CRITICAL ANALYSIS OF MINOR AGREEMENTS

2.1. Law of Contract – I

Submitted by:

Riya Jain

UID: UG2019-85

B.A.LL.B.(Hons.) I Year-2nd Semester

Submitted to:

Dr. Himanshu Pandey

(Associate Professor of Law)

MAHARASHTRA NATIONAL LAW UNIVERSITY, NAGPUR

Table of Cases

 Mohori Bibi v. Dharmodas Ghose ILR (1903) 30 Cal 539 (PC)

 Mathai Mathai v. Joseph Mary (2015) 5 SCC 622

 Raghava Chariar v. Srinivasa Raghava (1916) 31 MLJ 575

 Khan Gul v. Lakha Singh AIR 1928 Lah. 609

 Ram Ashish Chaudhary v. State of Uttar Pradesh (2003) All. LJ.330

 Mir Sarwarjan v. Fakhruddin Mahommed ILR 39 Cal. 232

Table of Contents

Sr. no. Title Page no.

1 Table of Cases i

2 Introduction 1

3 Research Methodology 2

i
4 Analysis 4

5 Mohori Bibi v. Dharmodas Ghose 6

6 Principle of Restitution in Minor Agreements 8

7 Mathai Mathai v. Joseph Mary 9

8 Conclusion 11

9 References iii

ii
 INTRODUCTION

A minor, in the eyes of law, is someone who has not yet attained the age of majority as
stipulated by the law in context. The age of majority is dynamic, i.e., the age is not fixed, it can
be set by the law differently for different circumstances. Take for instance, all the rights and
laws relating to child labour. According to these, the minimum age for employment is fourteen
years only, which means that a child attains majority for employment purposes at fourteen
itself. In contrast to this is the fact that a child cannot enter into a contract – such as that of
employment and marriage – until the age of eighteen (twenty-one in case of male for marriage).
This is a highly controversial issue in the country where millions of children are engaged in
child labour at hazardous places from tender ages.1

In Indian Contract law, the age of majority is governed by the Indian Majority Act, 1875 –
section 3 of this Act provides the age of majority for individuals in India.2 Any person
domiciled in India who is under the age of eighteen years, is considered as a minor. In certain
specific instances, a person continues to be dealt with as a minor until he/she attains the age of
twenty-one. These instances are:

 When, under the Guardians and Wards Act, 1890, a guardian has been appointed for
the minor’s person or property, or,
 When a Court of Wards assumes the superintendence of a minor’s property.3

Thus, a person is usually considered to have attained majority at the age of eighteen years,
except in the above-mentioned situations where majority is attained at twenty-one. The law
provides special protection to minors in relation to them entering into contracts and agreements
with others. The special protection is given to them as they are not considered legally capable
to provide consent. The rationale behind this is that minors are not mature enough to think of
their own interests and therefore, it is the duty of the law to safeguard their interests.

1
MADABHUSHI SRIDHAR, Discussion Paper on Legal Provisions Regarding Age of Child: To Protect the
Rights of the Children, NALSAR University of Law, Hyderabad.
2
Section 03, The Indian Majority Act, 1875, No. 09, Acts of Parliament.
3
Section 03, The Indian Majority Act, 1875, No. 09, Acts of Parliament.

1
The Indian Contract Act, 1872 does not specifically deal with agreements with minors.
However, as per section 11 of the Indian Contract Act, 1872 – persons who have not attained
the age of majority are not competent to contract.4 Thus, minors are forbidden from entering
into contracts. Any contract entered into by a minor is void ab initio, i.e., it has no legal force
and is void from the very beginning. Such contracts cannot be enforced, even if the other party
to the contract was not aware of the minority and intended to deal fairly.5

The essential point to note here is that restricting minors from entering into contracts is actually
in their interest and not against their freedom, as might be implied. It comes under the ambit of
the law to ensure that no one is able to take advantage of the position of a minor. The broader
outlook of this is that, in a way, by imposing restrictions on minors entering into agreements
and contracts, the law is acting in their interests. Along with taking care of interests of minors,
the law also has to keep in mind that the persons who knowingly or unknowingly enter into
contracts with minors should not suffer any unnecessary hardship.

RESEARCH METHODOLOGY

(i) Research design – The research method used to write this paper is doctrinal. It is
doctrinal in the sense that it comes from credible sources such as books, journals and
articles published in renowned publications.

