Citation: (1903) ILR 30 Cal 539 (PC)
Date of Judgement: 04 March 1903
Names of the Judges involved in the Judgement:
Lord McNaughton, Lord Davey, Lord Lindley, Sir Ford North, Sir Andrew Scoble, Sir Andrew Wilson
Background and Short Introduction
The rights and duties enclosed in a contract are governed by the Indian Contract Act, 1872. Section 10 of the Contract Act mentions the essentials of a contract.
Section 10 of the Indian Contract Act states: “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.” One of the essentials include competency of the party to contract. Section 11 of the Indian Contract Act defines who are the ones competent to contract as: “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.” This clearly states that a minor is not competent enough to form a contract.
Law doesn’t consider a minor or a person domiciled in India who has not attained the age of 18 years competent to form a contract. The law believes that a minor is incapable of thinking in a way an ordinary person might think and that his decisions can be dominated by a major with whom he attempts to make a contract. Thus the law declares a contract with a minor to be void and not voidable. The case of Mohori Bibee vs Dharmodas Ghose brought about new principles and facts on minorities. The case involves a minor being a part of a contract. After this case, any sort of contract or agreement with a minor was considered void from the very beginning or void ab-initio.
Facts of the case
1. Dharmodas Ghose was the respondent in this case. He was a minor when he mortgaged his immovable property in favour of Brahmo Dutt who was the defendant. Brahmo Dutt was a moneylender.
The Calcutta High Court had authorised the mother of Dharmodas Ghose as his legal custodian.
2. Dharmodas mortgaged his property for obtaining a sum of Rs. 20,000 at 12% interest per year. Kedar Nath was the attorney of Brahmo Dutt who managed his business.
3. Dharmodas Ghose’s mother by notification had informed Kedar Nath about the minority status of Dharmodas Ghose on the date of the said mortgage. However, the sum paid to him was less than that. Thus, Kedar Nath was well aware of the incompetency of Dharmodas Ghose to enter into the contract yet he continued the mortgaged deed on behalf of Brahmo Dutt.
4. Dharmodas along with his mother brought a legal action against Brahmo Dutt claiming that when the
mortgage deed was executed, Dharmodas was a minor and therefore the agreement was void and improper. They demanded the mortgage be cancelled and the contract be revoked.
5. Brahmo Dutt asked if the mortgage was cancelled he should be returned the amount he had lent but it was held that Dharmodas could not be forced to pay back the amount as there existed no legal contract.
6. Brahmo Dutt died while the claim was still in process and further an appeal was litigated by his executors. The appellant claimed that no relief should be granted to them because according to him they had deceitfully kept the fact of Dharmodas’s minority out of his knowledge.
But the mother had informed Kedar Nath about the fact of the minority so the contract was a void one.
Issues before the Court
1. Whether the contract was void as under Section 2, 10, 11 of Indian Contract Act, 1872 or not?
2. Whether the defendant was liable to return the amount of loan as per the mortgage deed or not?
Contentions of Petitioner
1. The appellant did not have any knowledge about the minority of the respondent.
2. The respondents had fraudulently depicted Dharmodas to be a major and competent to a contract.
3. The respondent under Section 115 of the Indian Evidence Act, 1872 is prohibited from claiming that he was a minor at the time of entering the contract.
4. The respondent must repay the amount devised according to Section 64 and 38 of Indian Contract Act, 1872 and Section 41 of Specific Relief Act, 1877.
Contentions of Respondent
1. Kedar Nath was well aware of the fact that Dharmodas was a minor at the time of executing the deed as informed by his mother.
2. Since the respondent was minor at the date of the contract, the contract is void.
1. As per the verdict of the Trial court,
the contract was declared to be void. It was held that the deed executed between the plaintiff and the defendant was void on the grounds that the person who executed it was a minor at the time of the execution of such mortgage.
2. Brahmo Dutt being dissatisfied with the verdict of the Trial court, filed an appeal in Calcutta High Court. However, the Calcutta High Court too upheld the decision given by the Trial Court and declared the contract to be void.
3. Brahmo Dutt further appealed to Privy Council and his appeal was dismissed on the following grounds:
a) There cannot be a contract between a minor and a major person.
b) Any contract with a minor or infant is void ab initio.
c) Since minor is considered incompetent to enter a contract as per Section 10 of the Indian Contract Act, 1872 therefore, such a contract will be void in the eyes of law.
d) The respondent cannot be forced to give back the amount of money that was advanced to him by Brahmo Dutt since he is not bound by the promise executed through a void contract.
This case brought about a new aspect on contract with a minor.
After this case it was concluded that a contract with a minor was neither void or voidable rather it was void ab-initio. The Court also mentioned that if a representative to the legal matters has the knowledge then the act done by him is of his principal. The Majority Act was enforced that gave information about the majority and minority criteria of a person. It stated that a person domiciled in India would be considered as major after the completion of 18 years of age, at no cost otherwise. If in case a guardian is appointed by the Court to a minor, then his age of majority would be considered as 21 years instead of 18 years. Thus the concept of minority and majority was made more clear.
The conclusion thus obtained by Mahori Bibee vs. Dharmodas Ghose was that a contract with a minor will be considered void ab-initio (void from beginning). As a result of which, the beneficiary amount or compensation could not be reimbursed from a minor on the basis of a void contract. Although, a custodian or guardian can form a contract on the behalf of the minor. In such a case where the contract was guided by the custodian, the money if taken by deceit can be forced to be repaid as the decision was taken by a custodian, who was major and sensible enough to give his consent. This completed the essential competency to contract regarding minorities.
--  Under the age of 18 years  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.  Consequences of rescission of a voidable contract. —When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is the promisor. The party rescinding a voidable contract shall, if he had received any benefit thereunder from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received.  Effect of refusal to accept an offer of performance. —Where a promisor has made an offer of performance to the promisee, and the offer has not been accepted, the promisor is not responsible for non-performance, nor does he thereby lose his right under the contract. —Where a promisor has made an offer of performance to the promisee, and the offer has not been accepted, the promisor is not responsible for non-performance, nor does he thereby lose his right under the contract.