Ajudhia Prasad v Chandan Lal (1937)

Mohori Bibee v Dharmodas Ghose settled that a minor's agreement is void. It left open the harder, more examinable question: if the minor has taken the money and the lender sues, can the Court order the minor to give it back? The Lahore Full Bench in Khan Gul v Lakkha Singh had said yes, on a supposed rule of equity, even where all that could be ordered was a money decree.

Ajudhia Prasad is the Allahabad Full Bench's refusal to follow Khan Gul. It is the leading statement of the narrow view of restitution against a minor, and it is built almost entirely out of Mohori Bibee and the English cases Mohori Bibee had approved. For an examiner, it is the case that supplies the distinction between the minor as plaintiff and the minor as defendant, and the distinction between restoring identifiable property and ordering payment of money.

The suit was for sale on the basis of a mortgage deed dated 15 October 1925 executed by the defendants in favour of the plaintiffs. The defendants pleaded that they were minors at the time of the deed, a certificated guardian having been appointed for them, and that there was no necessity for contracting the debt. In their rejoinder the plaintiffs denied the minority and asserted liability under s. 68 of the Contract Act.

The trial Court found the defendants to be over 18 but under 21 years of age, found no evidence of representation by the defendants or their father Sital Prasad, and held that the plaintiffs could not recover under s. 68.

The lower appellate Court held that the defendants were minors, being under 21; that the marriage expenses for which the money was said to have been advanced were not "necessaries," so that s. 68 had no application; but that the defendants and their father had concealed the existence of the appointed guardianship, the father having gone so far as to declare before the Sub-Registrar that his younger son was over 18. It concluded: "Thus in my opinion there was a fraudulent misrepresentation made by or on behalf of the respondents." Following Khan Gul v Lakkha Singh, it decreed the claim with contractual and future interest and, in default, for sale of the mortgaged property.

The Division Bench hearing the second appeal referred to the Full Bench the question whether, where money has been borrowed by two minors under a mortgage deed under a fraudulent concealment of their minority, the mortgagee can get a decree for the principal money under s. 65, Contract Act or under any other equitable principle, and a decree for sale of the mortgaged property.

The Court set out the two possible readings of s. 65 and then held that the question was concluded by Mohori Bibee v Dharmodas Ghose, where the Privy Council had said of that section that it "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."

Sulaiman C.J. treated that as decisive and refused any attempt to narrow it: "This is as clear a pronouncement as can be, and it is impossible to whittle down its effect either by suggesting that it was not necessary in that case to go into that question or that their Lordships meant to refer to only a portion of Section 65."

Three further reasons are given, and each is worth reproducing in an answer.

Consistent practice. The rule "has, of course, been followed unanimously by all the High Courts in India for the last 35 years," and counsel could point to no case in which s. 65 had been applied against a minor defendant. Kamta Prasad v Sheo Gopal Lal, Kanhai Lal v Babu Ram, Kanhayalal v Girdhari Lal, Radhey Shiam v Bihari Lal and Bindeshri Bakhsh Singh v Chandika Prasad are collected to that effect.

The protection would be nullified. If s. 65 applied, "all agreements by minors would have to be enforced indirectly against them, no matter whether there had been any mistake, misrepresentation or fraud or not," and the decree "would have to be a personal decree." That would be inconsistent with s. 68 itself, which even for necessaries "confines such liability to the minor's property and exempts his person." Worse, "a wide door would be opened for mischief, and persons would be free to deal with minors with the full confidence that even if the worst comes to the worst, they would get back full compensation for what they were risking."

Legislative acquiescence. The Contract Act had been amended from time to time since 1923; the Legislature must be taken to have known of the Privy Council's interpretation, and "the fact that it has not thought fit to amend the section is an indication that the Legislature has seen nothing in this interpretation to disapprove of."

The plaintiffs' second ground was estoppel, resting on the appellate Court's finding of fraudulent misrepresentation. The answer is short: "when the contract itself was void the plea of estoppel must fail. No estoppel can be pleaded against a statute." A minor cannot be prevented from pleading that his contract is void on the ground of his minority.

The English authority relied on is Leslie Ltd v Sheill, where Lord Sumner had said that in such a case there was "nothing but compulsion through a personal judgment to pay an equivalent sum out of his present or future resources, in a word nothing but a judgment in debt to repay the loan. I think this would be nothing but enforcing a void contract." Kennedy L.J. had held the cause of action to be "in substance ex contractu and is so directly connected with the contract of loan that the action would be an 'indirect way of enforcing that contract." Lawrence J. had warned that "It would be a simple thing for those who prey upon infants to obtain from them materials which could be used to support a charge of fraud as easy as obtaining the usual promissory note."

The Court pointed out that the Privy Council had itself approved Leslie Ltd v Sheill in Mahomed Syedol Arffin v Yeoh Ooi Gark, observing that a case of fraud on the subject of age "would fail"; and that in Sadiq Ali Khan v Jai Kishori the Privy Council had dismissed the mortgagee's suit even though the guardian had concealed the guardianship proceedings and passed the minors off as majors, on the footing that such a deed was "a nullity according to Indian law, and incapable of founding a plea of estoppel."

The Lahore majority had rested exclusively on equity. Sulaiman C.J. answered on three fronts.

First, on the alleged identity of money and property: "Where a contract of transfer of property is void, and such property can be traced, the property belongs to the promise and can be followed. There is every equity in his favour for restoring the property to him. But where the property is not traceable and the only way to grant compensation would be by granting a money decree against the minor, decreeing the claim would be almost tantamount to enforcing the minor's pecuniary liability under the contract which is void."

Second, on plaintiff and defendant. The passage in Mohori Bibee about the lender's knowledge went to a claim by the minor under the Specific Relief Act, where the Court has a discretion to impose terms; "It would absolutely have no application to the converse case where the defendant is being sued and is not himself asking for any relief."

Third, on Lord Kenyon's shield-and-sword image, which Khan Gul had invoked: "Surely when the defendant is being sued and sets up the plea of minority, he is not using his minority as a sword, but is merely using it as a shield."

The dissent of Harrison J in Khan Gul is adopted, including his quotation of Lord Sumner: "It was thought necessary to safeguard the weakness of infants at large, even though here and there a juvenile knave slipped through."

The governing sentence of the judgment follows: "There is no rule of equity, justice and good conscience which entitles a Court to enforce a void contract of a minor against him under the cloak of equitable doctrine." A Court is not free to improvise: "It is hardly open to an Indian Court to invent a new rule of equity for the first time contrary to the principles of the English law."

The last argument was that the mortgage might be upheld under s. 43, T.P. Act, the words "fraudulently or" having been added before "erroneously represents". It was rejected. The section presupposes a transfer, and "can have no application to a case where there has been no transfer at all"; it addresses a transfer by an unauthorised person who subsequently acquires an interest, whereas a minor's interest "has remained vested in him all along," so that on majority he acquires nothing new. And the section rests on estoppel, "which cannot be pleaded against a statute so as to prejudice a minor who enjoys the protection of the law."

The appeal was allowed and the suit dismissed. The mortgagee could recover neither the principal money nor a decree for sale: s. 65 has no application to an agreement by a minor; no estoppel arises from the minor's or his guardian's misrepresentation of age; and no equitable jurisdiction exists to order a minor defendant to pay money where the money advanced cannot be traced.