Mohori Bibee v. Dhurmodas Ghose
BS650536
PRIVY COUNCIL
Before:-Lord Macnaghten, Lord Davey, Lord Lindley, Sir Fort North, Sir Andrew Schoble and Sir Andrew Wilson
0 D/d. 11, 12.6., 26.11.1902/
04.03.1903.
Mohori Bibee - Defendants
Versus
Dhurmodas Ghose - Plaintiff
On Appeal from the High Court in Bengal.
Solicitors for Appellant :- Watkins & Lempriere.
Solicitors for Respondent :- W.W. Box.
Indian Evidence Act, Section 115 - Act I of 1877, Section 41 - Indian Contract Act, Section 19 (Explanation), and Sections 64, 65
Appeal from a decree of the High Court (Dec. 12, 1898) affirming a decree of Jenkins J. (Feb. 7, 1898).
These decrees held that a certain mortgage dated July 20, 1895, was void and inoperative as having been executed by the respondent to Brahmo Dutt, now represented by his executors, the appellants, while he was still a minor, and ordered the same to be cancelled.
The suit was to cancel the mortgage as having been executed by the respondent while a minor after due notice of the fact.
The said mortgage was of the respondent's properties, No. 15, Boloram Ghose's Street, and 133, Cornwallis Street, in Calcutta, to one Brahmo Dutt, since deceased, to secure Rs. 20,000, with interest at 12 per cent, per annum. It was prepared by one Kedar Nath Mitter, an attorney of the Calcutta High Court, who acted in the matter on behalf of both the mortgagee and the mortgagor. The First Court found that in May, 1895, the respondent applied to the said attorney to procure him a loan of Rs. 20,000 on the said property, and that the attorney applied to Brahmo Dutt's local manager, one Dedraj, who consented to take up the mortgage; that in course of investigating the title of the houses it came to the knowledge of the attorney that the respondent was a minor, and was still represented in certain litigation in which he was concerned by his mother as the guardian of his person and property; that, the respondent having alleged that he had attained his majority, the attorney made inquiries which, he said, led him to the conclusion, which was found not to have been justified, that the respondent had been born on June 17, 1874, and was of full age on June 17, 1895; that in order to make matters, as he thought, safe, the attorney called upon the respondent to make a declaration fixing the date of his birth, and that the respondent made such declaration, affirming that he had been born on June 17, 1874, and had attained his full age of twenty-one years on June 17, 1895; that on July 15, 1895, the attorney had been informed by the respondent's mother and guardian that he was still a minor, and that he, the attorney, was fully aware of the respondent's minority at the time of the execution by the respondent of the mortgage in question.
The same Court held that section 115 of the Indian Evidence Act (Act I of 1872), which is as follows, "When one person has by his declaration, act, or omission intentionally caused or permitted another person to believe a thing to be true, and to act upon such belief, neither he nor his representative shall be allowed in any suit or proceeding between himself and such person or his representative to deny the truth of that thing," was not intended to apply to infants.
The judge held further that, although he absolved Brahmo Dutt from all personal responsibility in the matter, his claim must necessarily be tested by reference to his attorney's knowledge, and he expressed his opinion that Kedar Nath was not deceived, and that the circumstances of the case were not such as to nullify the plea of infancy.
On behalf of Brahmo Dutt a point was raised based on the provisions of section 64 of the Contract Act (Act IX of 1872), which provides as follows :-
"64. When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is promisor. The party rescinding a voidable contract shall, if he have received any benefit thereunder from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received."
The judge in reference to this contention said that both sides agreed that if the mortgage in question was the mortgage of an infant it was voidable; and that he was of opinion that there had been no benefit to the respondent which he was bound or able to restore, as he "probably" spent the money received by him "in useless or even vicious extravagance." He considered also that this was not a case in which justice required that the respondent should make compensation in accordance with the provisions of section 38 of the Specific Relief Act (Act I. of 1877), which provides that, "on adjudging the rescission of a contract, the Court may require the party to whom such relief is granted to make any compensation to the other which justice may require."
