This article is written by Tejas Pardeshi, a BA.LLB student of Indian Law Society(ILS), Pune.
First, you need to know few concepts before you read the judgments:
What is a contract?
A contract is a legally enforceable agreement between two or more parties with mutual obligations. It is governed in India by THE INDIAN CONTRACT ACT OF 1872. The Section 2(h) of the Indian Contract Act of 1872 defines the term ‘CONTRACT’ as ‘an agreement enforceable by law’.
Therefore, for the formation of a contract there must be:
- An Agreement;
- The Agreement should be enforceable by law.
Not every agreement is a contract, an agreement to be a contract the parties should be competent to contract. The word “COMPETENT” is described under Section 11 of the Indian Contract Act of 1872 which includes three essentials:
- A person should be of the age of majority I.e., 18 years;
- At the time of the contract the person should of sound mind;
- A person should not be disqualified by any law from contracting.
Who is considered a minor?
It is stated under THE MAJORITY ACT OF 1875 a person of either sex who is under the age of 18 (Eighteen) is to be considered a minor.
Landmark judgments that you need to know about
Mohori Bibee v. Dharmodas Ghosh
In this case, the privy council held that a contract by a minor is void-ab-initio (from the start) it was held in 1903.
- Case Name: Mohori Bibee and Ors. Vs. Dharmodas Gosh
- Before The: Privy Council
- Decided On: 04.03.1903
- Appellants: Mohori Bibee and Ors
- respondent: Dharmodas Ghose
- Citation: 30M.I.A.114
- Facts of the case:
The respondent Dharmodas Ghose on the 20th July of 1895 executed a mortgage deed in the favor of a moneylender named Brahmo Dutt carrying on business in Calcutta and elsewhere but throughout the transaction Brahmo Dutt was absent from the Calcutta. The business was carried out for him by his attorney Kedar Nath Mitter. The respondent mortgaged immovable property his house for the repayment of Rs. 20,000 at the rate of 12% (Twelve Percent) interest, the amount increased in the dispute. At that time the respondent was a minor. On the 15th of July 1895, Kendar Nath received information that the respondent was still minor through a letter sent by Bhupendra Nath Bose, an attorney. Kedar Nath denied receiving any letter but court held that he did personally receive the letter on 15th July and the evidence is conclusive.
- Whether the contract was void or not under The Indias Contract act of 1872 Section 2 Section 10 and most important Section 11;
- Whether the respondent was liable to pay back the loan to the Defendant;
- Whether the contract of mortgage was avoidable or not.
First, the trial court held that the contract between the Plaintiff and Defendant was void because at the time of the contract the Plaintiff was a minor.
Later Defendant filed an appeal in the Calcutta High Court where the High Court agreed with the verdict of the trial court and dismissed the appeal.
Again, Brahmo Dutta went to the Privy Council to appeal and the Privy Council also dismissed the case and held that the contract between appellant and respondent is void.
The final decision passed by The Privy Council was:
The contract with any minor is void-ab-initio (from the beginning).
The Dharmodas Ghose was not held liable for the repayment of the loan because the contract was void-ab-initio.
In this case, Privy Council held that the contract entered by the guardian of a minor for the benefit of a minor is valid.
- Case name: Sri Kakulam Subrahmanyam Vs. Kurra Subba Rao
- Before the: Privy Council
- Decided on: 26.02.1948
- Appellants: Sri Kakulam Subrahmanyam
- respondent: Kurra Subba Rao
- Citation: 1948 (50) BOMLR 646
- Facts of the case:
The respondent and his father were living in a joint Hindu family. The respondent’s father died on the 4th of October 1935. The respondent was and still a minor living with her widow mother. The respondent’s father before the death he has incurred few debts, including Rs. 16,000 owing to appellants securing with two promissory notes and one debt of Rs. 1,200 owing to Ramayya and secured by the mortgage. The respondent is a minor, mother of the respondent that is guardian entered into an agreement in writing for the sale of the land to the appellant at the cost of Rs. 17,200. The purchase price has to be applied at Rs. 16000 for discharging the promissory note and the remaining Rs.1,200 the mortgage debt owing to Ramayya. The contract stated that the sale deed was to be executed, registered, and delivered to the appellant at their request upon their expenses.
The appellants paid off the RS. 1,200 debt and they were let into possession of the sold land but there was never a sale-deed executed or registered. 10th of September 1938 the respondent and his mother led this suit for claiming the property.
- Whether the contract made by his guardian is valid.
- Who should be in the possession of the land.
First, the subordinate judge held that the appellants are protected under the Section 53A of the Transfer of Property Act and dismissed the suit.
The District Court overruled the judgment of the subordinate and ordered possession of the land in the favor of the respondent.
The High Court of Madras dismissed the appeal made by the current appellant.
The Privy Council held that the contract was entered by the mother of the respondent. It was made for the benefit of a minor and the order of the Subordinate Judge was restored and the claim for the relief by the respondent was dismissed. The respondent must pay the cost of appeal and proceedings in India to the appellant.
In this case, Allahabad High Court held that the old consideration by the minor is not valid consideration for a fresh contract.
