The main legal point established in the judgment is that earnest money paid as a guarantee for the performance of a void contract cannot be enforced against a minor.

Alfred Henry Lionel Leach, C.J.

1. This appeal raises the question of the liability of a minor to return a sum of money paid to his guardian as earnest money in respect of a contract of sale of immovable property entered into by the guardian on his behalf. On the 20th August, 1931, Andalammal, the mother and guardian of the appellant, agreed to sell to the respondent the minors shares in a village. The price agreed upon was Rs. 7,125 of which Rs. 500 was paid in advance. It is common ground that certain creditors of the estate were pressing for the payment of their debts and the intention was to sell the minors interests in the village to discharge these liabilities. The sale was not completed, and the property was sold by the mother to a third party, the second defendant in the suit out of which this appeal arises. The suit was for a decree for specific performance of the contract, but before the case came on for hearing it was realised that the Court could not grant this relief. An infant cannot contract in this country and a covenant by his guardian for the sale of immovable property cannot be enforced against him: Mir Sarwarjan v. Fakhruddin Mahomed Chowdhuri and Batchu Ramajogayya v. Vajjula Jagannadham (1918) 36 M.L.J. 29 : I.L.R. 1918 Mad. 185 (F.B.). An application was then made for leave to amend the plaint by adding a prayer for the return of the earnest money. This application was granted, and at the trial the only question which was raised was whether the respondent was entitled to the return of the Rs. 500. The learned trial Judge held that he was on the ground that the minor was liable, unless it could be shown that he had not received the benefit of the Rs. 500. On this basis he granted a decree for the return of the amount with interest. The appellant challenges the correctness of the decision. The second defendant is not concerned with this question, and has, therefore, not been made a party to the appeal.

2. It may be taken that it was necessary to sell this property of the minor for the purpose of paying off pressing creditors. This was alleged in the plaint and it was acknowledged in the appellants written statement that he had to sell the property to the second defendant "owing to the pressing necessities of the creditors". It would appear that it was out of the money which the mother received from the second defendant that the debts were in fact discharged. What has become of the Rs. 500 paid to the appellants mother by the respondent has not been disclosed. The learned Advocate for the appellant contends that there can be no decree for the return of earnest money paid under a void contract. On the other hand the learned Advocate for the respondent says that as the contract was entered into in order to raise money to pay off creditors the Rs. 500 must be treated as having been paid to the guardian for necessaries or for his benefit.

3. In our opinion, the appellant is entitled to succeed. It is true, that the guardian was compelled to sell the property of the minor to pay off debts for which the minors estate was liable, and if a conveyance had been executed no doubt the respondent would have obtained a valid title to the property, but the Rs. 500 can only be treated as being security for the performance of a contract which in law was no contract at all. Earnest money is paid as a guarantee that the contract will be performed. James, L.J., so held that in Ex parte Barrett : In re Parnell (1875) 10 Ch. App. Cases 512 where there was a contract for the sale of immovable property with a stipulation that a portion of the purchase money should be paid immediately, and his definition was accepted by the Court of Appeal in Howe v. Smith (1884) 27 Ch. D. 89 and by the House of Lords in Soper v. Arnold (1889) 14 A.C. 429 . In the last mentioned case, Lord Macnaghten observed:

The deposit serves two purposes - if the purchase is carried out it goes against the purchase-money--but its primary purpose is this, it