He therefore decreed the suit, and ordered that Brahmo Dutt should pay the respondent's costs.
In the Appellate Court Maclean C.J. expressed his opinion that the declaration affirmed by the plaintiff was not his language, but that of Kedar Nath, and that the latter was not misled by it. He also considered that section 115 of the Evidence Act had no application to the case of a minor. He also held that the Court was not bound either by section 64 of the Contract Act, or by sections 38 and 41 of the Specific Relief Act, to order the plaintiff to repay whatever money he had received at the execution of the mortgage.
Phillips and De Gruyther, for the appellant, after submitting that the Courts were wrong in imputing to Brahmo Dutt, Kedar Nath Mitter's knowledge of the respondent's infancy, contended that under section 115 of the Indian Evidence Act the respondent was estopped from setting up that he was an infant when he executed the mortgage in suit. And in any event the Courts should not have decreed the respondent's suit without ordering repayment by him to Brahmo Dutt of Rs. 10,500, which he admittedly received as part of the consideration money under the deed. They relied upon section 64 of the Indian Contract Act, and contended that the Courts were wrong in holding that those two sections - 115 of Act I of 1872 and 64 of Act IX of 1872 - did not apply to infants. Infants were "persons" competent to contract within the meaning of those sections, and any one contracting with them was bound subject to this, that the infant could avoid it on coming of age. Being a voidable contract, it was nevertheless a contract, and fell within sections 64 and 65 of Act IX of 1872. See also sections 11 and 19 and Act IV. of 1882, sections 4 and 7. Sects. 38, 41, 11, and 64 of Act I of 1877 were also relied upon as entitling the mortgagee in this case to a return of his mortgage money, and as giving a discretion to the Court, which ought to have been exercised so to order. Reference was made to the following cases : Sara Chunder Mitter v. Mohun Bibee (1898) Ind. L.R. 25 Calc. 371; Sarat Chunder Dey v. Gopal Chunder Laha (1892) L.R. 19 Ind. Ap. 203, 215; Ganesh Lala v. Bapu (1895) Ind. L.R. 21 Bomb. 198, 201; Mills v. Fox, (1887) 37 Ch. D. 153; Wright v. Snowe (1848) 2 De G. & Section 321; Mahomed Arif v. Saraswati Debya (1891) Ind. L.R. 18 Calc. 259.
Mayne and Bonnerjee, for the respondent contended that the mortgage appearing on the face of it to have been made by a person not of full age was absolutely void. The case did not fall within section 64 of the Indian Contract Act or any of the other sections relied upon, because there was no contract to be dealt with. An infant's so called contract, according to the true construction of the sections in question, is made null and void altogether; it is in fact no contract at all, for a contract cannot be made by a person who is legally incompetent in that behalf. His agreement, if made, is one which is not enforceable by law : see interpretation clause of the contract Act; see sections 11, 19, and 64. Reference was made to Sashi Bushan Dutt v. Jadu Nath Dutt (1885) Ind. L.R. 11 Calc. 552; Hanmant Lakhsman v. Jayarao Narsinha (1888) Ind. L.R. 13 Bomb. 50; Mahomed Arif v. Saraswati Debya Ind. L.R. 18 Calc. 259, 263; Fatima Bibi v. Debnauth Shah (1893) Ind. L.R. 20 Calc. 508, 512. It was contended that all the cases were those of voidable contracts, made by competent persons, and avoided by some extrinsic circumstances. Here there were concurrent findings that the mortgagor was a minor at the date of the mortgage : see Toolsey Persaud Bhuck v. Benayek Misser (1896) L.R. 23 Ind. Ap. 102; S.C. Ind. L.R. 23 Calc. 918.
Phillips replied, referring to Trevelyan on Minority, 2nd ed. pp. 215, 216, and the cases there cited, and also to p. 7.