- Case Name: Suraj Narain Dube v. Sukhu Aheer and Anr
- Before the: Allahabad High Court
- Decided on: 06.07.1928
- Appellant: Suraj Narain Dube
- respondent: Sukhu Aheer and Anr
- Citation: AIR 1928 All 440
- Facts of the case:
On 24th June 1919 Suraj Narain the Plaintiff lent Rs. 40 bearing interest of 2% p.m. to Defendant Sukhu Aheer who was a minor at the time. After the 4 years on 17th June 1923 the Defendant who was a major by that time. The Defendant and his mother Ms. Bilasi executed a new bond of Rs.76 with the represented previous consideration of Rs. 40 principal and Rs. 36 as interest on the principal. In 1927 The lender brought a suit in The Court of Small Causes at Jaunpur. The suit was dismissed and then the Plaintiff appealed in the Allahabad High Court where the case was referred to a larger bench.
There was only one issue whether the money lend to a minor Defendant was a valid consideration for the subsequent bond or the bond was void.
The Court of Small Causes held that the previous bond was executed by a minor the Defendant so it failed the Competency to the contract so the subsequent bond is not a valid consideration so the contract is void.
The three-Judge Bench of Allahabad High Court upheld the decision of Small Causes Court they stated the previous contract fails Section 11 of the Indian Contract Act “Competency of Contract” as the respondent was a minor so the Contract was void. The previous contract being void the consideration not a good consideration for the contract and the contract was held void.
The court dismissed the appeal with the costs.
In this case, the property was given to a minor on the rent due to the necessities for living and continuing study and a minor is liable to pay rent.
- Case Name: Kunwarlal Daryavsingh vs Surajmal Makhanlal And Ors.
- Before the: Madhya Pradesh High Court
- Decide on: 14.07.1963
- Appellant: Kunwarlal Daryavsingh
- respondent: Surajmal Makhanlal and Ors
- Citation: AIR 1963 MP 58
- Facts of the case:
The Plaintiff (appellant) was an owner of the house and Defendants (respondents) No. 1 and No. 2 (Father and Son). Defendant No. 2 was a minor who took the house on rent and he was not contempt to contract so the below both courts dismissed the suit.
The Plaintiff appealed in the Madhya Pradesh High Court and proved that on 25th January 1954 Defendant No. 1 Surajmal made an entry in Bhai-Khata which stated that Defendant No. 1 took the house on rent at Rs. 15 per month after the 3 months from a minor Defendant No. 2 took the house on rent from 25th October 1953.
Whether the Appellant is entitled to payment of rent from the Defendants.
Both courts below upheld the contention and dismissed the suit by the Plaintiff.
The Plaintiff appealed in Madhya Pradesh High Court where the Plaintiff provided evidence and Defendant No. 1 was made liable to pay rent from 25th January 1954 which amounted to Rs. 168.
Recovery of Rs. 15 acknowledged by his father and due rent of 3 months by his minor son Defendant No. 2 to carry on the studies. Under Section 68 of the Indian contract act, Rs. 15 was claimed as a supply of necessities for studying to a minor.
A decree of Rs. 183 was passed in the favor of the Plaintiff against Defendant No. 1 Surajmal with the cost throughout.
In this case, a minor sued the other party for not performing the promise, and the contract was entered by the guardian of the minor with the other party and it was considered a valid contract.
- Case Name: The Great American Insurance Co Ltd vs Madanlal Sonulal:
- Before the: Bombay High Court.
- Decided on: 12.03.1935
- Appellant: The Great American Insurance Co Ltd
- respondent: Madanlal Sonulal
- Citation: (1935) 37 BOMLR 461
- Facts of the case:
The Plaintiff was Madanlal Sonulal a minor by his next friend Goverdhandas Mohanlal and the Defendant was The Great American Insurance Co. Ltd. Incorporated in New York, United States of America, carrying on business in Bombay at Apollo Street within the Fort of Bombay. A minor Plaintiff was the only surviving son of a joint Hindu Family carrying out business at a Devalgaum, firm named Surajmal Sonulal, the business was carried out under the superintendence of Goverdhandas Mohanlal who was the husband of the Plaintiff’s sister and with whom Plaintiff Resides. The firm effected fire insurance with Defendants company on Cotton bales. On the actual effected date of fire insurance, the cotton bales got burnt and the Plaintiff sued the Defendant company for the recovery of the loss.
- Whether the insurance made by the minor was valid.
- Whether the insurance company is liable to pay the losses under the policy.
First, Defendant raised in the written statement is in effect that there was collusion between the Plaintiff and the agent of Defendant’s company and in fact, the insurance came in effect after the fire on that ground Defendants resisted their lability. The minority of the Plaintiff was not pleaded so the learned judge concluded since the minority is not pleaded so it was not necessary to answer the issue and concluded that the insurance was valid. In the case of collusion and fraud, he navigated and the decision was given in the favor of the Plaintiff.
The Defendant appealed on the ground that the Plaintiff was minor at the time of insurance so the Plaintiff being minor the insurance should be void ab initio. The court held that the insurance was entered by the Goverdhandas on behalf of the minor through agent Trimbaksha with Puranmal on behalf of Defendant’s company who had knowledge of Plaintiff being minor which makes company know about the fact of the Plaintiff being minor. The Goverdhandas was a Guardian within the meaning of the Act, which states the person having the care of the person of a minor or of his property, or of both his person and property and the insurance was made for the benefit of a minor and his property so the insurance was held valid. The appeal failed and was dismissed with costs. The parties agreed on the insurance company paying Rs. 7000 to the Plaintiff.
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