Dharmodas Ghose, a minor, entered into a contract for borrowing a amount of Rs. 20,000 out of which the loaner paid the child a amount of Rs. 8,000. The minor executed mortgage of belongings in favor of the loaner. Subsequently, the minor sued for puting aside the mortgage.
The Privy Council had to determine the cogency of the mortgage. Under Section 7 of the Transfer of Property Act, every individual competent to contract is competent to mortgage. The Privy Council decided that Sections 10 and 11 of the Indian Contract Act make the minor’s contract nothingness. The mortgage holder prayed for refund of Rs. 8,000 by the child. The Privy Council farther held that as a minor’s contract is null, any money advanced to a child can non be recovered.
JUSTICE SIR FORD NORTH
On July 20, 1895, the respondent, Dharmodas Ghose, executed a mortgage in favor of Brahmo Dutt, a money-lender transporting on concern at Calcutta and elsewhere, to procure the refund of Rs. 20,000 at 12 per cent involvement on some houses belonging to the respondent. The sum really advanced is in difference. At that clip the respondent was an baby ; and he did non achieve 21 until the month of September following. Throughout the dealing Brahmo Dutt was absent from Calcutta, and the whole concern was carried through for him by his lawyer, Kedar Nath Mitter, the money being found by Dedraj, the local director of Brahmo Dutt. While sing the proposed progress, Kedar Nath received information that the respondent was still a minor ; and on July15, 1895, the undermentioned missive was written and sent to him by Bhupendra Nath Bose, an lawyer:
“Dear Sir, I am instructed by S.M. Jogendranundinee Dasi, the female parent and defender appointed by the High Court of the individual and belongings of Babu Dharmodas Ghose, that a mortgage of the belongingss of the said Babu Dharmodas Ghose is being prepared from your office. I am instructed to give you notice, which I hereby make, that the said Babu Dharmodas Ghose is still an baby under the age of 21, and any one loaning money to him will make so at his ain hazard and peril.”
Kedar Nath positively denied the reception of any such missive ; but the Court of first case and the Appellate Court both held that he did personally have it on July 15 ; and the grounds is conclusive upon the point. On the twenty-four hours on which the mortgage was executed, Kedar Nath got the baby to subscribe a long declaration, which he had prepared for him, incorporating a statement that he came of age on June 17 ; and that Babu Dedraj and Brahmo Dutt, trusting on his confidence that he had attained his bulk, had agreed to progress to him Rs. 20,000. There is conflicting grounds as to the clip when and fortunes under which that declaration was obtained ; but it is unneeded to travel into this, as both Courts below have held that Kedar Nath did non move upon, and was non misled by, that statement, and was to the full cognizant at the clip the mortgage was executed of the minority of the respondent
On September 10, 1895, the baby, by his female parent and guardian as following friend, commenced this action againt Brahmo Dutt, saying that he was under age when he executed the mortgage, and praying for a declaration that it was null and inoperative, and should be delivered up to be cancelled. The suspect, Brahmo Dutt, put in a defense mechanism that the complainant was of full age when he executed the mortgage ; that neither he nor Kedar Nath had any notice that the complainant was so an baby, that, even if he was a minor, the declaration as to his age was fraudulently made to lead on the suspect, and disentitled the complainant to any alleviation ; and that in any instance the Court should non allow the complainant any alleviation without doing him refund the moneys advanced.
Jenkins J. , who presided in the Court of first case, found the facts as above stated, and granted the alleviation asked. And the Appellate Court dismissed the entreaty from him. Subsequently to the establishment of the present entreaty Brahmo Dutt died, and this entreaty has been prosecuted by his executors. The first of the appellants’ grounds in support of the present entreaty is that the Courts below were incorrect in keeping that the cognition of Kedar Nath must be imputed to the suspect. In their Lordships’ sentiment they were evidently right. The suspect was absent from Calcutta, and personally did non take any portion in the dealing. It was wholly in charge of Kedar Nath, whose full authorization to move as he did is non disputed. He stood in the topographic point of the suspect for the intents of this mortgage ; and his Acts of the Apostless and cognition were the Acts of the Apostless and cognition of his principal.
It was contended that Dedraj, the defendant’s gomastha, was the existent representative in Calcutta of the suspect, and that he had no cognition of the plaintiff’s minority. But there is nil in this. He no uncertainty made the progress out of the defendant’s financess. But he says in his grounds that “Kedar Babu was moving on behalf of my maestro from the beginning in this affair ; ” and a small farther on he adds that before the enrollment of the mortgage he did non pass on with his maestro on the topic of the minority. But he did cognize that there was a inquiry raised as to the plaintiff’s age ; and he says, “I left all affairs sing the minority in the custodies of Kedar Babu.”
The appellants’ advocate contended that the complainant is estopped by Section 115 of the Indian Evidence Act ( I. of 1872 ) from puting up that he was an baby when he executed the mortgage. The subdivision is as follows: “Estoppels. When one individual has by his declaration act or skip deliberately caused or permitted another individual to believe a thing to be true, and to move upon such belief, neither he nor his representative shall be allowed in any suit or continuing between himself and such individual or his representative to deny the truth of that thing.”
The Courts below seem to hold decided that this subdivision does non use to babies ; but their Lordships do non believe it necessary to cover with that inquiry now. They consider it clear that the subdivision does non use to a instance like the present, where the statement relied upon is made to a individual who knows the existent facts and is non misled by the untrue statement. There can be no estoppel where the truth of the affair is known to both parties, and their Lordships clasp, in conformity with English governments, that a false representation, made to a individual who knows it to be false, is non such a fraud as to take away the privilege of babyhood:
Nelson V Stocker [ 1 De G. & A ; J. 458 ] . The same rule is recognised in the account to Section 19 of the Indian Contract Act, in which it is said that a fraud or deceit which did non do the consent to a contract of the party on whom such fraud was practiced, or to whom such deceit was made, does non render a contract rescindable.
