1903 Supreme(SC) 6
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD MACNAGHTEN, LORD DAVEY, LORD LINDLEY, SIR FORT NORTH, SIR ANDREW SCOBLE, AND SIR ANDREW WILSON.
MOHORI BIBEE - Appellant
Versus
DHURMODAS GHOSE - Respondents
On appeal from the High Court in Bengal.
Decided On : June. 11, 12; Nov. 26. 1902; Mar. 4. 1903.
Solicitors for appellants:Watkins & Lempriere. Solicitor for respondent: W. W. Box.
A contract entered into by a minor is void ab initio, not voidable, as a minor is incompetent to contract under Sections 10 and 11 of the Indian Contract Act. Consequently, the minor cannot be compelled to restore benefits received under such an agreement.
Headnote:(A) Indian Contract Act, 1872 - Sections 10 and 11 - Competence to contract - A person who is a minor is incompetent to contract; therefore, any agreement entered into by a minor is void ab initio and not a voidable contract.
(B) Indian Contract Act, 1872 - Section 64 - Restoration of benefit - Since a minor's agreement is void and not a voidable contract, the requirement to restore benefits received under a voidable contract does not apply.
(C) Indian Evidence Act, 1872 - Section 115 - Estoppel - Estoppel does not apply where the party to whom the representation is made is aware of the truth of the matter.
(D) Agency - Knowledge of the agent is imputed to the principal.
Facts of the case:
A minor executed a mortgage to secure a loan. The mortgagee's attorney was aware of the mortgagor's minority but proceeded with the transaction after obtaining a false declaration of majority from the minor. The minor subsequently sought to cancel the mortgage on the grounds of infancy.
Findings of Court:
The mortgage is void and inoperative. The knowledge of the attorney is imputed to the principal. The minor is not required to repay the money advanced because the agreement was void ab initio and not a voidable contract.
Issues: Whether a contract entered into by a minor is void or voidable under the Indian Contract Act, and whether the minor is liable to restore the benefit received under such an agreement.
Ratio Decidendi: Under Sections 10 and 11 of the Indian Contract Act, competence to contract is an essential requirement. A minor is legally incompetent to contract; thus, any agreement made by a minor is not a contract at all but is void from the beginning. Consequently, provisions relating to the rescission of voidable contracts under Section 64 cannot be applied to a transaction that never constituted a legal contract. Furthermore, a false representation made to a person who knows it to be false does not take away the privilege of infancy.
Result: Appeal dismissed.
Legal Category Hierarchy
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contract law
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capacity to contract
- minority
- void and voidable contracts
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capacity to contract
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evidence law
- estoppel
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property law
- mortgages
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equity and specific relief
- cancellation of instruments
- restitution and compensation
Judgement
Appeal from a decree of the High Court (Dec. 12, 1898) affirming a decree of Jenkins J. (Feb. 7, 1898).
These decrees held that a certain mortgage dated July 20, 1895, was void and inoperative as having been executed by the respondent to Brahmo Dutt, now represented by his executors, the appellants, while he was still a minor, and ordered the same to be cancelled.
The suit was to cancel the mortgage as having been executed by the respondent while a minor after due notice of the fact.
The said mortgage was of the respondents properties, No. 15, Boloram Ghoses Street, and 133, Cornwallis Street, in Calcutta, to one Brahmo Dutt, since deceased, to secure Rs.20,000, with interest at 12 per cent, per annum. It was prepared by one Kedar Nath Mitter, an attorney of the Calcutta High Court, who acted in the matter on behalf of both the mortgagee and the mortgagor. The First Court found that in May, 1895, the respondent applied to the said attorney to procure him a loan of Rs.20,000 on the said property, and that the attorney applied to Brahmo Dutts local manager, one Dedraj, who consented to take up the mortgage; that in course of investigating the title of the houses it came to the knowledge of the attorney that the respondent was a minor, and was still represented in certain litigation in which he was concerned by his mother as the guardian of his person and property; that, the respondent having alleged that he had attained his majority, the attorney made inquiries which, he said, led him to the conclusion, which was found not to have been justified, that the respondent had been born on June 17, 1874, and was of full age on June 17, 1895 ; that in order to make matters, as he thought, safe, the attorney called upon the respondent to make a declaration fixing the date of his birth, and that the respond ent made such declaration, affirming that he had been born on June 17, 1874, and had attained his full age of twenty-one years on June 17, 1895 ; that on July 15, 1895, the attorney had been informed by the respondents mother and guardian that he was still a minor, and that he, the attorney, was fully aware of the respondents minority at the time of the execution by the respondent of the mortgage in question.
The same Court held that s. 115 of the Indian Evidence Act (Act I. of 1872), which is as follows, "When one person has by his declaration, act, or omission intentionally caused or permitted another person to believe a thing to be true, and to act upon such belief, neither he nor his representative shall be allowed in any suit or proceeding between himself and such person or his representative to deny the truth of that thing," was not intended to apply to infants.
The judge held further that, although he absolved Brahmo Dutt from all personal responsibility in the matter, his claim must necessarily be tested by reference to his attorneys knowledge, and he expressed his opinion that Kedar Nath was not deceived, and that the circumstances of the case were not such as to nullify the plea of infancy.
On behalf of Brahmo Dutt a point was raised based on the provisions of s. 64 of the Contract Act (Act IX. of 1872), which provides as follows —
"64. When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is promisor. The party rescinding a voidable contract shall, if he have received any benefit thereunder from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received."
The judge in reference to this contention said that both sides agreed that if the mortgage in question was the mortgage of an infant it was voidable; and that he was of opinion that there had been no benefit to the respondent which he was bound or able to restore, as he "probably" spent the money received by him "in useless or even vicious extravagance." He considered also that this was not a case in which justice requ