Article By: Pushkar Gulia

Parties related to this case:

1. Dhamodas Ghose: A Minor
2. Mohori Bibee: Wife of the Brahmo Dutt
3. Brahmo Dutt: The Money lander
4. Kedar Nath: Attorney of Brahmo Dutt

Facts:

In this case, Dharmodas Ghose was a young individual, who is 18 years old. He had some land under his authority but his mother was a legal in charge of that land. He, as a minor mortgaged his property to Brahmo Dutt (Moneylender) to secure a loan amount of Rs 20,000. Brahmo Dutt’s attorney Kedar Nath was aware of the fact that the Dharmodas Ghose was a minor at the time of transaction. A part of money was transferred by the attorney. This act of transfer of money, make the relation of principal and agent between the Brahmo Dutt and Kedar Nath. Here Kedar Nath acted on the behalf of the Brahmo Dutt. After some time Dhamodas Ghose’s mother informed Brahmo Dutt that her son was a minor at the time of making the contract, so he couldn’t make contract related to his land. As mentioned above his attorney already knew about the incapacity of his age. Later on this point, Dhamodas Ghose and his mother filed a lawsuit claiming that Dharmodas was minor when he mortgaged his property, which is invalid and improper. So, the contract may not be proceed further. After some time, during the legal proceedings Brahmo Dutta had passed away and Mohori Bibee become the representative for his case.

Issue Raised:

1. Whether the mortgage executed by Dharmodas Ghose was legally enforceable or not?
2. Whether a contract entered into a minor is valid under the Indian Contract Act, 1872 or not?
3. Whether the minor could be held responsible to return the loan amount inder the principle of restitution?
4. Whether the principle of estoppel applied against the minor.
5. Whether a minor’s contract is void ab initio or merely voidable?

Arguments:

Appellant’s Arguments:

The appellant argued that at the time of contract Dharmodas Ghose intentionally misrepresented his age to induce the lender into granting him a loan. Since Ghose had obtained the loan through misrepresentation, he should not be allowed to deny the validity of the contract.

Further, argued that Ghose should be estopped from claiming the contract was void due to his minority. Since he knowingly entered into the mortgage agreement, he should not be allowed to benefit from his own wrongdoing by escaping liability.

Further, argued that even if the contract was declared to be void due to Ghose being a minor, he should return the money he borrowed under the principle of restitution. the appellant relied on section 64 and 65 of Indian Contract Act, 1872, which state that when a contract becomes void, the exchange of benefits received under it must be restored to prevent unjust enrichment.

Further argued that if a minor benefited from a contract, they should be held responsible for certain obligations.

Respondent’s Arguments:

The respondent argued on the basis of fact that since Dharmodas Ghose was a minor at the time of the mortgage, so the contract was void from the very beginning (Void ab Initio). Section 11 of Indian Contract Act states that a person of majority age ( above 18 years) can enter into a contract. Since the minor lacks contractual capacity, the mortgage had no legal effect.

Further they argued that Section 64 and Section 65 of Indian Contract Act 1872, did not apply to this situation because these sections apply to valid contracts that later become void, but in this situation a contract with minor was void from very beginning.

Further, on the point of where appellant had claimed that Ghose misrepresented his age and should not be allowed to deny the validity of the contract. Here the respondent argued on that the principal of estoppel cannot be used a minor because a minor cannot be bound by a contract in first place. Even if a minor misrepresents their age, the law still protects them from being held liable for a void contract.

The respondent also pointed out the fact that Kedar Nath was aware that Dharmodas Ghose was a minor at the time of mortgage. It indicated that the lender had the prior knowledge of the minor’s age and this showed that he accepts this fact. So, they could not claim that he was deceived.

Judgement:

The Privy Council ruled in favour of Dharmodas Ghose and affirmed that under Section 11 of Indian Contract Act, 1872 , a minor lacks the capacity to contract and no legal standing from the outset.

Further they rejected the Doctrine of Restitution stating that it applies only to voidable contracts, whereas a minor’s contract is void ab initio and never comes into existence. So, there was no valid contract, the minor was under no obligation to return any money.

The privy council also held that the doctrine of estoppel does not apply to minor, as they are legally incapable of entering into binding agreements.

Significance of the Judgement:

This ruling remains one of the most important precedents in Indian Contract Law. It established that:

1. Contracts with minors are void ab initio.
2. Minors cannot be held liable for restitution in void contracts.
3. The doctrine of estoppel doesn’t apply to minors in contractual matters.

Legal Provisions:

1. Section 11 of Indian Contract Act:  This sections states that only a person who has attained the age of majority (above than 18 years) can enter into a valid contract.
2. Section 64 and 65 of Indian Contract Act: These section explain the effect of void and voidable contracts (principle of restitution), applied only to contracts that were initially valid but later became void, this provision doesn’t applied with any such contract with minors.
3. Doctrine of Estoppel: It prevents a person from denying or retracting a statement that they have previously made if another party has relied on it and acted accordingly. This ensures fairness and prevents fraudulent conduct in legal transaction. This rule doesn’t apply on minor.

Conclusion:

The Mohori Bibee v. Dharmodas Ghose case set a significant precedent in Indian contract law by affirming that a contract with a minor is void ab initio (void from the beginning) under Section 11 of the Indian Contract Act, 1872. The court also ruled that the principle of restitution and the doctrine of estoppel do not apply to minors in contractual matters. This judgment protects minors from legal obligations arising from agreements they are not legally competent to enter into, ensuring their financial and legal safety.