The paper uses deductive reasoning for its research. The sources of knowledge also
consist of the theoretical knowledge the researcher possesses as a law student. The
research is a critical analysis of Minor Agreements under Indian Law of Contracts. The
work discusses at length, ‘Minor Agreements’, its historical background, aspects, legal
standing and more. The data used is qualitative, in the form of established theory and
criticism. The data has been extracted from journals, articles and e-law websites.

4
Section 11, The Indian Contract Act, 1872, No. 09, Acts of Parliament.
5
HIMANSHU ARORA, Legal Position of Minor and Minor’s Agreements, Vol. 02, International Journal of
Management and Commerce Innovations, October 2014 – March 2015, pp. 481-486.

2
 The instructions given by the research supervisor have been followed. The entire
research has been done in an organized manner. The necessary chapters have been
selected first, and then only has the effort been made to collect information for each
chapter.

(ii) Aims and objectives – The aim of the researcher by doing this project is to understand
the concept of ‘Minor Agreements’ and the various issues associated with it. Another
aim is to study and critically analyse the various aspects of ‘Minor Agreements’ in the
contemporary world with respect to the past conditions and situations. The researcher
also wishes to examine numerous case laws associated with ‘Minor Agreements’ to
further analyse its significance and to illustrate the development of legal principles
associated with it.

The objectives of the researcher are as follows:

 To understand and evaluate the concept of ‘Minor Agreements’ under Indian
Law of Contracts.
 To analyse and study various case laws associated with ‘Minor Agreements’ and
find exceptions to existing rules.
 To evaluate the legal principles regarding restitution, enforceability and
estoppel in relation with ‘Minor Agreements’.

(iii) Hypothesis – The researcher has formulated the following hypothesis about the
concept of ‘Minor Agreements’ before starting the research work to ensure that the
research follows certain guidelines.

The general knowledge of the researcher with regard to ‘Minor Agreements’ is that if
any person who has not attained the age of majority, enters into a contract with another,
then that contract is void ab initio, i.e., void from the beginning. The contract cannot be
enforced at the cost of the minor.

(iv) Review of literature – The following literature has been referred to for the purpose of
performing this research:

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  Legal Position of Minor and Minor’s Agreement, an article authored by Himanshu
Arora in the International Journal of Management and Commerce Innovations. This
article has been referred by the researcher to understand the legal standing of
minors.
 Mathai Mathai v. Joseph Mary: A Step Backwards, an article authored by Anirudh
Wadhwa in the NLS Business Law Review journal. This article is an analysis of the
judgement in the Mathai Mathai v. Joseph Mary case and provides insights into the
development of legal principles in the field of ‘Minor Agreements’.
 Discussion Paper on Legal Provisions Regarding Age of Child: To Protect the
Rights of the Children, this is an article authored by Madabhushi Sridhar in a
National Commission for Protection of Child Rights (NCPCR) showcase.
 Indian Contract and Specific Relief Acts, a book by Frederick Pollock and Dinshaw
Fardunji Mulla. This book provides a comprehensive and detailed study of the
Indian Contract Act. The researcher has found this book to be very useful in
understanding the evolution of law in relation to ‘Minor Agreements’.

(v) Limitations – The limitations of the study are those characteristics of design or
methodology that impacted or influenced the application or interpretation of the results
of the researcher’s study. They are the constraints on generalizability and utility of
findings that are the result of the ways in which the researcher chose to design the study
and/or the method used to establish internal and external validity.

Lack of prior research studies on the topic hindered the research work of the researcher.
Moreover, measures used to collect the data is often an obstacle. Further, the research
on the topic is very vast, as the laws regarding ability of minor to enter into agreements
differ from nation to nation.

ANALYSIS

Let us examine the various characteristics of minor agreements and the legal position of minors
with respect to entering into legal contracts through various case laws.

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One of the most important cases in the realm of minor agreements is Mohori Bibi v. Dharmodas
Ghose of 1903. The Privy Council’s decision gave clarity upon the issue of the voidability of
minor’s agreements and their legal standing. Subsequent cases have resolved substantial
questions that plagued this area of law such as the issue of restitution.

The complete legal viewpoint on minor agreements under the Indian Law of Contracts is
developed from mere three sections, which are sections 10, 11 and 68. Section 10 of the 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.”6

Section 11 reads 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.”7 As discussed above, majority
here is regulated by the Indian Majority Act, and has been stipulated at eighteen years of age.
If in case a guardian is appointed then the age of majority becomes twenty-one.

Section 68 of the Act provides “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.” This provision deals with contracts for
necessities. This enables a minor, or any other person incapable of entering into a contract by
purview of section 11 to deal with other persons to make arrangements for necessities for life.

