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Case Summary
| Citation | Mohori bibee V Dhurmodas Ghose (1903) 30 I A 114 |
| Keywords | |
| Facts | Dharmodas Ghose, was the respondent in this case. He was a minor (i.e. has not completed the 18 years of age) and he was the sole owner of his immovable property. The mother of Dharmodas Ghose was authorized as his legal custodian by Calcutta High Court. When he went for the mortgage of his own immovable property which was done in the favor of appellant i.e. Brahmo Dutta, he was a minor and he secured this mortgage deed for Rs. 20,000 at 12% interest rate per year. Bhramo Dutta who was a money lender at that time and he secured a loan or amount of Rs. 20,000, and the management of his business was in the control of Kedar Nath, and Kedar Nath acted as the attorney of Brahmo Dutta. Dharmodas Ghose’s mother sent a notification to Brahmo Dutta informing him about the minority of Dharmodas Ghose on the date on which such mortgage deed was commenced.but the proportion or sum of loan that was actually provided was less than Rs. 20,000. The negotiator or representative of the defendant, who actually acted instead of on behalf of money lender has given money or sum to the plaintiff, who was a minor and he fully had knowledge about the incompetency of the plaintiff to perform or enter into contract and also that he was incompetent legally to mortgage his property which belonged to him. After that, on 10thSept. 1895 Dharmodas Ghose along with his mother brought an legal suit or action against Brahmo Dutta by saying that the mortgage that was executed by Dharmodas was commenced when he was a minor or infant and so such mortgage was void and disproportionate or improper and as a result of which such contract should be revoked or rescinded. When this petition or claim was in process, Brahmo Dutta had died and then further the appeal or petition was litigated or indicted by his executor’s. |
| Issues | Whether the deed was void under section 2, 10[5], 11[6], of Indian Contract Act, 1872 or not? Whether the defendant was liable to return the amount of loan which he had received by him under such deed or mortgage or not? Whether the mortgage commenced by the defendant was voidable or not? Section 10 – what agreement are contractFree consent Parties Competent to contract Lawful consideration Lawful object Section 11 of ICA 1872 Who are competent to contractAge of majority according to the law to which he is subject Who is of sound mind Not disqualified from contracting by any law to which he is subject. According to he verdict of Trial Court, such mortgage deed or contract that was commenced between the plaintiff and the defendant was void as it was accomplished by the person who was an infant at the time of execution of mortgage. When Brahmo Dutta was not satisfied with the verdict of Trial Court he filled an appeal in the Calcutta High Court |
| Contentions | |
| Law Points | The principles of law that were laid down in this case are:− Any contract with a minor or an infant is neither valid nor voidable but is void ab− initio(void from beginning) Section 64 of Indian Contract Act,1872 is only applicable in the case, where the parties entering in contact are competent to make such contract and is not applied to cases where there is no contract made at all. The legal acts done by an representative or any knowledge of an agent means that such acts done or having knowledge of anything is of his principal. |
| Judgment | A person who by reason of infancy is as laid down by section 11 of ICA, incompetent to contract, cannot make a contract within the meaning of the act. The transaction entered can not be recognised by law Contract Void, as it was accomplished by the person who was an infant at the time of execution of mortgage. According to the decision of Calcutta High Court, they agreed with the verdict that was given by Trial Court and it dismissed the appeal of Brahmo Dutta. Then he later went to Privy Council for the appeal and later the Privy Council also dismissed the appeal of Brahmo Dutta and held that there cannot be any sought of contract between a minor and a major person. The final decision that was passed by the Council were :− 1.Any sought of contract with a minor or infant is void/ void ab−initio (void from beginning). 2.Since minor was incompetent to make such mortgage hence the contact such made or commenced shall also be void and id not valid in the eyes of law. 3.The minor i.e. Dahrmodas Gosh cannot be forced to give back the amount of money that was advanced to him, because he was not bound by the promise that was executed in a contract. |
| Ratio Decidendi & Case Authority |
Full Case Details
SIR FORD NORTH – On July 20, 1895, the respondent, Dharmodas Ghose, executed a mortgage in favour of Brahmo Dutt, a money-lender carrying on business at Calcutta and elsewhere, to secure the repayment of Rs. 20,000 at 12 per cent interest on some houses belonging to the respondent. The amount actually advanced is in dispute. At that time the respondent was an infant; and he did not attain twenty-one until the month of September following. Throughout the transaction Brahmo Dutt was absent from Calcutta, and the whole business was carried through for him by his attorney, Kedar Nath Mitter, the money being found by Dedraj, the local manager of Brahmo Dutt. While considering the proposed advance, Kedar Nath received information that the respondent was still a minor; and on July 15, 1895, the following letter was written and sent to him by Bhupendra Nath Bose, an attorney:
“Dear Sir, I am instructed by S.M. Jogendranundinee Dasi, the mother and guardian appointed by the High Court under its letters patent of the person and property of Babu Dharmodas Ghose, that a mortgage of the properties of the said Babu Dharmodas Ghose is being prepared from your office. I am instructed to give you notice, which I hereby do, that the said Babu Dharmodas Ghose is still an infant under the age of twenty-one, and any one lending money to him will do so at his own risk and peril.” Kedar Nath positively denied the receipt of any such letter; but the Court of first instance and the Appellate Court both held that he did personally receive it on July 15; and the evidence is conclusive upon the point.