On November 26 the case was re argued upon the point whether infants' contracts are voidable only, which in their Lordships' judgment is dealt with as turning exclusively on the right construction of the Contract Act.
Mayne and Bonnerjee, for the respondent contended that they were void, and relied on section 64 and section 2 of the Contract Act. Under Hindu law minors' contracts were utterly void : see Strange, vol. i. c. xii. p. 271; Menu, c. viii. section 163; 2 Colebrooke's Dig. p. 181. The Indian Contract Act obviously did not alter that law and make them merely voidable. He referred to sections 2, 10, 11, 19, 22, 23, 24, 31, and 39, as shewing that a contract by a minor is treated as a transaction which has never become a contract, but remains a written instrument of no legal effect.
Phillips and De Gruyther, for the appellant contended that if had never been decided that before the Contract Act contracts amongst Hindus were to be governed exclusively by Hindu law. He went through the sections relied upon on the other side to shew that the construction insisted upon was erroneous, and cited Jamsetji N. Tata v. Kashinath Jivan Manglia (1801) Ind. L.R. 26 Bomb. 326.; Mahomed Arif v. Saraswati Debya Ind. L.R. 18 Calc. 259; Boiddonath Dey v. Ramkishore (1870) 13 Suth. W.R. 166; S.C. 10 Beng. L.R. 326, n; Doorgachurn Saha v. Ramnarain Doss (1870) 13 Suth. W.R. 172; Rennie v. Gunga Narain Chowdhry (1865) 3 Suth. W.R. 10; Hari Ram v. Jitan Ram (1869) 3 Beng. L.R.A.C. 426; Khairunnessa Bibi v. Lokenath Pal (1899) Ind. L.R. 27 Calc. 276. He referred to Act VI. of 1899, which amended the Contract Act after the decisions to the effect that infants' contracts were voidable only, and did not correct that view. [SIR ARTHUR WILSON referred to Sadashiv Vaman v. Trimbak (1898) Ind. L.R. 23 Bomb. 146].
The respondent's counsel was not heard in reply.
Cases Referred :-
Boiddonath Dey v. Ramkishore, (1870) 13 Suth. W.R. 166; S.C. 10 Beng. L.R. 326, n.
Doorgachurn Saha v. Ramnarain Doss, (1870) 13 Suth. W.R. 172.
Fatima Bibi v. Debnauth Shah, (1893) Ind. L.R. 20 Calc. 508, 512.
Ganesh Lala v. Bapu, (1895) Ind. L.R. 21 Bomb. 198, 201.
Hanmant Lakhsman v. Jayarao Narsinha, (1888) Ind. L.R. 13 Bomb. 50.
Hari Ram v. Jitan Ram, (1869) 3 Beng. L.R.A.C. 426.
Jamsetji N. Tata v. Kashinath Jivan Manglia, (1801) Ind. L.R. 26 Bomb. 326.
Khairunnessa Bibi v. Lokenath Pal, (1899) Ind. L.R. 27 Calc. 276.
Mahomed Arif v. Saraswati Debya, (1891) Ind. L.R. 18 Calc. 259 : 263.
Mills v. Fox, (1887) 37 Ch. D. 153.
Nelson v. Stocker, (1859)4 De G. & J. 458 : 1 De G. & J. 458.
Nottingham Permanent Benefit Building Society v. Thurstan, [1903] A.C. 6.
Rennie v. Gunga Narain Chowdhry, (1865) 3 Suth. W.R. 10.
Sadashiv Vaman v. Trimbak, (1898) Ind. L.R. 23 Bomb. 146.
Sara Chunder Mitter v. Mohun Bibee, (1898) Ind. L.R. 25 Calc. 371.
Sarat Chunder Dey v. Gopal Chunder Laha, (1892) L.R. 19 Ind. Ap. 203, 215.