Prior to the decision of the Privy Council in Mohori Bibi v. Dharmodas Ghose, a lot of
confusion and uncertainty prevailed over aspects of contracts in relation with minors. For
example, there was no clarity on the nature of minor’s agreement – whether the agreement was
completely void or if it could be voidable at the option of the minor. Two interpretations to this
effect are advanced from the proposition that a minor is not competent to contract. One, that
the minor is completely incompetent to contract which suggests that the contract is completely
void. The other view is that a contract with a minor is a voidable one since the minor is not
liable on the contract, which means that it is voidable at the option of the minor.8

6
Section 10, The Indian Contract Act, 1872, No. 09, Acts of Parliament.
7
Section 11, The Indian Contract Act, 1872, No. 09, Acts of Parliament.
8
FREDERICK POLLOCK and DINSHAW FARDUNJI MULLA, Indian Contract and Specific Relief Acts, 4th
ed. 1919, pp. 146-147.

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Mohori Bibi v. Dharmodas Ghose9

The facts of this case are as follows: Dharmodas Ghose, a minor, mortgaged his property to the
defendant Brahmo Dutt, a moneylender, for attaining a loan amount of Rs. 20,000. The fact
that Ghose was a minor and incompetent to contract was known to the agent of the other party
at the time of entering into the agreement and performing the transaction.

The facts of this case are as follows: Dharmodas Ghose, a minor, mortgaged his property to the
defendant Brahmo Dutt, a moneylender, for attaining a loan amount of Rs. 20,000. The fact
that Ghose was a minor and incompetent to contract was known to the agent of the other party
at the time of entering into the agreement and performing the transaction.

Dharmodas Ghose then brought a legal suit against Brahmo Dutt alleging that the mortgage
was executed when he was a minor and legally incapable of mortgaging the property, therefore
the entire transaction was void and improper. He emphasized that the contract should be
rescinded.

The defendant, Brahmo Dutt died during the claim and the case was carried forward by his
executors. They contended that Ghose had intentionally misrepresented his age and
consequently no relief should be provided to him. However, it was proved during the course of
the trial that the minority of Ghose was known to the agent of Brahmo Dutt. Further, they put
forward that if the contract is revoked, then Dharmodas Ghose should be directed to repay the
sum of Rs 10,500 that was loaned to him.10

The trial court ruled in the favour of Dharmodas Ghose in saying that the contract between the
two parties was void and unenforceable as Ghose had not attained the age of majority as per
the Indian Majority Act, 1875. In an appeal by Brahmo Dutt in the Calcutta High Court, the
judges agreed with the trial court and dismissed the appeal. Finally, the Privy Council was
approached and in 1903, the judgement was delivered which clearly laid down that any sort of
contract with a minor is completely void, i.e., void ab initio. The Privy Council also stated that

9
Mohori Bibee v. Dharmodas Ghose, ILR (1903) 30 Cal 539 (PC).
10
ANIL KUMAR DIXIT, Contractual Liability of a Minor in India, Vol. 03, International Journal of Advanced
Educational Research, March 2018, pg. 437.

6
Dharmodas Ghose cannot be directed to return the amount of money loaned to him as a contract
never existed between the two parties.11

This is a landmark case in Indian legal history as it strictly defined that for a contract to be
legally enforceable, all contracting parties must be competent to contract. It is clear from this
that any person who has not attained the age of majority at the time of making of contract is
not legally competent to enter into any sort of contract. If at all any minor forms a contract with
another party, then that contract will be deemed void ab initio, and there is no legal approach
to enforce it. The minor cannot be held liable for its enforcement and also, the rule of estoppel
cannot be applied.

In the case of Ram Ashish Chaudhary v. State of Uttar Pradesh12, by an agreement a person
was appointed as a teacher. But it was found that he was a minor at the time of his appointment
as a teacher. The Court held that the agreement was void ab initio due to the minority of the
person appointed, in light of the principle laid down in Mohori Bibi’s case.

An exception to the rule derived from section 11 of the Indian Contract Act, 1875 that minors
are incapable of providing free consent to enter into a contract is that of necessity. In simple
words, this means that a minor is allowed to enter into any contract with another party that is
for his/her benefit. As the main aim of the court is to protect the interests of minors, the laws
have been interpreted in such a manner as to allow for the enforcement of contracts that are
beneficial for the minor.

