Khan Gul vs. Lakha Singh

0
1610
Khan Gul vs. Lakha Singh
In the Lahore High Court
Case No.
AIR 1928 Lah 609
Equivalent Citation:
(1928)ILR9LAH701
Appellants
Khan Gul 
Respondent 
Lakha Singh
Decided on
2nd April 1928
Bench 
Sir Shadi Lal; Justice Broadway; Justice Harrison; Justice Tek Chand; Dalip Singh.

Introduction

1. Section 10 of the contract act requires that the parties must be competent to contract.

2. Section 11 defines who are competent to contract :

a. Age of majority

b. Sound mind

c. Not disqualified from contracting by law

3. Thus minors, persons of unsound mind and persons disqualified by law are incompetent to contract.

4. The age of majority is 18, but where a guardian is appointed it is 21.

5. Nature and effects of Minor’s agreement:

a. It is void ab initio.

A minor cannot make a promise enforceable by law.[1]

b. No estoppel against minor.

When a minor misrepresents while making a contract that he is a major, no estoppel lies against such minor. He is not estopped from setting up a defence of his minority even if he acted fraudulently.

c. No liability in contract or in tort arising out of contract.

He may be liable in tort but not in a tort arising out of a contract.

d. Doctrine of restitution.

Object of restitution means to restore back the ill-gotten gains taken by the minor, rather than enforcing the contract.

Facts

1. Plaintiffs brought a suit for possession of half a square which had been sold to them by defendant 1 for Rs. 17,500 out of which Rs. 8,000 had been paid in cash before the Sub-Registrar and Rs. 9,500 was secured by a promissory note payable on demand from the plaintiffs.

2. The plaintiffs alleged that defendant 1 had been duly paid Rs. 17,500 because the promissory note for Rs. 9,500 in his favour had been discharged by another promissory note executed by the plaintiff in favour of the defendant’s brother-in-law Muhammad Hussain at the request and with the consent of the defendant, that the plaintiffs had paid Rs. 5,500 out of the Rs. 9,500 to Muhammad Hussain and were prepared to pay the balance.

3. Defendant 1 had refused to deliver possession of the property and the plaintiffs prayed that possession of the property sold might be delivered to them, or, in the alternative, that a decree for Rs. 17,500, the consideration money, together with interest or damages arising from breach of contract at the rate of one per cent per mensem, amounting to Rs. 1,050, i.e., for Rs. 19,000, in all, might be passed against the other property of defendant 1. 

4. Defendant 1 pleaded minority.

5. Defendant 2, wife of defendant 1, pleaded minority of defendant 1, and also pleaded a prior gift by defendant 1.

a. Procedural History

First appeal from the decree of Sardar Sahib Bhai Hukam Singh, Senior Subordinate judge, Lyallpur, dated 31st July 1922, decreeing the claim against the defendants.

1. The trial Court decreed the suit for possession holding that defendant 1 had made a false representation that he was of full age to the plaintiffs and was therefore estopped from raising the plea of minority, following the authority of Wasinda Ram vs. Sita Ram [2]

2. It also held that the consideration had been duly discharged by payment of Rs. 8,000 in cash and by substitution of the promissory note in favour of the defendant by one in favour of Muhammad Hussain and that Muhammad Hussain had realized Rs. 5,500 out of this sum from the plaintiffs.

3. It also held that the gift to the wife was of no effect and was void ab initio. Defendants have appealed. 

Issues

The questions, which have been formulated for decision by the Full Bench, are in these terms:

1. Whether a minor, who, by falsely representing himself to be a major, has induced a person to enter into a contract, is estopped from pleading his minority to avoid the contract. 

2. Whether a party, who, when a minor, has entered into a contract by means of a false representation as to his age, whether he be defendant or plaintiff, in a subsequent litigation, refuse to perform the contract and at the same time retain the benefit he may have derived therefrom. 

Arguments

1. The counsel for appellant urged that the facts do not show that the respondents were in any way deceived by any representation made by defendant 1. He relies on the evidence of Fakir Muhammad (P.W. 3) who states that Lakha Singh, one of the respondents had told the defendant that he (defendant) should state his age to be 19 at time of registration.

2. There can be no doubt that the appellant stated his age to be 19 at the time of registration.

3. Except the evidence of Fakir Muhammad there is no evidence to show us that the respondents knew or were in a position to know what the age of the appellant was.

4. The appellant had previously executed other mortgages and deals of gift in which he had represented himself to be 19.

5. In one case he had obtained a medical certificate showing that he was over 19 years of age.

6. He admits that he stated before the Sub-Registrar that he was 19 years of age because his cousin Muhammad Hussain had asked him to give his age as 19 years. 

