Mohori Bibee vs Dharmodas Ghose

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Case Name: Mohori Bibee vs Dharmodas Ghose

Case Citation: [1903] UKPC 12, (1903) LR 30 IA 114

Date of Judgment: 4 March 1903

Court: Judicial Committee of the Privy Council

Appealed from: High Court of Judicature at Fort William

Appellant: Mohori Bibee

Respondent: Dhurmodas Ghose

Bench:

  • Lord McNaughton
  • Lord Davey
  • Lord Lindley
  • Sir Ford North
  • Sir Andrew Scoble
  • Sir Andrew Wilson

Decision by: Sir Ford North

Referred Sections of the Indian Contract Act, 1872:

  • Section 38
  • Section 41
  • Section 68

Facts of Mohori Bibee vs Dharmodas Ghose Case

In Mohori Bibee vs Dharmodas Ghose, Dharmodas Ghose was a young person under 18 years old, which means he couldn’t legally make contracts. He owned some land and his mother was in charge of it legally. He used his land as collateral for a loan from Brahmo Dutta, agreeing to pay Rs.20,000 with a 20% interest rate every year.

At the time, Brahmo Dutta was a money lender and Kedar Nath managed his business on his behalf. Kedar Nath acted as Brahmo Dutta’s representative.

Dharmodas Ghose’s mother informed Brahmo Dutta that her son was a minor and couldn’t make contracts regarding his land. Kedar Nath, acting on behalf of Brahmo Dutta, knew about Dharmodas Ghose’s age and incapacity to enter such contracts.

On September 10th, 1895, Dharmodas Ghose and his mother filed a lawsuit against Brahmo Dutta, claiming that Dharmodas had been a minor when he made the mortgage, rendering it invalid and improper. They wanted the contract to be cancelled.

During the legal proceedings, Brahmo Dutta had passed away, so his representatives took over the case.

The plaintiffs argued that the contract should be cancelled because the defendant, Dharmodas Ghose, had been deceitful about his age when he made the mortgage request.

Mohori Bibee is the person appealing the case, but she’s the representative of Brahmo Dutta who had passed away.

Issue Raised

The legal questions raised in Mohori Bibee vs Dharmodas Ghose were:

  • Whether the deed was void under Section 2, 10(5), 11(6) of the Contract Act or not?
  • Whether the mortgage initiated by the defendant was voidable or not?
  • Whether the defendant was obligated to return the loan amount he had received under the deed or mortgage or not?

Arguments

Appellant’s Agruments

The appellant’s arguments in Mohori Bibee vs Dharmodas Ghose are as follows:

The respondent claims in Mohori Bibee vs Dharmodas Ghose to have been a minor when he executed the mortgage, but the appellant argues that the respondent was actually of legal age at that time. The appellant and their representative had no knowledge that the respondent was a minor. They assert that the respondent provided false information about his age and, as a result, should not be entitled to any relief.

The appellant contends that Section 115 of the Indian Evidence Act, 1872, applies in this case. This section states that if one person intentionally causes another person to believe something to be true through their actions, declarations, or omissions and that person acts on that belief, neither party nor their representatives can later deny the truth of that matter in any lawsuit or proceeding.

The appellant in Mohori Bibee vs Dharmodas Ghose argues that the respondent must repay the amount advanced to him in accordance with Section 64 and Section 38 of the Indian Contract Act (1872) and Section 41 of the Specific Relief Act (1877).

Section 38 of the Indian Contract Act, 1872, stipulates that if a promisor offers to perform their part of the contract to the promisee and the offer is not accepted, the promisor is not held responsible for non-performance and they do not lose their rights under the contract.

Section 41 of the Indian Contract Act, 1872, specifies that when a promisee accepts performance of a promise from a third party, they cannot subsequently enforce that promise against the original promisor.

Section 64 of the Indian Contract Act, 1872, states that when a person who has the option to void a contract chooses to rescind it, the other party to the contract is not obligated to fulfill any promises contained in the contract where they are the promisor.

Respondent’s Arguments

Brahmo Dutta and his agent, Kedar Nath in Mohori Bibee vs Dharmodas Ghose were aware of the true age of the respondent.