For example, if in a case the minor has performed his/her part of the consideration and the other
party refuses, the other party can be compelled to perform their obligations in order to protect
the minor. In most of the cases where a minor is the beneficiary to a contract, they are held to
be valid and enforceable.13

“Necessaries must be things which the minor actually needs therefore it is not enough that they
be of a kind which a person of his condition may reasonably want for ordinary use, they will

11
ANIL KUMAR DIXIT, Contractual Liability of a Minor in India, Vol. 03, International Journal of Advanced
Educational Research, March 2018, pg. 437.
12
Ram Ashish Chaudhary v. State of Uttar Pradesh, (2003) All. LJ.330.
13
HIMANSHU ARORA, Legal Position of Minor and Minor’s Agreements, Vol. 02, International Journal of
Management and Commerce Innovations, October 2014- March 2015, pg. 483.

7
not be necessary if he is already sufficiently supplied with things of that kind, and it is
immaterial whether the other party knows this or not.”14

Further, Section 68 of the Indian Contract Act states 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.”15 Thus, any contract that
is for the essentials of the minor is perfectly valid and enforceable. It creates no personal
liability for the minor and only his/her estate can be liable.

Principle of Restitution in Minor Agreements

Section 65 of the Indian Contract Act reads as follows: “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.”16

The Privy Council in its decision in the case of Mohori Bibi v. Dharmodas Ghose of 1903 laid
down an exception to this section that it would not be applicable for minors. This means that
any person entering into a contract with a minor cannot claim restitution from him/her as the
contract itself is void. Thus, in the Mohori Bibi case, the defendant was not allowed to claim
restitution of the amount of loan that was advanced by him to the plaintiff.

There is a provision in the Specific Relief Act, 1963 – Section 33(2) – which states that if a
suit is instituted against a minor for a void contract, the court may order the minor to restore
the benefit that he/she has received to person and to estate. However, this may not be the case
if the other contracting party knew of the minority and acted in spite of it.

Section 33(2) of the Specific Relief Act, 1963 states:

“Where a defendant successfully resists any suit on the ground—

14
FREDERICK POLLOCK and DINSHAW FARDUNJI MULLA, Indian Contract and Specific Relief Acts, 4th
ed. 1919.
15
Section 68, The Indian Contract Act, 1872, No. 09, Acts of Parliament.
16
Section 65, The Indian Contract Act, 1872, No. 09, Acts of Parliament.

8
(a) that the instrument sought to be enforced against him in the suit is voidable, the court may
if the defendant has received any benefit under the instrument from the other party, require
him to restore, so far as may be, such benefit to that party or to make compensation for it;

(b) that the agreement sought to be enforced against him in the suit is void by reason of his not
having been competent to contract under section 11 of the Indian Contract Act, 1872 (9 of
1872), the court may, if the defendant has received any benefit under the agreement from the
other party, require him to restore, so far as may be, such benefit to that party, to the extent to
which he or his estate has benefited thereby.”17

Executed contracts – Another exception to the various ground rules laid down by the Privy
Council in Mohori Bibi is that of executed contracts. This mandates that if there is any contract
which is completely executed on behalf of the minor, i.e., to say that the minor has performed
all promises made by him, then the Courts can enforce the contract in interest of the minor and
simply for the reason that nothing remained to be done by him.

Mathai Mathai v. Joseph Mary18

The facts of this case are: The Appellant in this case pleaded that his mother had paid Rs. 7000
to his uncle, which was the amount of dowry paid to her upon marriage. For this amount, the
uncle had mortgaged certain piece of land as security to his mother. It is an undisputed fact that
at the time of execution of the mortgage, mother of the Appellant was just 15 years of old, i.e.,
a minor as per Indian Majority Act, 1875 and incompetent to contract according to Section 11
of Indian Contract Act, 1872. Both these have provisions and others related to them have
already been discussed in detail above. It is to be noted however that the age and minority of
the mother were never called into question and it was never made a subject of argument.19

Going by the appellant, his mother had been in possession of the said piece of land for over
fifty years now and thus, on the back of these facts, he filed an application to be declared as a
deemed tenant under Section 4A of the Kerala Land Reforms Act, 1963. According to the

17
Section 33(2), Specific Relief Act, 1963, No. 47, Acts of Parliament.
18
Mathai Mathai v. Joseph Mary, (2015) 5 SCC 622.
19
ANIRUDH WADHWA, Mathai Mathai v. Joseph Mary: A Step Backwards, Vol. 01, NLS Business Law
Review, pp. 135-136.

9
provisions of this Act, the Appellant was entitled to procure a purchase certificate and also, to
receive statutory rights enabling him to purchase that land at pre-determined rates.