The point most pressed, nevertheless, on behalf of the plaintiff in errors was that the Courts ought non to hold decreed in the respondent’s favor without telling him to refund to the plaintiff in errors the amount of Rs. 10,500, said to hold been paid to him as portion of the consideration for the mortgage. And in support of this contention Section. 64 of the Contract Act ( IX of 1872 ) was relied on:
Both Courts below held that they were bound by authorization to handle the contracts of babies as rescindable merely, and non null ; but that this subdivision merely refers to contracts made by individuals competent to contract, and hence non to babies.
The general current of determination in India surely is that of all time since the passing of the Indian Contract Act the contracts of babies are rescindable merely. This decision, nevertheless, has non been arrived at without vigourous protests by assorted Judgess from clip to clip ; nor so without determinations to the contrary consequence. Under these fortunes, their Lordships see themselves at autonomy to move on their ain position of the jurisprudence as declared by the Contract Act, and they have thought it right to hold the instance reargued before them upon this point.
They do non see it necessary to analyze in item the legion determinations above referred to, as in their sentiment the whole inquiry turns upon what is the true building of the Contract Act itself. It is necessary, hence, to see carefully the footings of that Act ; but before making so it may be convenient to mention to the Transfer of Property Act ( IV of 1882 ) , s.7 of which provides that every individual competent to contract and entitled to movable belongings … is competent to reassign such belongings … in the fortunes, to the extent, and in the mode allowed and prescribed by any jurisprudence for the clip being in force.
That is the Act under which the present mortgage was made, and it is simply covering with individuals competent to contract ; and s. 4 of that Act provides that the chapters and subdivisions of that Act which relate to contracts are to be taken as portion of the Indian Contract Act, 1872. The present instance, hence, falls within the commissariats of the latter Act.
Then, to turn to the Contract Act, s. 2 provides ( vitamin E ) Every promise and every set of promises, organizing the consideration for each other, is an understanding. ( g ) An understanding non enforceable by jurisprudence is said to be null. An understanding enforceable by jurisprudence is a contract, ( I ) An understanding which is enforceable by jurisprudence at the option of one or more of the parties- thereto, but non at the option of the other or others, is a rescindable contract
Sect. 10 provides: “All understandings 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 non thereby expressly declared to be void.”
Then Sec. 11 is most of import, as shaping who are meant by “persons competent to contract ; ” it is as follows: “Every individual is competent to contract who is of the age of bulk harmonizing to the jurisprudence to which he is capable, and who is of sound head, and is non disqualified from undertaking by any jurisprudence to which he is capable. Looking at these subdivisions, their Lordships are satisfied that the Act makes it indispensable that all undertaking parties should be “competent to contract, ” and expressly provides that a individual who by ground of babyhood is unqualified to contract can non do a contract within the significance of the Act. This is clearly borne out by ulterior subdivisions in the Act. Sec. 68 provides that, “If a individual incapable of come ining into a contract, or any one whom he is lawfully bound to back up, is supplied by another individual with necessities suited to his status in life, the individual who has furnished such supplies is entitled to be reimbursed from the belongings of such incapable person.”
It is beyond inquiry that an baby falls within the category of individuals here referred to as incapable of come ining into a contract ; and it is clear from the Act that he is non to be apt even for necessities, and that no demand in respect thereof is enforceable against him by jurisprudence, though a statutory claim is created against his belongings. Under Section. 183 and 184 no individual under the age of bulk can bask or be an agent. Again, under Section. 247 and 248, although a individual under bulk may be admitted to the benefits of a partnership, he can non be made personally apt for any of its duties ; although he may on achieving bulk accept those duties if he thinks tantrum to make so. The inquiry whether a contract is null or rescindable presupposes the being of a contract within the significance of the Act, and can non originate in the instance of an baby. Their Lordships are, hence, of sentiment that in the present instance there is non any such rescindable contract as is dealt with in Section 64.
A new point was raised here by the appellants’ advocate, founded on s. 65 of the Contract Act, a subdivision non referred to in the Courts below, or in the instances of the plaintiff in errors or respondent. It is sufficient to state that this subdivision, like Section. 64, starts from the footing of there being an understanding or contract between competent parties, and has no application to a instance in which there ne’er was, and ne’er could hold been, any contract.
It was further argued that the preamble of the Act showed that the Act was merely intended to specify and amend certain parts of the jurisprudence associating to contracts, and that contracts by babies were left outside the Act. If this were so, it does non look how it would assist the plaintiff in errors. But in their Lordships’ sentiment the Act, so far as it goes, is thorough and imperative, and does supply in clear linguistic communication that an baby is non a individual competent to adhere himself by a contract of this description.
Another passage relied upon as a ground why the mortgage money should be returned is Section 41 of the Specific Relief Act ( I of 1877 ) , which is as follows: “Sec. 41. On declaring the cancellation of an instrument the Court may necessitate the party to whom such alleviation is granted to do any compensation to the other which justness may require.” Sec.38. provides in similar footings for a instance of recission of a contract. These subdivisions, no uncertainty, do give a discretion to the Court ; but the Court of first case, and later the Appellate Court, in the exercising of such discretion, came to the decision that under the fortunes of this instance justness did non necessitate them to order the return by the respondent of money advanced to him with full cognition of his babyhood, and their Lordships see no ground for interfering with the discretion so exercised.