Given that the respondent was a minor when he entered into the mortgage, the contract is considered void.

Judgement in Mohori Bibee vs Dharmodas Ghose

The judgment in Mohori Bibee vs Dharmodas Ghose is as follows:

After carefully examining the facts of the case, the Privy Council ruled that the agreement made with a minor is void ab initio, which means it is void from the very beginning. The court also addressed the defendant’s arguments.

Firstly, the court in Mohori Bibee vs Dharmodas Ghose determined that the law of estoppel would not apply in this case since Brahmo Dutta’s attorney had knowledge of Dharmodas’s minority status.

Secondly, the court clarified that Section 64 and 65 of the Indian Contract Act would not apply because there was no valid agreement in the first place and for these sections to be applicable, the contract must be between competent parties.

As a result, the court in Mohori Bibee vs Dharmodas Ghose established a precedent that agreements with minors are void ab initio based on this case.

Mohori Bibee vs Dharmodas Ghose Case Analysis

In Mohori Bibee vs Dharmodas Ghose, several legal principles were analysed and established as follows:

Law of Estoppel

The law of estoppel states that if a person incurs liability based on another person’s representation, they cannot later change their position. In Mohori Bibee versus Dharmodas Ghose, the law of estoppel was not applied because the appellant’s attorney knew about the respondent’s minority status. However, it has been held in various other cases that the law of estoppel does not apply against minors.

Even if a minor intentionally misrepresent their age, they can still plead minority as a defence to avoid liability. This approach is taken to protect minors from incurring liabilities, as the law deems them incompetent to contract. Applying estoppel against a minor would defeat the purpose of Section 11 of the Contract Act, which renders minors incompetent to contract.

Section 64 and 65 of the Indian Contract Act, 1872

Sections 64 and 65 of the Indian Contract Act deal with the restoration of benefits received under voidable and void contracts, respectively.

The court in Mohori Bibee versus Dharmodas Ghose noted that these sections apply to contracts between competent parties that have been declared void or voidable. However, since the parties in this case were not competent due to the respondent’s minority, these provisions for the restoration of benefits under the Contract Act would not apply.

Refund under the Specific Relief Act, 1877 (now Section 33 of the Specific Relief Act, 1963)

Section 41 of the Specific Relief Act, 1877, which corresponds to the current Section 33 of the Specific Relief Act, 1963, states that when a court cancels an instrument, it may require the party to whom the relief is granted to compensate the other party as justice demands.

Essentially, this provision means that if a party seeks the cancellation of an instrument in court and also requests the restoration of benefits received under that instrument, they cannot claim a refund of those benefits under the Specific Relief Act. In this case, the appellant sought the cancellation of the instrument and the restoration of benefits, so they cannot claim a refund under this Act.

Equitable Doctrine of Restitution for Minors

Courts have developed an equitable doctrine of restitution in cases involving minor agreements. According to this doctrine, if a minor has received benefits in the form of goods or other non-monetary assets under a transaction, those goods or assets, as long as they are traceable, should be returned to the bona fide party to the agreement.

However, there is a difference of opinion among courts when it comes to the restitution of money received by minors. The established legal principle in Mohori Bibee v. Dharmodas Ghose is that agreements with minors are void ab initio, meaning void from the outset.

Mohori Bibee vs Dharmodas Ghose Summary

The case of Mohori Bibee vs Dharmodas Ghose was a landmark legal case in India. Dharmodas Ghose, a minor, had mortgaged his property to Brahmo Dutta. When he later sought to void the contract, the court ruled in his favor, declaring the agreement with the minor void ab initio, or void from the outset. The court rejected the application of estoppel, as Brahmo Dutta’s agent knew of Dharmodas’s minority.

Sections 64 and 65 of the Indian Contract Act were deemed inapplicable because the parties were not competent due to Dharmodas’s minor status. The case also addressed the restitution of benefits received by minors, with a distinction made between goods and money. The court in Mohori Bibee vs Dharmodas Ghose held that agreements with minors are void ab initio, providing protection for minors from incurring liabilities beyond their capacity to contract.


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