By Shreyan Acharya, Vivekananda Institute of Professional Studies, Delhi.
In a contractual obligation, it is of general presumption that every man is the best judge of his own interests but such presumption is suspended in some cases. The following paper focuses on the issues or controversies related to the position of a minor in an agreement.
Section 10 of the Indian Contract Act, 1872 requires that, for an agreement to be a contract, the parties must be competent to contract (amongst other requirements), and such competence to contract is defined in Section 11 of the Indian Contract Act, 1872. Section 11 of the Indian Contract Act can be understood in two parts. The first part states that every person is competent to contract who is of the age of majority. Now, here it states majority which is general known to be the person of the age of eighteen years. The Indian Majority Act, 1875 provides a clear picture as Section 3 of the Indian Majority Act, 1875 states that any person domiciled in India shall be deemed to attain majority only when the person has completed eighteen years and not before. But the same provision also states that when a guardian of minor’s person or property has been appointed by the Court, then the attainment of majority would be after completing twenty-one years.
The second part simply states that the person would be competent to contract who is of sound mind and who is not disqualified from contracting by any law to which he is subject to.
Nature of Minor’s Agreement
Section 10 of the Indian Contract Act, 1872 requires that the parties to an agreement must be competent to contract, and Section 11 of the Indian Contract Act, 1872 declares that a minor is not competent. But the Law was uncertain as to the validity of an agreement entered into by a minor. The ambiguity was regarding the question that if a minor enters into an agreement, then is it a Voidable Contract, voidable at the option of such minor; or if such an agreement is void ab initio. These provisions had given rise to a controversy related to the nature of minor’s agreement which resolved in 1903 by the Judicial Committee of the Privy Council in their well-known pronouncement in Mohori Bibi v Dhurmodas Ghosh (1903) 30IA 114. The decision cleared the vagueness and held that the minor’s agreement would absolutely be void. As observed by Sir Lord NORTH :
“Looking at Section 11, 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 this Act. 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.”
So, the Privy Council in Mohori Bibi v Dhurmodas Ghosh made the provisions crystal clear that the nature of minor’s agreement would be entirely void, but now the issues arises whether the guardian of the minor’s person or estate bind the minor in case of any transaction of immovable property on minor’s behalf?
The ruling of the Privy Council in the Mohori Bibi case has been generally followed by the courts in India. The Privy Council in Mir Sarwarjan v Fakhruddin Mohd Chowdhury (1912) 39CAL 232 (PC) observed that:
“A contract to purchase certain immovable property had been made by a guardian on behalf of a minor, and the minor sued the other party for a decree of specific performance to recover possession. His action was rejected.”
The above observation clearly indicated the notion of the Privy Council in which the court stated that it was not within the competence either of the manager or the guardian to bind the minor or the minor’s estate by a contract for the purchase of immovable property, that as the minor was not bound by the contract as there was no mutuality and that consequently the minor could not obtain specific performance of the contract. But the above decision was overruled by the Privy Council in its pronouncement in Subramanyam v Subha Rao AIR 1948 PC 25, in which it entertained no doubt that it was within the powers of the mother of a minor as guardian to enter into a contract of sale for the purpose of discharging his father’s debts.
Following this decision, various High Courts also recognised the principle laid down in this decision. As the Orissa High Court in Durga Thakurani v Chitnamani, AIR 1948 PC 25, also held that endowment of property for religious purposes by guardians on behalf of minors, being within their competence, was specifically enforceable. As in Suryaprakasan v Gangaraju,AIR 1956 AP 33, it was observed that the doctrine of mutuality should not have been imported into the matter where the contract was within the competence of the guardian and that there is no scope for this doctrine under Section 20 of the Specific Relief Act, 1963. Dispute arises when the guardian undertake the transaction and later, the suit is filed by the minor to reclaim it. As this dispute had been resolved by the Srikakulam Subrahmanyam v Kurra Subba Rao (1949) 75IA 115. In this decision it was found Privy Council in that as a fact of the transaction was for the benefit of the minor and the guardian had the capacity to contract on his behalf.
As observed by Lord Morton:
“Section 11 of the Indian Contract Act, 1872 and the Mohori Bibi case leave no doubt that a minor cannot contract and that if the guardian and the mother had taken no part in this it would have been void. The contract being for the benefit of the minor and within the power of the guardian was held to be binding upon him”.
English and Indian Law
There is not much to differentiation between English and Indian law of contract because this statute had been promulgated during the British era. So mostly, the provisions of the Indian Contract Act, 1872 is identical to the English law. There are certain things which can be differentiated.
As per Section 11 of the Indian Contract Act, 1872, a person who has attained the age of majority would be competent to contract. The age of majority has been stated in Section 3 of the Indian Majority Act, 1875, i.e. a person would attain majority when he would complete eighteen years. But earlier in England, the age of majority formerly was twenty-one years. Now, under the Family Law Reform Act, 1969, a minor is a person under the age of eighteen years. Formerly the minor was referred to as ‘infant; but this Act has changed the term to ‘minor’. In the landmark Judgment of Mohori Bibi, it was laid down that a minor’s agreement is absolutely void, in England also the Infant’s Relief Act of 1874 declares the following categories of a minor’s agreement to be absolutely void when:
- Contracts for repayment of money lent or to be lent;
- Contracts for good supplied or to be supplied ;
- Contract for accounts stated
The difference lies that the Indian Law does not specify any of the categories and any agreement entered by the minor would be held to be void because a child may show poor judgment in making a particular contract.Therefore, the above case laws and analysis can be useful in drawing a clear picture of the nature of minor’s agreement and its implication under the Indian Contract Act, 1872.