Drinking water while sitting down is part of the social etiquette
Islam teaches its followers. One should try to observe this etiquette whenever
it is possible for him. However, if a person does not do so, he will not be
punished since this directive is not part of the Islamic Sharī‘ah. It is known
that the Prophet (sws) drank water while standing up as well:
‘Umar Ibn Shu‘ayb reports from his grandfather: I saw that the Prophet (sws)
used to drink water while standing as well as sitting. (Tirmadhī:
Similarly, there are a number of other Ahādīth which narrate that many
companions of the Prophet (sws) also used to follow both practices.
The Hadīth you have referred to is not only Mawqūf (a sort of weakness in its
chain of its narrators), according to some scholars of Hadīth, but also cannot
be accepted in the presence of a number of Ahādīth in which drinking water while
standing is regarded as perfectly allowable. After all, the Prophet (sws) cannot
simultaneously give two opposite directives.
In my opinion, it seems that in the Hadīth of Abū Hurayrah and in other
Ahādīth which contain such severity on drinking water while standing, either
there must have been other details which have failed to reach us or the
narrators misunderstood what the Prophet (sws) had actually said.