Sashi Bushan Dutt v. Jadu Nath Dutt, (1885) Ind. L.R. 11 Calc. 552.
Thurstan v. Nottingham Permanent Benefit Building Society, [1902] 1 Ch. 1.
Toolsey Persaud Bhuck v. Benayek Misser, (1896) L.R. 23 Ind. Ap. 102; S.C. Ind. L.R. 23 Calc. 918.
Wright v. Snowe, (1848) 2 De G. &S. 321.
JUDGMENT
The judgment of their Lordships was delivered by
4.3.1903
Sir Ford North :- On July 20, 1895, the respondent, Dharmodas Ghose, executed a mortgage in favour of Brahmo Dutt, a money-lender carrying on business at Calcutta and elsewhere, to secure the repayment of Rs. 20,000 at 12 per cent, interest on some houses belonging to the respondent. The amount actually advanced is in dispute. At that time the respondent was an infant; and he did not attain twenty-one until the month of September following. Throughout the transaction Brahmo Dutt was absent from Calcutta, and the whole business was carried through for him by his attorney, Kedar Nath Mitter, the money being found by Dedraj, the local manager of Brahmo Dutt. While considering the proposed advance, Kedar Nath received information that the respondent was still a minor; and on July 15, 1895, the following letter was written and sent to him by Bhupendra Nath Bose, an attorney:-
"Dear Sir,- I am instructed by S.M. Jogendranundinee Dasi, the mother and guardian appointed by the High Court under its letters patent of the person and property of Babu Dharmodas Ghose, that a mortgage of the properties of the said Babu Dharmodas Ghose is being prepared from your office. I am instructed to give you notice, which I hereby do, that the said Babu Dharmodas Ghose is still an infant under the age of twenty-one, and any one lending money to him will do so at his own risk and peril."
Kedar Nath positively denied the receipt of any such letter; but the Court of first instance and the Appellate Court both held that he did personally receive it on July 15; and the evidence is conclusive upon the point.
On the day on which the mortgage was executed, Kedar Nath got the infant to sign a long declaration, which he had prepared for him, containing a statement that he came of age on June 17; and that Babu Dedraj and Brahmo Dutt, relying on his assurance that he had attained his majority, had agreed to advance to him Rs. 20,000. There is conflicting evidence as to the time when and circumstances under which that declaration was obtained; but it is unnecessary to go into this, as both Courts below have held that Kedar Nath did not act upon, and was not misled by, that statement, and was fully aware at the time the mortgage was executed of the minority of the respondent. It may be added here that Kedar Nath was the attorney and agent of Brahmo Dutt, and says in his evidence that he got the declaration for the greater security of his "client." The infant had not any separate legal adviser.
On September 10, 1895, the infant, by his mother and guardian as next friend, commenced this action against Brahmo Dutt, stating that he was under age when he executed the mortgage, and praying for a declaration that it was void and inoperative, and should be delivered up to be cancelled.
The defendant, Brahmo Dutt, put in a defence that the plaintiff was of full age when he executed the mortgage that neither he nor Kedar Nath had any notice that the plaintiff was then an infant, that, even if he was a minor, the declaration as to his age was fraudulently made to deceive the defendant, and disentitled the plaintiff to any relief; and that in any case the Court should not grant the plaintiff any relief without making him repay the moneys advanced.
By a further statement the defendant alleged that the plaintiff had subsequently ratified the mortgage; but this case wholly failed, and is not the subject of appeal.
Jenkins J., who presided in the Court of first instance, found the facts as above stated, and granted the relief asked. And the Appellate Court dismissed the appeal from him. Subsequently to the institution of the present appeal Brahmo Dutt died, and this appeal has been prosecuted by his executors.
