Mohori Bibee vs. Damodar Ghose : Facts, Issues, Contentions, Judgement & Analysis

The case of Mohori Bibee vs. Dharmodas Ghose[1] covers a wide scope of minor’s agreements. This case primarily concerns a contract involving a minor or a contract with a minor. In India, an agreement or contract with a minor (a person under the age of 18 or who has not legally reached the age of 18) is void ab-initio (void from the start). These rules and regulations are in place because, according to the law, such people do not have the capacity to contract or agree to do so.

Anyone under the age of 18 or who has not yet reached the age of 18 (i.e. a minor) cannot sign a contract or make major choices, according to the courts. Because adolescents are legally incapable of providing their consent, this case has effectively taught us that they must be entitled to or provided with protection in their relationships with other adults. Every attempt to contact or negotiate with the minor after this incident is null and void from the beginning.

FACTS

1. Dharmodas Ghose, the Respondent, was a minor and sole owner of immovable property. His legal custody was with his mother as per authorization by Calcutta High Court.
2. He mortgaged his property in favour of Brahmo Dutta, the appellant, and secured this deed for Rs. 20,000 at an interest of 12% p.a.
3. Brahmo Dutta was a money lender at that time and his business was managed by Kedar Nath who also acted as his attorney.
4. At the time of the said mortgage transaction, Kedar Nath was aware of Dharmodas Ghose’s minority.
5. Ghose’s mother wrote a letter to Brahmo Dutta informing him about the minority of his son on the date of mortgage deed.
6. She mentioned that Kedar Nath, who has entered into the deed on behalf of Brahmo Dutta had knowledge of Ghose’s minority and thus he is incompetent to mortgage the property.
7. On 10^th September 1895, Dharmodas Ghose and his mother filed a suit against Brahmo Dutta claiming that the mortgage deed is void ab initio as at the time of the deed he was a minor.
8. During the pendency of litigation, Brahmo Dutta died, and the case was carried forward by his executors.
9. They argued that Ghose should not get any aid or relaxation because he made a dishonest representation about his age.
10. The trial court ruled that any mortgage, deed, sale, or contract involving a minor as a party to the contract cannot be enforced and is void ab initio, and because Dharmodas Ghosh was a minor, Brahmo Dutta’s petition was dismissed.
11. The aggrieved party went to Calcutta High Court for appeal, but the high court sided with the trial Court’s judgement and rejected the appeal. So, they move the petition to Privy Council

ISSUES RAISED

1. Whether the mortgage deed was valid?
2. Whether the Responded was liable to return the amount given to him against the mortgage deed?

CONTENTIONS BY THE APPELLANT

1. The minor had fraudulently misrepresented his age, the law of estoppel should be applied against him. in other words, he should not be allowed to plead that at the time of the transaction he was a minor and, therefore, no relief should be given to the minor in the case
2. If the mortgage is cancelled as requested by the minor, then he should also be asked to refund the loan amount which he has taken
3. The appellants emphasized that they have recourse under Sections 64 and 65 of the Indian Contract Act of 1872, as well as Section 41 of the Specific Relief Act of 1877.

CONTENTIONS BY THE RESPONDENT

1. Despite knowing Dharmodas Ghose’s true age, the petitioner, and his agents Brahmo Dutta and Kedar Nath went into the deal at their own risk and with mala fide purpose.
2. The respondent Dharmodas Ghose was a minor [i.e., under the age of 18] when he entered into the contract, and it was void ab initio, meaning it was void from the start, according to the Indian Contract Act, 1855, thus there is no question of relief or remedy.

JUDGEMENT

1. The Privy Council rejected the opinion that the minor falsely presented his age, therefore, the law of estoppel should apply against him, and he should not be allowed to contend that he was a minor. They allowed the minor to plead that he was a minor at the time of the agreement and the agreement was void. It was found that the fact that the plaintiff was a minor at the time of making the agreement was known to the defendant’s agent. It was held that the law of estoppel as stated in section 115 Indian Evidence Act, was not applicable to the present case because in this case the statement about the age was made to a person who knew the real facts and was not misled by the untrue statements. It was observed:

“there can be no estoppel where the truth of the matter is known to both the parties and their lordships hold, 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.”[2]

2. Another contention of the defendant was that, if the plaintiff’s claim to order the cancellation of the mortgage is allowed then the minor should be asked to refund the loan taken by him under sections 64 and 65 of the Indian Contract Act. Section 64 reads as under:

“When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained of which he is a promiser. The party rescinding a voidable contract shall, if he has received any benefit thereunder from another party to such a contract, restore such benefit so far as may be, to the person from whom it was received”

 The lordships observed that section 64 was applicable to the case of a voidable contract. Minor’s agreement being void, section 64 was not applicable to the case and therefore the minor could not be asked to pay the amount under this section.

Application of section 65 to the present case was also considered. It reads:

“When an agreement is discovered to be void or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.”

 as regards the application of this section to the present case, it was observed that this section like section 64 is applicable to 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. The minor; therefore, could not be asked to repay the amount even under section 65.

3. The lender claimed the refund of a mortgage under another provision also, that is, section 41 Specific Relief Act, 1877 the section reads as follows:

“On adjudging the cancellation of an instrument, the court may require the party to whom such a relief is granted to make any compensation to the other which justice may require.”

as regards the section, it was held that the section gives discretion to the court to order compensation, but under the circumstances of this case, justice did not require the return of the money advanced to the minor as the money had been advanced with the full knowledge of the infancy of the plaintiff. The claim for refund under the specific release app was therefore disallowed

Hence all the defendant’s contentions were rejected, and the minor’s agreement was held void. it was held that the minor could not be asked to repay the loan taken by him.

ANALYSIS OF JUDGEMENT

According to the ruling, any transaction with a minor is null and void simply because of Sections 2, 10 and 11 of the Indian Contract Act. When Section 11 is read in conjunction with Section 10, the result is that a contract with a minor is null and void. Section 10 of the Indian Contract Act stipulates that all contracting parties must be competent, but Section 11 establishes the competency criteria, which excludes children, persons of unsound mind, and those who are expressly prohibited by law.

In this case, the court also held that section 64 and section 65 are not applicable in void agreements. However, the Law Commission[3] of India disagrees with the interpretation given by the Privy Council to Section 65. In their view, section 65 covers the case of a minor, who makes a false representation that he is a major and such a minor should be asked to pay compensation. They recommended that an application be added to section 65 to give effect to their opinion.

No amendment of the Indian contract act has been made so far to give effect to the recommendation of the Law Commission.

CONCLUSION

It can be concluded from this case that any contract with a minor is not valid and thus cannot be enforced. The only exception to this rule is Section 68 of the Indian Contract Act, which deals in reimbursement for the necessaries supplied to a minor.

[1] (1903) 30 I.A. 114 (P.C.)

[2] Ibid at Pg 122

[3] Law Commission of India, 13^th Report, on Indian Contract Act, 1872.