No evidence was produced to show that the appellants became partners or accepted the firm’s liabilities after the death of Basavaraj Uppin.
Remedy and Jurisdiction:
The Supreme Court set aside the orders of the DCDRF, SCDRC, and NCDRC, holding the complaint was not maintainable under the CPA. The complainant’s remedy, if any, lay in civil court proceedings.
Significance
This judgment clarifies that:
Commercial investment disputes between partners are not covered by the Consumer Protection Act.
Legal heirs of a deceased partner are not liable for firm liabilities unless they expressly assume them.
Consumer forums cannot adjudicate commercial disputes, which must be pursued in civil courts.
Citation:
Annapurna B. Uppin & Ors. v. Malsiddappa & Anr., Supreme Court of India, Civil Appeal No. of 2024 (arising out of SLP (C) No.11757 of 2022), decided on April 5, 2024; Neutral Citation: 2024 INSC 276.
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