The first of the appellants' reasons in support of the present appeal is that the Courts below were wrong in holding that the knowledge of Kedar Nath must be imputed to the defendant. In their Lordships' opinion they were obviously right. The defendant was absent from Calcutta, and personally did not take any part in the transaction. It was entirely in charge of Kedar Nath, whose full authority to act as he did is not disputed. He stood in the place of the defendant for the purposes of this mortgage; and his acts and knowledge were the acts and knowledge of his principal. It was contended that Dedraj, the defendant's gomastha, was the real representative in Calcutta of the defendant, and that he had no knowledge of the plaintiff's minority. But there is nothing in this. He no doubt made the advance out of the defendant's funds. But he says in his evidence that "Kedar Babu was acting on behalf of my master from the beginning in this matter "; and a little further on he adds that before the registration of the mortgage he did not communicate with his master on the subject of the minority. But he did know that there was a question raised as to the plaintiff's age; and he says, "I left all matters regarding the minority in the hands of Kedar Babu."
The appellants' counsel contended that the plaintiff is estopped by Section 115 of the Indian Evidence Act (I. of 1872) from setting up that he was an infant when he executed the mortgage. The section is as follows: "Estoppel. When one person has by his declaration act or omission intentionally caused or permitted another person to believe a thing to be true, and to act upon such belief, neither he nor his representative shall be allowed in any suit or proceeding between himself and such person or his representative to deny the truth of that thing."
The Courts below seem to have decided that this section does not apply to infants; but their Lordships do not think it necessary to deal with that question now. They consider it clear that the section does not apply to a case like the present, where the statement relied upon is made to a person who knows the real facts and is not misled by the untrue statement. There can be no estoppel where the truth of the matter is known to both parties, and their Lordships hold, in accordance with English authorities, that a false representation, made to a person who knows it to be false, is not such a fraud as to take away the privilege of infancy: Nelson v. Stocker. 1 De G. & J. 458. The same principle is recognised in the explanation to Section 19 of the Indian Contract Act, in which it is said that a fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.
The point most pressed, however, on behalf of the appellants was that the Courts ought not to have decreed in the respondent's favour without ordering him to repay to the appellants the sum of Rs. 10,500, said to have been paid to him as part of the consideration for the mortgage. And in support of this contention Section 64 of the Contract Act (IX of 1872) was relied on:-
"Section 64. When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained of which he is promisor. The party rescinding a voidable contract shall, if he have received any benefit thereunder from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received."
Both Courts below held that they were bound by authority to treat the contracts of infants as voidable only, and not void; but that this section only refers to contracts made by persons competent to contract, and therefore not to infants.
The general current of decision in India certainly is that ever since the passing of the Indian Contract Act (IX of 1872) the contracts of infants are voidable only. This conclusion, however, has not been arrived at without vigorous protests by various judges from time to time; nor indeed without decisions to the contrary effect. Under these circumstances, their Lordships consider themselves at liberty to act on their own view of the law as declared by the Contract Act, and they have thought it right to have the case re-argued before them upon this point. They do not consider it necessary to examine in detail the numerous decisions above referred to, as in their opinion the whole question turns upon what is the true construction of the Contract Act itself. It is necessary, therefore, to consider carefully the terms of that Act; but before doing so it may be convenient to refer to the Transfer of Property Act (IV of 1882), Section 7 of which provides that every person competent to contract and entitled to transferable property....is competent to transfer such property...in the circumstances, to the extent, and in the manner allowed and prescribed by any law for the time being in force. That is the Act under which the present mortgage was made, and it is merely dealing with persons competent to contract; and Section 4 of that Act provides that the chapters and sections of that Act which relate to contracts are to be taken as part of the Indian Contract Act, 1872. The present case, therefore, falls within the provisions of the latter Act.
Then, to turn to the Contract Act, Section 2 provides: (e) Every promise and every set of promises, forming the consideration for each other, is an agreement,(g) An agreement not enforceable by law is said to be void, (h) An agreement enforceable by law is a contract, (i) An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract.
Section 10 provides: "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."
