Under Section 6 of the Transfer of Property Act, property may be transferred to a minor as he is not " a person legally disqualified to be transferee" within the meaning of Sub-section (h) of that section. It is quite clear that a transfer of full ownership or of a mortgage interest in immoveable property may be made by way of gift in favour of a minor just as a minor may inherit specific immoveable property or an interest in it by way of mortgage. The question then is whether it makes any difference that the transfer in favour of the minor by way of sale or mortgage is made in consideration of a price paid or a loan advanced by the minor. No doubt according to their Lordships' decision in such a case the minor could not bind himself by contract to pay the price or advance the mortgage money ; but when he has done so and the vendor or mortgagor has executed a registered conveyance in his favour, is there any reason why the transfer in his favour should not take effect? The provision of law which renders minors incompetent to bind themselves by contract was enacted in their favour and for their protection and it would be a strange consequence of this legislation if they are to take nothing under transfers in consideration of which they have parted with their money. This precise question cannot arise in England where a purchase by a minor of immoveable property is voidable by him on attaining majority but not void ah initio, as it is only the contracts specified in the Infants' Relief Act which are void. However even in the case of a contract which was void under the Infants' Relief Act, Lord Coleridge, C.J. and Bowen, L.J. held that a reasonable construction must be put upon the statute and that when an infant had paid for something under a void contract and had used or consumed it, it would be contrary to natural justice that he should recover back the money which he had paid on the ground that the contract was void. Valentini v. Canali (1896) I.L.R. 20 M. 147. I do not think this decision is inconsistent with Thurstan v. Nottingham Permanent Benefit Building Society (1909) I.L.R. 33 M. 312, which decided, as I understand it, that the mortgage given by the minor as security for a void contract entered into by him was also void. Applying the same reasoning to the present case it would be even more opposed to natural justice to allow the transferor to a minor by way of sale or mortgage to question the transfer for which full consideration has been paid to him. In that case it was the minor who sought to take advantage in an unconscionable manner of the Act which had been passed for the benefit of minors. There is even less reason for allowing a vendor to a minor to take advantage of the minor's statutory inability to contract which was imposed for his protection in order to avoid a transfer into which he entered with his eyes open.
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Property - Validity of mortgage - Whether mortgage executed in favour of minor who had advanced whole of mortgage money was enforceable by him or by any other person on his behalf - Held, it was clear that before passing of these connected Acts, Contract Act and Transfer of Property Act, transfers by way of sale and mortgage in favour of minors were not void if it had been intended to make them absolutely void and of no effect this would have been done by clear and unambiguous words - On contrary, general scheme of Transfer of Property Act as appeared from definition was that minors might be transferees but not transferors.
Madras High Court
A.T. Raghava Chariar vs O.A. Srinivasa Raghava Chariar on 5 April, 1916
Equivalent citations: 36 Ind Cas 921, (1916) 31 MLJ 575,AIR 1917 Mad 561
1. The question referred to us is whether a mortgage executed in favour of a minor who has advanced the whole of the mortgage money is enforceable by him or by any other person on his behalf. In considering this question the starting point is the decision of their Lordships of the Privy Council in Mohori Bibee v. Dharmodas Ghose (1909) I.L.R. 38 M. 312 : 19 M.L.J. 752, which decided, so far as is material for the present case, that a mortgage by a minor was void. A mortgage is a transfer of property and their Lordships pointed out that under Section 7 of the Transfer of Property Act persons competent to contract are competent to transfer property and went on to show that under the Contract Act a minor is not competent to contract. They, therefore, as I understand, held that the transfer by the minor was bad and went on to hold with reference to certain other contentions which were raised that, as an infant was not competent to contract the question whether the contract was void or voidable could not arise in the case of an infant. The earlier decision of the House of Lords in Thurston v. Nottingham Permanent Benefit Building Society (1903) L.R. 30 I.A. 114 : I.L.R. 30 0. 539 was practically to the same effect. In a later case in Mir Sarwarjan v. Fakhruddin Muhammad Chowdhuri (1913) 21 M.L.J. 363 their Lordships held that it was not competent to the guardian of a minor or the manager of his estate to bind the minor or his estate by a contract for the sale of immoveable property and that in the absence of mutuality the contract could not be enforced on behalf of the minor. These decisions do not, in my opinion, affect the question arising in the present case whether the transfer by way of mortgage in favour of a minor is enforceable. Under Section 6 of the Transfer of Property Act, property may be transferred to a minor as he is not " a person legally disqualified to be transferee" within the meaning of Sub-section (h) of that section. It is quite clear that a transfer of full ownership or of a mortgage interest in immoveable property may be made by way of gift in favour of a minor just as a minor may inherit specific immoveable property or an interest in it by way of mortgage. The question then is whether it makes any difference that the transfer in favour of the minor by way of sale or mortgage is made in consideration of a price paid or a loan advanced by the minor. No doubt according to their Lordships' decision in such a case the minor could not bind himself by contract to pay the price or advance the mortgage money ; but when he has done so and the vendor or mortgagor has executed a registered conveyance in his favour, is there any reason why the transfer in his favour should not take effect? It has been held by a Bench of this Court in Navakoti Narayana Chetty v. Logalinga Chetty (1889) 24 Q.B.D. 166, that in such a case a transfer by way of a sale is void on the authority of Mohori Bibee v. Dharmodas Ghose L.R. (1903) A.C. 6. This conclusion has been dissented from in Munni Kunwar v. Madan Gopal (1909) I.L.R. 83 M. 312 and does not, in my opinion, follow from the decision in Mohori Bibee v. Dharmodas Ghose (1903) I.L.R. 30 C. 539 on the authority of which it is based. The learned Judges proceed on the view that the sale would be preceded by an agreement not amounting to a contract by the minor to pay the price and this would no doubt generally be so, but not necessarily, as the agreement might merely be that if the minor paid the price before a certain date the vendor would convey to him and there might be no undertaking on the part of the minor to pay the price. But, assuming that there was an agreement not amounting to a contract by the minor to pay the price and that he has paid it and that the vendor has executed a conveyance in his favour, I am unable to see why the property should not pass to the minor under the transfer. There is a transfer of ownership in exchange for a price and consequently a sale within the meaning of Section 54 of the Transfer of Property Act and in the absence of a contract to the contrary certain statutory obligations are imposed on the vendee. Section 55(5)(a) imposes a duty of disclosure breach of which may give the vendor a right to relief, (b) payment of the price is a duty which has been complied with exhypothesi; (c) and (d) are mere incidents of ownership which passed by the transfer and apply in the case of gift as much as in the case of sale.