On the day on which the mortgage was executed, Kedar Nath got the infant to sign a long declaration, which he had prepared for him, containing a statement that he came of age on June 17; and that Babu Dedraj and Brahmo Dutt, relying on his assurance that he had attained his majority, had agreed to advance to him Rs. 20,000. There is conflicting evidence as to the time when and circumstances under which that declaration was obtained; but it is unnecessary to go into this, as both Courts below have held that Kedar Nath did not act upon, and was not misled by, that statement, and was fully aware at the time the mortgage was executed of the minority of the respondent.
On September 10, 1895, the infant, by his mother and guardian as next friend, commenced this action againt Brahmo Dutt, stating that he was under age when he executed the mortgage, and praying for a declaration that it was void and inoperative, and should be delivered up to be cancelled.The defendant, Brahmo Dutt, put in a defence that the plaintiff was of full age when he executed the mortgage; that neither he nor Kedar Nath had any notice that the plaintiff was then an infant, that, even if he was a minor, the declaration as to his age was fraudulently made to deceive the defendant, and disentitled the plaintiff to any relief; and that in any case the Court should not grant the plaintiff any relief without making him repay the moneys advanced. Jenkins J., who presided in the Court of first instance, found the facts as above stated, and granted the relief asked. And the Appellate Court dismissed the appeal from him. Subsequently to the institution of the present appeal Brahmo Dutt died, and this appeal has been prosecuted by his executors.
The first of the appellants’ reasons in support of the present appeal is that the Courts below were wrong in holding that the knowledge of Kedar Nath must be imputed to the defendant. In their Lordships’ opinion they were obviously right. The defendant was absent from Calcutta, and personally did not take any part in the transaction. It was entirely in charge of Kedar Nath, whose full authority to act as he did is not disputed. He stood in the place of the defendant for the purposes of this mortgage; and his acts and knowledge were the acts and knowledge of his principal. It was contended that Dedraj, the defendant’s gomastha, was the real representative in Calcutta of the defendant, and that he had no knowledge of the plaintiff’s minority. But there is nothing in this. He no doubt made the advance out of the defendant’s funds. But he says in his evidence that “Kedar Babu was acting on behalf of my master from the beginning in this matter;” and a little further on he adds that before the registration of the mortgage he did not communicate with his master on the subject of the minority. But he did know that there was a question raised as to the plaintiff’s age; and he says, “I left all matters regarding the minority in the hands of Kedar Babu.”
The appellants’ counsel contended that the plaintiff is estopped by s. 115 of the Indian Evidence Act (I. of 1872) from setting up that he was an infant when he executed the mortgage. The section is as follows: “Estoppel. 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.”
The Courts below seem to have decided that this section does not apply to infants; but their Lordships do not think it necessary to deal with that question now. They consider it clear that the section does not apply to a case like the present, where the statement relied upon is made to a person who knows the real facts and is not misled by the untrue statement. There can be no estoppel where the truth of the matter is known to both parties, and their Lordships hold, in accordance with English authorities, that a false representation, made to a person who knows it to be false, is not such a fraud as to take away the privilege of infancy: Nelson v. Stocker [1 De G. & J. 458]. The same principle is recognised in the explanation to s. 19 of the Indian Contract Act, in which it is said that a fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.
