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2026 Supreme(Kar) 296
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
VIJAYKUMAR A. PATIL, J.
M/s. New Praveen Trailers – Petitioner
Versus
M/s. Shiva Steel Supplies – Respondent
Writ Petition No. 6219 Of 2022 (Gm-Cpc)
Decided On : 30-07-2026
For the Petitioner:Sri B.S. Sathyanand, Advocate
For the Respondent:Sri G.S. Marulaiah, Advocate
In a partnership firm consisting of only two partners, the death of one partner results in the automatic dissolution of the firm, regardless of any clause in the partnership deed providing otherwise, as partnership is based on contract and not status.
Headnote:(A) Indian Partnership Act, 1932 - Sections 4, 31 and 42 - Code of Civil Procedure, 1908 - Order XXI Rule 50 and Order XXX Rules 6 and 7 - Dissolution of partnership - Firm consisting of only two partners - Death of one partner - Automatic dissolution - A partnership is founded upon contract and not upon status - Death of one of the two partners results in automatic dissolution notwithstanding any clause in the partnership deed providing otherwise - Legal heirs of a deceased partner do not automatically step into the shoes of the deceased as partners - Continuation of business with legal representatives requires constituting a fresh partnership. (Paras 6, 7, 10, 11, 12)
(B) Privity of contract - Contract between original partners cannot confer rights or impose obligations on third parties, including legal heirs, without their acceptance and agreement. (Para 11)
Facts of the case:
A suit for recovery of money was filed against a registered partnership firm. One of the two partners of the firm died during the proceedings. The plaintiff filed a memo stating that as it was a registered firm, legal heirs need not be brought on record, but would implead any new partner inducted into the firm. The trial court directed the plaintiff to bring the legal heirs of the deceased partner on record, relying on a clause in the partnership deed which stated the firm would not dissolve upon the death of a partner and would continue with the surviving partner and legal heirs.
Findings of Court:
The firm consisted of only two partners. Upon the death of one partner, the partnership stood automatically dissolved by operation of law. The clause in the partnership deed providing for the automatic continuation of the firm through legal heirs is unenforceable as it contradicts the fundamental principle that partnership is a matter of contract and not status.
Issues: Whether a partnership firm consisting of only two partners is automatically dissolved upon the death of one partner, despite a clause in the partnership deed providing for its continuation by the legal heirs of the deceased partner.
Ratio Decidendi: The court held that in a partnership consisting of only two partners, the death of one partner automatically brings the partnership to an end. There is no surviving partnership into which a third party or legal heir can be introduced without a new contract. Partnership is a relation arising from contract and not from status; therefore, no heir can become a partner without their own consent, express or implied. Any clause in the partnership deed attempting to automatically induct legal heirs is opposed to the law and public policy. (Paras 10, 11, 12)
Result: Writ petition allowed. Order dated 05.01.2022 set aside and memo dated 07.08.2021/03.09.2021 rejected.
JUDGMENT :
VIJAYKUMAR A. PATIL, J.
This writ petition is filed challenging the order dated 05.01.2022 passed in Com.O.S.No.34/2020 by the Principal District and Sessions Judge, Davanagere, (for short, the ‘Commercial Court').
2. Sri.B.S.Sathyanand, learned counsel appearing for petitioner submits that the respondent filed a suit seeking recovery of money against the petitioner- defendant firm. It is submitted that the defendant No.1(a) died on 16.05.2021. Subsequently, the plaintiff filed a memo dated 07.08.2021 indicating that since the defendant is a registered partnership firm, the question of bringing the legal heirs of the deceased partner would not arise. However, when a person is inducted as a partner of the defendant firm, necessary steps would be taken to implead the said person as a party to the proceedings. The Trial Court allowed the memo and directed the plaintiff to bring the legal heirs of the deceased defendant No.1(a) on record, which is impermissible. It is submitted that when one of the partners out of the two partners died, the partnership firm will not survive and it is deemed to have been dissolved. It is submitted that a memo is filed stating that there is no necessity to bring the legal heirs of deceased respondent No.1(a) on record and contrary to that, the Trial Court passed the order which is impermissible. In support of his contentions, he placed reliance on MOHAMMAD LAIQUIDDIN AND ANOTHER Vs. KAMALA DEVI MISRA (DEAD) BY LRS. AND OTHERS, (2010) 2 SCC 407. Hence, he seeks to allow the petition.
3. Per contra, Sri.G.S.Marulaiah, learned counsel for respondent supports the impugned order of the Trial Court and submits that the suit is for recovery of money. It is submitted that even after the death of one of the partners, the suit remains against the firm, the decree can be granted and the said decree is executable under Order XXI Rule 50 of the Code of Civil Procedure, 1908 (for short, ‘the CPC’) as well as under Order XXX Rule 6 and 7 of the CPC. It is further submitted that the Trial Court, considering the various decisions, had made a distinction on facts with regard to the decision of the Hon’ble Supreme Court in the case of MOHAMMAD LAIQUIDDIN AND ANOTHER, referred supra and hence, there is no merit in the contention of the petitioner. It is also submitted that the clause in the partnership deed states that the legal heirs of the partners would continue as the partners of the firm. Hence, he seeks to dismiss the petition.
4. I have heard the arguments of the learned counsel for the petitioner, the learned counsel for the respondent and meticulously perused the material available on record.
5. The respondent had filed Com.O.S.No.34/2020 against the petitioner herein, for a judgment and decree for recovery of a sum of Rs.18,90,730/- together with current and future interest @ 18% p.a. on Rs.12,29,232/- from the date of the suit till the date of realisation. The petitioner filed a written statement. The defendant filed a memo indicating that the defendant No.1(a) died on 16.05.2021. Thereafter, the plaintiff filed a memo indicating that since the defendant is a registered partnership firm constituted under the provisions of the Indian Partnership Act, 1932, which is a creation of the statute, the question of bringing the legal heirs of the deceased partner i.e. defendant No.1(a) would not arise. However, it is submitted that as and when a person is inducted as the partner of the defendant firm and the same is intimated in the case, the plaintiff firm will take necessary steps to implead the inducted partner as a party to the proceeding in place of the deceased defendant No.1(a). The Trial Court considered the rival contentions, decisions placed on both the sides and passed the impugned order allowing the memo filed by the plaintiff by permitting the plaintiff to take steps to bring the legal heirs of the deceased defendant No.1(a) on record, in the suit, which is challenged.
6. The contention of the petiti
