The case of Ajudhia Prasad & Anr. v. Chandan Lal & Anr. was decided by the Allahabad High Court on May 11, 1937. The primary issue in this second appeal was whether a mortgage executed by minors (below 21 years of age) under fraudulent concealment of their age could be enforced against them under Section 65 of the Indian Contract Act, 1872 or any equitable principle. The plaintiffs (mortgagees) sought recovery of the principal amount along with interest and also sought the sale of the mortgaged property.
Case Title: Ajudhia Prasad & Anr. v. Chandan Lal & Anr.
Court: Allahabad High Court
Citation: AIR 1937 Allahabad 610
Judges: Sulaiman, C.J., Thorn, J., Bennet, J.
The Allahabad High Court examined various legal principles, including contractual competency, restitution under equity, estoppel, and the scope of Section 65 of the Contract Act, ultimately ruling against the plaintiffs and dismissing the suit.
Background and Facts
The plaintiffs filed a suit for sale based on a mortgage deed dated October 15, 1925, executed in their favour by the defendants.The defendants pleaded minority, asserting that they were under 21 years of age and had a certificated guardian appointed for them under the Guardians and Wards Act, 1890.They further contended that there was no legal necessity for contracting the mortgage debt.The trial court held that the defendants were between 18 and 21 years old, but there was no fraudulent misrepresentation on their part. The claim under Section 68 of the Contract Act was also denied.The lower appellate court found that the defendants were indeed minors, and the money borrowed for marriage expenses was not a necessity under Section 68. However, it held that the defendants and their father fraudulently concealed the fact that they were minors and misrepresented their age. Relying on the Full Bench decision of the Lahore High Court in Khan Gul v. Lakkha Singh (AIR 1928 Lah. 609), it decreed the claim.
Issues
The primary legal questions referred to the Full Bench of the Allahabad High Court were:
Whether a mortgage executed by minors (between 18 and 21 years) under fraudulent concealment of their minority can be enforced under Section 65 of the Contract Act or any other equitable principle.Whether the mortgagee (plaintiff) could get a decree for the principal money and sale of the mortgaged property.
Court’s Analysis and Judgment
(i) Applicability of Section 65 of the Indian Contract Act, 1872
Section 65 states that “When an agreement is discovered to be void or when a contract becomes void, the person who has received any advantage under such agreement or contract is bound to restore it or make compensation.”The Court analyzed whether Section 65 applies to agreements that are void ab initio due to incompetency of parties (such as minors).The Privy Council’s ruling in Mohori Bibee v. Dharmodas Ghose (1903) 30 Cal. 539 was extensively discussed. In that case, the Privy Council ruled that contracts by minors are absolutely void, and Section 65 does not apply to cases where no contract ever existed due to lack of competency.Following this, the Allahabad High Court held that Section 65 starts from the basis that there is an agreement between competent parties. Since minors are not competent to contract, the section does not apply.
(ii) Estoppel Against Minors
The plaintiffs argued that since the defendants fraudulently misrepresented their age, they should be estopped from claiming minority.The Court held that estoppel cannot override statutory provisions. Since the Contract Act declares contracts with minors void, a minor cannot be estopped from a pleading minority.The Privy Council in the Mohori Bibee case had earlier ruled that knowledge of the mortgagee (or lender) about the borrower’s minority negates any claim of estoppel.
(iii) Restitution under Equity
The plaintiffs relied on English law principles and the Lahore Full Bench decision in Khan Gul v. Lakkha Singh, which allowed restitution even where the contract was void.The Court rejected this reasoning, holding that equitable principles cannot override statutory protections for minors.It further referred to the English decision in Leslie Ltd. v. Shiell (1914) 3 KB 607, which held that minors cannot be made personally liable even for fraudulent misrepresentation in contracts.The Court emphasized that courts of equity do not enforce void contracts indirectly by compelling restitution.
(iv) Scope of Section 68 (Liability for Necessaries)
Section 68 of the Contract Act provides that a minor is not personally liable for necessaries supplied to him, but his property may be held liable.The Court found that the marriage expenses for which the mortgage was taken did not qualify as “necessaries” under this provision.Since Section 68 is the only statutory provision that provides any liability for minors, and this case did not fall within its scope, the plaintiffs had no claim under statutory law.
(v) Applicability of Section 43 of the Transfer of Property Act, 1882
The plaintiffs also attempted to invoke Section 43, which allows a later-acquired interest in property to be transferred if the transferor fraudulently represents his competency to transfer.The Court held that this section applies only when an incompetent transferor later acquires an interest. Since minors never lose ownership of their property upon reaching the majority, they do not “acquire” interest later, making Section 43 inapplicable.
Key Precedents Considered
Mohori Bibee v. Dharmodas Ghose (1903) 30 Cal. 539 (PC): Held that minors’ contracts are void, and Sections 64 and 65 of the Contract Act do not apply.Leslie Ltd. v. Shiell (1914) 3 KB 607 (UK): Held that equitable restitution cannot be used to enforce a void contract against a minor.Sadiq Ali Khan v. Jai Kishori (1928) PC: Reiterated that minority is a complete defense and estoppel cannot apply.Khan Gul v. Lakkha Singh (AIR 1928 Lah. 609): Held by the Lahore High Court that equity allows restitution in certain cases. This ruling was explicitly disapproved by the Allahabad High Court.
Judgment and Conclusion
The Full Bench of the Allahabad High Court allowed the appeal and dismissed the plaintiffs’ suit. The key conclusions were:
Contracts by minors are void ab initio, and Section 65 of the Contract Act does not apply.No estoppel can be claimed against a minor to enforce an agreement.Equity does not demand restitution when a contract is void.Marriage expenses do not constitute “necessaries” under Section 68 of the Contract Act.Section 43 of the Transfer of Property Act does not apply to minors.
This judgment reinforced the absolute legal protection afforded to minors under Indian contract law, ensuring that minors are not held liable for void transactions—even in cases of fraudulent misrepresentation.