The point most pressed, however, on behalf of the appellants was that the Courts ought not to have decreed in the respondent’s favour without ordering him to repay to the appellants the sum of Rs. 10,500, said to have been paid to him as part of the consideration for the mortgage. And in support of this contention s. 64 of the Contract Act (IX of 1872) was relied on:
Both Courts below held that they were bound by authority to treat the contracts of infants as voidable only, and not void; but that this section only refers to contracts made by persons competent to contract, and therefore not to infants.
The general current of decision in India certainly is that ever since the passing of the Indian Contract Act the contracts of infants are voidable only. This conclusion, however, has not been arrived at without vigourous protests by various judges from time to time; nor indeed without decisions to the contrary effect. Under these circumstances, their Lordships consider themselves at liberty to act on their own view of the law as declared by the Contract Act, and they have thought it right to have the case reargued before them upon this point. They do not consider it necessary to examine in detail the numerous decisions above referred to, as in their opinion the whole question turns upon what is the true construction of the Contract Act itself. It is necessary, therefore, to consider carefully the terms of that Act; but before doing so it may be convenient to refer to the Transfer of Property Act (IV of 1882), s. 7 of which provides that every person competent to contract and entitled to transferable property … is competent to transfer such property … in the circumstances, to the extent, and in the manner allowed and prescribed by any law for the time being in force. That is the Act under which the present mortgage was made, and it is merely dealing with persons competent to contract; and s. 4 of that Act provides that the chapters and sections of that Act which relate to contracts are to be taken as part of the Indian Contract Act, 1872. The present case, therefore, falls within the provisions of the latter Act.
Then, to turn to the Contract Act, s. 2 provides (e) Every promise and every set of promises, forming the consideration for each other, is an agreement. (g) An agreement not enforceable by law is said to be void. An agreement enforceable by law is a contract, (i) An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract.
Sect. 10 provides: “All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.”Then s. 11 is most important, as defining who are meant by “persons competent to contract;” it is as follows: “Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject. Looking at these sections, their Lordships are satisfied that the Act makes it essential that all contracting parties should be “competent to contract,” and expressly provides that a person who by reason of infancy is incompetent to contract cannot make a contract within the meaning of the Act. This is clearly borne out by later sections in the Act. Sec. 68 provides that, “If a person incapable of entering into a contract, or any one whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person.” It is beyond question that an infant falls within the class of persons here referred to as incapable of entering into a contract; and it is clear from the Act that he is not to be liable even for necessaries, and that no demand in respect thereof is enforceable against him by law, though a statutory claim is created against his property. Under ss. 183 and 184 no person under the age of majority can enjoy or be an agent. Again, under ss. 247 and 248, although a person under majority may be admitted to the benefits of a partnership, he cannot be made personally liable for any of its obligations; although he may on attaining majority accept those obligations if he thinks fit to do so. The question whether a contract is void or voidable presupposes the existence of a contract within the meaning of the Act, and cannot arise in the case of an infant. Their Lordships are, therefore, of opinion that in the present case there is not any such voidable contract as is dealt with in s. 64.
A new point was raised here by the appellants’ counsel, founded on s. 65 of the Contract Act, a section not referred to in the Courts below, or in the cases of he appellants or respondent. It is sufficient to say that this section, like s. 64, starts from the basis of there being an agreement or contract between competent parties, and has no application to a case in which there never was, and never could have been, any contract. It was further argued that the preamble of the Act shewed that the Act was only intended to define and amend certain parts of the law relating to contracts, and that contracts by infants were left outside the Act. If this were so, it does not appear how it would help the appellants. But in their Lordships’ opinion the Act, so far as it goes, is exhaustive and imperative, and does provide in clear language that an infant is not a person competent to bind himself by a contract of this description.
Another enactment relied upon as a reason why the mortgage money should be returned is s. 41 of the Specific Relief Act (I of 1877), which is as follows: “Sec. 41. On adjudging the cancellation of an instrument the Court may require the party to whom such relief is granted to make any compensation to the other which justice may require.” Sec. 38. provides in similar terms for a case of rescission of a contract. These sections, no doubt, do give a discretion to the Court; but the Court of first instance, and subsequently the Appellate Court, in the exercise of such discretion, came to the conclusion that under the circumstances of this case justice did not require them to order the return by the respondent of money advanced to him with full knowledge of his infancy, and their Lordships see no reason for interfering with the discretion so exercised.
