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Mohori Bibee v. Dharmodas Ghose (1903 SCC OnLine PC 4. ) (Mohori Bibee)was a Privy Council judgement pronounced at the dawn of the twentieth century which aptly dealt with the ambit of minor’s agreement. The court interpreted the relevant provisions pertaining to the Indian Contract Act, 1872 (The Act) in considering the validity of an agreement with a minor. This case in many ways put an end to a dilemma which was initiated in the English judicial system before the passage of the Infants Relief Act, 1874 regarding the legal implications of contracts with minors.
With such legislation in hand, the status of contracts with minors shifted from being voidable (with the infant having a right to enforce them against the third party, rather than vice versa) to mostly void, albeit with a few exceptions. The colonial rule mirrored the fundamentals of English common law jurisprudence in India. But the Indian judiciary’s interpretation of the Colonial perspective saw a change with Mohori Bibee which vehemently held that an agreement with a minor is void ab-initio. It paved the way for a lot of legal implications concerning minors as stakeholders or beneficiaries.
The Factual Scenario
Dharmodas Ghose who was a minor at the commencement of the transaction, was the sole owner of an immovable property. His mother was appointed as a legal custodian of his property. The minor mortgaged his property to Brahmo Dutta, a moneylender at a certain amount. The minority of the party was aptly communicated to the mortgagee and his attorney on the date of commencement of such mortgage. On careful appreciation, a discrepancy was discovered with respect to the amount paid. The plaintiff, taking the plea of his minority at the time of execution of the mortgage, filed a suit against the defendant, rendering such an arrangement to be void and inoperative. The defendant inter alia contended that there was misrepresentation by the plaintiff and such request of cancellation of mortgage could only be given effect after a refund of the partial amount of money that had already been advanced to him.
The main issues revolved around the validity of the agreement. The contentions revolved around the fact whether such an agreement was void under Section 2, 10(5) and 11(6) of the Act or not? The second point of contention was whether such agreement with a minor was to be considered voidable or void. Lastly, the question revolved around the consideration of a minor as a ‘beneficiary’ and the fate of such legal obligations.
The Privy Council held contractual arguments with minors to be void and not voidable. It further held that the effect of minority on contractual obligations was to be assessed on a comprehensive reading of Sections 10 and 11. Section 10 vehemently requires the unconditional consent and competence of the contracting parties for such contract to be legally viable. As per Section 11 of the Act, persons who are of unsound mind as well as those disqualified from contracting by any law which they are subject to are incapable of forming a contractual obligation by reason of such disqualification. The court held minority to be one such disqualification. It further held that a contract by a minor would be non-executable against the other party even after such minor had attained majority, as enshrined by a collective reading of Sections 7 and 58 of the Transfer of Property Act, 1882. The penultimate part of the judgement held that the minor could not be forced to return the money advanced to him as he was not legally bound by such promise. Further it iterated that a minor was not bound by such contract unless it was related to his necessities.
The position of minors with respect to the execution of contracts had been in a turmoil. Although Section 3 of the Majority Act, 1875 fixed the attainment of 18 years as the standard measure for the age of majority (subject to personal laws), it was silent as to how such fixation would result in contractual obligations involving minors. Mohori Bibee struck a sharp contrast between the Indian and the British interpretations of the legal consequences of minority in a contractual obligation. The British law, drawing its foundation from the common law principles of England, considered such contracts to be voidable with respect to the minors to mostly void with a few general exceptions. (Anson, Law of Contract 184 (1969)). Each case was evaluated on the basis of the factual circumstances, being highly subjective. The Mohori Bibee case put an end to such subjectivity and treated all such contracts as void ab initio, thus providing a uniformity in the treatment of the cases.
Mohori Bibee lacked certain aspects. For instance, it didn’t discuss the applicability of the principle of estoppel, as discussed under Section 115 of the Indian Evidence Act, 1872, with respect to the contracts involving minors. The principle of estoppel is applicable where a person when making a statement while entering into a transaction cannot retract from such promise when the liability arises. Whether the principle of estoppel was applicable to minors or not was entailed thoroughly in Vaikuntarama Pillai v. Authimoolam Chettiar which clearly stated that the incompetence of the minor takes precedence over the factor of estoppel, hence, holding that a minor due to his incompetence is incapable of incurring any liability for any debt, even the factor of estoppel cannot make him liable.
Although the minors are able to enjoy the goods, they are stopped from obtaining undue benefit from any transaction. The doctrine of restitution comes to play, requiring such minors to restore back the exact goods that have been transferred to them, so long as they are traceable and in their possession. (Leslie (R) Ltd. v. Sheill, (1914) 3 KB 607). But the doctrine is inapplicable in case such goods are consumed, transferred or become non-traceable.
The Indian Contract Act, though restricts the competency of a minor to enter into a contract, however, it does not prevent them from deriving benefits by virtue of incompetency. Hence, as per Section 30 of the Partnership Act, 1930 minors are not allowed to be partners but it is in favour of such minors being admitted to the benefits of partnership. But rendering him beneficiary rights does not automatically render a right of dissolution on the favour of the minors. (Commissioner of Income-Tax, Andhra Pradesh, Hyderabad v. Messrs. Kesarimal Hirachand, (1970) 2 Andh W343.)
The term necessities has been given a conducive interpretation in Tejaswini Gaud v. Shekhar Jagdish Prasad Tewari, which held that the term “necessities” had to interpreted keeping in mind the holistic welfare of the child. Hence, it should be inclusive of factors like ethical upbringing, economic well being of the guardian, child’s ordinary comfort, contentment, health, education, etc.
The entire judicial mechanism helps minors, with the judges as their councilors and law as their guardian. But merely protecting the minors’ interest should not amount to their unjust enrichment, creating unnecessary hardships for the persons dealing with a minor. (A.V. v. iParadigms, Co., 544 F. Supp. 2d 473 E.D. Va. 2008) The Law Commission of India in their different reports suggested some amendments, thus new sections are designed and proposed in doctrine of estoppels, Specific Relief Act and Indian Contract Act. Minority should be used as a shield and not a sword. The judgment in Mohori Bibee case should not be applicable where a minor knowingly misrepresents the minority either directly or indirectly. It is suggested that the majority should not be strictly based on age but on the psychological capacities of the minors at the time of forming such an agreement. A minor must do equity, if he anticipates the same.
Author: Shouraseni Chakraborty, student of National University Of Study And Research In Law, Ranchi.