Then Section 11 is most important, as defining who are meant by "persons competent to contract"; it is 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." Looking at these sections, their Lordships are satisfied that the Act makes it essential that all contracting parties should be "competent to contract," and expressly provides that a person who by reason of infancy is incompetent to contract cannot make a contract within the meaning of the Act. This is clearly borne out by later sections in the Act. Section 68 provides 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." It is beyond question that an infant falls within the class of persons here referred to as incapable of entering into a contract; and it is clear from the Act that he is not to be liable even for necessaries, and that no demand in respect thereof is enforceable against him by law, though a statutory claim is created against his property. Under Sections 183 and 184 no person under the age of majority can employ or be an agent. Again, under Sections 247 and 248, although a person under majority may be admitted to the benefits of a partnership, he cannot be made personally liable for any of its obligations; although he may on attaining majority accept those obligations if he thinks fit to do so. The question whether a contract is void or voidable presupposes the existence of a contract within the meaning of the Act, and cannot arise in the case of an infant. Their Lordships are, therefore, of opinion that in the present case there is not any such voidable contract as is dealt with in Section 64.
A new point was raised here by the appellants' counsel, founded on Section 65 of the Contract Act, a section not referred to in the Courts below, or in the cases of the appellants or respondent. It is sufficient to say that this section, like Section 64, starts from the basis of there being an agreement or contract between competent parties, and has no application to a case in which there never was, and never could have been, any contract.
It was further argued that the preamble of the Act showed that the Act was only intended to define and amend certain parts of the law relating to contracts, and that contracts by infants were left outside the Act. If this were so, it does not appear how it would help the appellants. But in their Lordships' opinion the Act, so far as it goes, is exhaustive and imperative, and does provide in clear language that an infant is not a person competent to bind himself by a contract of this description.
Another enactment relied upon as a reason why the mortgage money should be returned is Section 41 of the Specific Relief Act (I of 1877), which is as follows: "Section 41. On adjudging the cancellation of an instrument the Court may require the party to whom such relief is granted to make any compensation to the other which justice may require." Section 38 provides in similar terms for a case of rescission of a contract. These sections, no doubt, do give a discretion to the Court; but the Court of first instance, and subsequently the Appellate Court, in the exercise of such discretion, came to the conclusion that under the circumstances of this case justice did not require them to order the return by the respondent of money advanced to him with full knowledge of his infancy, and their Lordships see no reason for interfering with the discretion so exercised.
It was also contended that one who seeks equity must do equity. But this is the last point over again, and does not require further notice except by referring to a recent decision of the Court of Appeal in Thurstan v. Nottingham Permanent Benefit Building Society [1902] 1 Ch. 1, since affirmed by the House of Lords. (2) In that case a female infant obtained from the society of which she was a member part of the purchase-money of some property she purchased; and the society also agreed to make her advances to complete certain buildings thereon. They made the advances, and took from her a mortgage for the amount. On attaining twenty-one she brought the action to have the mortgage declared void under the Infants Relief Act. The Court held that, as regards the purchase-money paid to the vendor, the society was entitled to stand in his place and had a lien upon the property, but that the mortgage must be declared void, and that the society was not entitled to any repayment of the advances. Dealing with this part of their claim Romer L.J. says (1) : "The short answer is that a Court of Equity cannot say that it is equitable to compel a person to pay any moneys in respect of a transaction which as against that person the Legislature has declared to be void." So here.
(2) [1903] A.C. 6.
(1) [1902] 1 Ch. at p. 13.
Their Lordships observe that the construction which they have put upon the Contract Act seems to be in accordance with the old Hindu Law as declared in the laws of Menu, ch. viii. 163; and Colebrooke's Dig. liii. 2, vol. ii. p. 181; although there are no doubt decisions of some weight that before the Indian Contract Act an infant's contract was voidable only in accordance with English law as it then stood.
The appeal, therefore, holly fails; and their Lordships will humbly advise His Majesty that it should be dismissed. The appellants must pay the costs of the appeal.
.