Judgment

1. As regards the minor’s capacity to enter into a contract there was some uncertainty prior to 1903 as to whether a minor’s contract was void or voidable.

2. But all doubt on the subject has been dispelled by the judgment of their Lordships of the Privy Council in Mohori Bibee v. Dharmodas Ghose[3] which declares that a person who, by reason of infancy as laid down  by S.11, Contract Act, incompetent to contract, cannot make a contract within the meaning of the Act. The transaction entered cannot be recognized by law.

3. The law of estoppel is a general law applicable to all persons, while the law of contract relating to capacity to enter into a contract is directed towards a special object; and it is well established principle that, when a general intention is expressed by the legislature, and also a particular intention, which is incompatible with the general one, particular intention is considered an exception to the general one: per Best, C.J. in Churchill v. Crease[4].

4. In India the rule against the application of the doctrine of estoppel to a contract void the ground of infancy has been adopted, not only by the Calcutta High Court, but also by the High Courts at Madras, Allahabad and Patna. A Division Bench of the Lahore High Court has, however, favoured the view taken by the Bombay High Court in Wasinda Ram v. Sim Rant[5].

5. In the case of Mohoree Bibee v. Dharmodas Ghose, which was an appeal from the judgment of the Calcutta High Court in Brahma Datt v. Dhurmo Dass Ghose[6] their Lordships refrained from expressing their opinion and disposed of the question by making the following observation: 
The Courts below seem to have decided that this section (S. 115) 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 isnot misled by the untrue statement. 

6. The balance of the judicial authority in India, is decidedly in favour of the rule that where an infant has induced a person to contract with him by means of a false representation that he was of full age, he is not estopped from pleading his infancy in avoidance of the contract and, though S. 115, Evidence Act is general in its terms, the court considering that it must be read subject to the provisions of the Contract Act, declaring a transaction entered into by a minor to be void.

7. Thus ,answer to the First question referred to is therefore in the negative.

8. Second issue: A false representation by an infant that he was of full age gives rise to an equitable liability. The Court, while relieving him from the consequences of the contract may in the exercise of its equitable jurisdiction restore the parties to the position which they occupied before the date of the contract (Doctrine of Restitution).

9. In Stocke v. Wilson[7] an infant, who had obtained furniture from the plaintiff by falsely stating himself to be of age, and had sold part of it for £ 30 was directed to pay this amount as part of the relief granted, to the plaintiff. 

10. Answer to the second question is that an infant though not liable under the contract, may in equity required to return the benefit he has received by making a false representation as to his age.

11. Harrison J. dissenting , that a minor who has entered into a contract by means of false representation as to his age, though not liable under the contract ,may ,in equity, be required to return the benefit he has received by making a false representation as to his age ,whether he be a defendant or plaintiff.

Conclusions

While deciding the case, Sir Shadi Lal, C.J. made a liberal interpretation of the above stated statutory provisions and also the equitable doctrine of English law. Decision on the following two points in the case needs a mention : 

1. According to Section 39, Specific Relief Act, 1877, a minor may sue for the cancellation of an instrument pertaining to a Void agreement, and when he so goes to the Court (as a plaintiff) to claim the relief, the Court may ask the minor to pay compensation to the other side under Section 41. In this particular case the minor was not the plaintiff but was the defendant. The Lahore High Court still held that the minor should be asked to pay back the money. In its view the other party deserves to be compensated by a fraudulent minor, in equity, irrespective of the fact that the minor is the plaintiff or the defendant. 

2. Sir Shadi Lal, C.J. also made a significant departure from the English doctrine of restitution and the decision of Leslie v. Sheill,40 according to which there can be only restoration of specific property wrongfully obtained by a fraudulent minor, if the same can be traced in his hands, and he cannot be asked to pay back money as the same cannot be identified, otherwise it would amount to enforcing an agreement which is void. 

3. According to the decision in the present case, asking a minor to return the ill gotten gain in the form of money, is not the enforcement of contract, but it is only the restoration of the pre-contract position. The relief is allowed not because there is a contract between the parties, but it is because there is no contract but one of the parties has unjustly benefited at the cost of the other.

Edited by Parul Soni

Approved & Published – Sakshi Raje

Reference

[1]Raj Rani v. Prem Adib (AIR 1949 Bom 215).

[2]Wasinda Ram v. Sita Ram (1920) 1 Lab. 389.

[3]MohoriBibee v. DharmodasGhose (1903) 30 I.A. 114.

[4]Churchill v. Crease 5 Bing 177 (180).

[5]Wasinda Ram v. Sim Rant (920) l Lah. 359.

[6]Brahma Datt v. Dhurmo Dass Ghose (1899) 26 Cal. 38.

[7]Stocke v. Wilson (1918) KB. 235.