The Supreme Court rejected the case of the Appellant after considering the principles of
executed contracts laid down in the celebrated case Mohori Bibi v. Dharmodas Ghose and
decisions of other courts. The Court found that these represented an ‘erroneous application of
the law’. They decided that the mortgage deed formed was actually void ab initio and that the
Appellant cannot claim any relief.

“Many courts have held that a minor can be a mortgagee as [mortgage] is transfer of property
in the interest of the minor. We feel that this is an erroneous application of the law keeping in
mind the decision of the Privy Council in Mohori Bibee case. As per the Indian Contract Act,
1872 it is clearly stated that for an agreement to become a contract, the parties must be
competent to contract, wherein age of majority is a condition for competency. A deed of
mortgage is a contract and we cannot hold that a mortgage in the name of a minor is valid,
simply because it is in the interests of the minor, unless she is represented by her natural
guardian or guardian appointed by the court. The law cannot be read differently for a minor
who is a mortgagor and a minor who is a mortgagee as there are rights and liabilities in respect
of the immovable property would flow out of such a contract on both of them. Therefore, this
Court has to hold that the mortgage deed… is void ab initio in law and the Appellant cannot
claim any rights under it.”20

The above is a passage from the Supreme Court judgement in this case, where the Court states
that the law should not be interpreted differently for minors as a mortgagor and as a mortgagee.
However, I find myself in disagreement with this rationale. The facts of the case suggest that
the principle of executed contracts should come in place and by virtue of Section 4(a) of Kerala
Land Reforms Act, 1963, the Appellant should have a claim on the said piece of land.

The judgement of Mohori Bibi that is relied upon by the Court in the above case does not
suggest that minors cannot be party to contracts in any case whatsoever. Rather, clear
exceptions have been laid down such as those of executed contracts, contracts for necessities
of life and contracts for the benefit of the minor. In Mohori Bibi, it has also been laid down that
the Court can enforce minor contracts in certain specific cases. The judgement in this case was
quite surprising and many eminent legal thinkers have regarded it as a step backwards.

20
Mathai Mathai v. Joseph Mary, (2015) 5 SCC 622, pg. 622-638.

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 CONCLUSION

The law has been so developed as to allow for the protection of children, i.e., minors so that
their interests can be taken care of. Minors are considered to be incompetent to contract and
hence there is a need for them to be protected from the consequences of their agreements.
Children constitute up to thirty-eight percent of the nation’s population and they are national
assets, who need to be safeguarded as their mental faculties are not fully developed. They are
innocent in their actions and it is the duty of the law to protect them from exploitation.

Therefore, a privilege has been given to minors in respect to their position on forming
agreements. In Mohori Bibi v. Dharmodas Ghose, the Privy Council decided that any contract
entered into with a minor is void ab initio – void from the very beginning. This was an
important step in shielding minors from liability that they might possibly incur as a
consequence of their agreements. It is also ensured that other parties entering into contracts and
agreements with minors do not suffer any unneeded hardships on account of the agreement.

However, in the Mathai Mathai v. Joseph Mary case, the Supreme Court took a very different
approach and overlooking several provisions, ruled that many of the decisions relying on
Mohori Bibi, were erroneous applications of the law.

On the overall, the position of law set by the Privy Council in 1903 was in full interest of
minors and several principles were laid down to that effect, such as the exceptions developed
of executed contracts, necessities and contracts for the benefit of minors. The outlook of the
courts since has been to protect interests of minors. However, I find myself in disagreement
with certain provisions of restitution and liability of minors. For instance, there should be
liability and restitution for the minor where he/she has obtained certain goods but not paid the
price for it.

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 REFERENCES

Statutes Referred –

 The Indian Contract Act, 1872.

 The Indian Majority Act, 1875.
 The Specific Relief Act, 1963.

Books Referred –

 FREDERICK POLLOCK and DINSHAW FARDUNJI MULLA, Indian Contract and Specific
Relief Acts, 4th ed. 1919.

Articles Referred –

 Legal Position of Minor and Minor’s Agreement, an article authored by Himanshu

Arora.
 Mathai Mathai v. Joseph Mary: A Step Backwards, an article authored by Anirudh
Wadhwa in the NLS Business Law Review journal.
 Discussion Paper on Legal Provisions Regarding Age of Child: To Protect the Rights
of the Children, this is an article authored by Madabhushi Sridhar in a National
Commission for Protection of Child Rights (NCPCR) showcase.
 Contractual Liability of a Minor in India, an article written by Anil Kumar Dixit in the
International Journal of Advanced Educational Research.

iii