Mohori Bibee V/S Dharmodas Ghose (1903) – DIVYANJALI VUDIPI-BBALLB23-28

Mohori Bibee V/S Dharmodas Ghose (1903) 

Minor’s Agreement Landmark Case

In the matter between:

• Appellant: Mohori Bibee (legal representative of her husband Brahmo Dutt) 
• Respondent: Dharmodas Ghose(Minor)

The bench of Judges Involved: Lord Mcnaughton, Lord Davey, Lord Lindley, Sir Ford North, Sir Andrew Scoble, and Sir Andrew Wilson.

Court: Judicial Committee of Privy Council.

Date of Judgement: 4^th of March, 1903.

INTRODUCTION

The 1903 judgment in Mahori Bibee v. Dharmodas Ghose is a landmark case in Indian contract law, clarifying the importance of competency in contractual agreements. This case established that contracts involving minors are invalid from the start, and therefore unenforceable. As we know, a contract is a legally binding agreement governed by the Indian Contract Act of 1872. The Act outlines the essential elements of a valid contract, including free consent, competency, lawful consideration, and a lawful object. Competency is a crucial aspect, and Section 11 defines it as being at least 18 years old, of sound mind, and not legally disqualified. Due to their vulnerability to influence and lack of discernment, Minors are considered incapable of entering into contracts. The Mahori Bibee v. Dharmodas Ghose case emphasized the significance of contractual capacity concerning minors, setting a vital precedent in Indian contract law.

FACTS OF THE CASE:

• Dharmodas Ghose, a minor, entered into a mortgage agreement with Brahmo Dutt, a moneylender, to secure a loan of Rs. 20,000. The loan was intended for non-essential purposes.

• At the time of the agreement, Dharmodas misrepresented his age, claiming to be a major, to enter into the contract.

• The agreement was executed through Kedar Nath, Brahmo Dutt’s attorney, who knew Dharmodas was a minor. Kedar Nath acted on behalf of Brahmo Dutt in the transaction.

• The contract involved mortgaging Dharmodas’s property in favor of Brahmo Dutt.

• Rs. 10,500 of the loan had already been advanced to Dharmodas by the attorney, Kedar Nath.

• Dharmodas’s mother was his legal guardian and had knowledge of the transaction.

• When the attorney discovered Dharmodas’s true age, the minor sought to cancel the contract, claiming it was void due to his minority.

• Brahmo Dutt died during the appeal, and his wife, Mohori Bibee, continued the case as his executor.

• The interest rate on the loan was 12% per annum.

• Dharmodas and his mother filed a lawsuit on September 10, 1885, claiming the contract was void due to his minority and seeking cancellation of the mortgage.

ISSUES RAISED

1. Whether the contract was void ab initio (void from the beginning) due to Dharmodas’s minority?

2. Whether Dharmodas’s misrepresentation of his age estopped him from claiming minority?

3. Whether the contract could be cancelled, and if so, should Dharmodas be required to return the advanced loan amount?

LAWS APPLICABLE IN THE CASE

1. Indian Contract Act, 1872

• Section 11: Capacity to Contract – This section provides information regarding the capacity of the parties entering to a valid contract. According to this, every person who is of sound mind and not from an alien country is competent to contract who is also of the age of majority (18 years) according to the law to which they are subject. Dharmodas Ghose, being a minor, was not competent to contract.

• Section 19: Voidability of Agreements without Free Consent – Section 19 states that when consent to an agreement is caused without free consent, the agreement is voidable at the option of the party whose consent was so caused. Here, the agreement was voidable at the option of Dharmodas Ghose due to misrepresentation of his age.

• Section 64: Consequences of Rescission of Voidable Contract – This section states that when a person at whose option a contract is voidable rescinds it, the other party need not perform any promise therein contained in which he is a promisor. The party rescinding a voidable contract shall, if he has received any benefit, restore such benefit to the person from whom it was received Dharmodas Ghose, having rescinded the contract, was not liable to perform any promise. Brahmo Dutt’s representatives had to restore any benefits received.

• Section 65: Obligation of Person who has Received Advantage under Void Agreement or Contract that Becomes Void – According to this section, 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. This section was invoked by Brahmo Dutt’s representatives to claim the return of the loan amount. Given the incompetence of the parties involved, the contract’s restoration of benefits provisions do not apply in this instance.

2. Indian Majority Act, 1875

• Section 3: Age of Majority – this section states the standard age of majority (18 years) which applies to all. Here, Dharmodas Ghose, being below 18 years old, was a minor at the time of the contract.

3. Specific Relief Act, 1877 (now Specific Relief Act, 1963)

• Section 41 (now Section 33): Refund of earnest money or deposit – In this Section, When a plaintiff requests the court to cancel a contract or instrument, the court has the authority to take two key actions. Firstly, it can direct the plaintiff to refund any earnest money they received as a deposit to demonstrate their commitment to the contract. Secondly, the court can also require the plaintiff to return any benefits they gained from the contract, but only to the extent that the court considers fair and just. This enables the court to strike a balance between the interests of both parties and prevent the plaintiff from unfairly benefiting from the agreement while seeking its cancellation. However, this provision does not apply in this case, as the appellant seeks both cancellation and restoration of benefits.

4. Law of Estoppel

• Estoppel is a legal principle that prevents a party from denying or asserting something that is contrary to what they have previously stated or done, especially if it would be unfair to allow them to do so. In the context of the Mahori Bibee vs. Dharmodas Ghose case, estoppel was raised by the appellant. However, it does not apply against minors, despite misrepresentation of age. The law aims to protect minors from incurring liabilities.

ANALYSIS

The Indian Contract Act, 1872, unequivocally states that a minor is incapable of entering into a contract, as per Section 11. Consequently, the mortgage agreement executed by Dharmodas, a minor, was deemed void ab initio. This principle was reinforced by the Privy Council, which held that a contract with a minor is inherently void, rather than merely voidable. This means that the contract is considered null and void from its inception, and the minor is not bound by its terms.

The misrepresentation of age by Dharmodas did not stop him from asserting his minority, as the law protects minors from the consequences of such misrepresentation. Furthermore, the Privy Council ruled that Sections 64 and 65 of the Indian Contract Act, of 1872, which deal with the restoration of benefits received under voidable and void contracts, do not apply to contracts with minors. Therefore, Dharmodas was not obligated to return the loan amount. The Law Commission of India’s dissenting view, suggesting that Section 65 should apply to cases involving minors who misrepresent their age, was not upheld. The courts prioritize the protection of minors from contractual liabilities, even if the minor misrepresents their age, and aim to shield them from the repercussions of their contractual agreements.

CONCLUSION

In Conclusion, the contract between Dharmodas Ghose and Brahmo Dutt was declared void ab initio due to Dharmodas’s minority. Dharmodas was not estopped from claiming minority despite his misrepresentation.

 Additionally, he was not required to return the loan amount advanced to him under the void contract. In my considered opinion, a minor who engages in fraudulent misrepresentation of their age should be required to restore all benefits received as a consequence of such misrepresentation, thereby preventing unjust enrichment. However, any restitution should be in kind, comprising the return of specific properties, jewelry, or objects that were the subject of the contract, rather than monetary compensation. This approach avoids validating the void ab initio agreement by precluding enforcement of monetary damages, which would effectively recognize the contract’s validity.