2. The provision of law which renders minors incompetent to bind themselves by contract was enacted in their favour and for their protection and it would be a strange consequence of this legislation if they are to take nothing under transfers in consideration of which they have parted with their money. This precise question cannot arise in England where a purchase by a minor of immoveable property is voidable by him on attaining majority but not void ah initio, as it is only the contracts specified in the Infants' Relief Act which are void. However even in the case of a contract which was void under the Infants' Relief Act, Lord Coleridge, C.J. and Bowen, L.J. held that a reasonable construction must be put upon the statute and that when an infant had paid for something under a void contract and had used or consumed it, it would be contrary to natural justice that he should recover back the money which he had paid on the ground that the contract was void. Valentini v. Canali (1896) I.L.R. 20 M. 147. I do not think this decision is inconsistent with Thurstan v. Nottingham Permanent Benefit Building Society (1909) I.L.R. 33 M. 312, which decided, as I understand it, that the mortgage given by the minor as security for a void contract entered into by him was also void. Applying the same reasoning to the present case it would be even more opposed to natural justice to allow the transferor to a minor by way of sale or mortgage to question the transfer for which full consideration has been paid to him. In that case it was the minor who sought to take advantage in an unconscionable manner of the Act which had been passed for the benefit of minors. There is even less reason for allowing a vendor to a minor to take advantage of the minor's statutory inability to contract which was imposed for his protection in order to avoid a transfer into which he entered with his eyes open.
3. I am therefore of opinion that Navakoti Narayana Chetty v. Logalinga Chetty (1915) 13 A. L J. 1084, was wrongly decided and that a transfer to a minor by way of sale is good and I see no reason for holding otherwise in the case of mortgage. An ordinary mortgage, as defined in Section 58, Transfer of Property Act, includes a transfer of specific immoveable property for the purpose of securing payment of money advanced or to be advanced by way of loan. If the money in whole or in part has not been advanced by the minor, there is of course a failure of consideration to that extent. If however, the money has been advanced by the minor by way of loan, I do not think that the fact that the minor may have had no power to transfer the mortgage money and may on that ground be entitled to recover it back is sufficient ground for holding that the transfer by the mortgagor to the minor by way of mortgage to secure the repayment of the mortgage money should not be enforced against the mortgaged property according to the terms of the mortgage if payment is not made at the date mentioned in the mortgage although the minor may not be entitled to sue the mortgagor on the personal covenant to pay and the advance by reason of his incapacity to contract may not be strictly by way of loan.
4. It is, I think, clear that before the passing of these connected Acts, the Contract Act and the Transfer of Property Act, transfers by way of sale and mortgage in favour of minors were not void and I think that if it had been intended to make them absolutely void and of no effect this would have been done by clear and unambiguous words. On the contrary the, general scheme of the Transfer of Property Act as appears from the definition is that minors may be transferees but not transferors and I do not think the intention of the legislature to except from this rule the most important classes of transfers by way of sale and mortgage is sufficiently made out.
5. In Ayres v. The South Australian Banking Company (1896) I.L.R. 20 M. 147 their Lordships of the Judicial Committee were reluctant to construe the statute in question as preventing the property passing to the person to whom an instrument otherwise valid professed to pass it. I think we should show the same reluctance in the present case.
6. I would answer the reference accordingly.
Abdur Rahim, J.
7. I would answer in the affirmative the question referred to us, namely, whether a mortgage executed in favour of a minor who had advanced the whole of the mortgage money is enforceable by him or by any other person on his behalf. I find nothing in the judgment of the Privy Council in Mohori Bibee v. Dharmodas Ghose (1911) I..L.R. 39 C 232, in which the plaintiff succeeded in obtaining a decree cancelling a mortgage executed by him during minority, which militates against this view. What was ruled in that case was that an infant being incompetent to contract (Section 11 of the Contract Act), a contract or agreement purported to be made by him should be treated as if it did not exist and that the question whether a contract is voidable or void within the meaning of Sections 64 and 65 of the Contract Act did not arise in the case of an infant. They laid down that a mortgage by a minor who is incapable of making a transfer not only did not bind him as to which no question was or could have been raised, but that the mortgagee could not recover, by virtue of Section 64 or 65 which presupposes the existence of a contract or an agreement, the money which he had advanced to the infant. These sections require the party who has received any benefit either under a contract voidable at the option of the party rescinding it or under an agreement which is discovered to be or has become void, to restore such benefit to the person from whom he received it.
8. In this case, does the question referred to us involve the enforcing of any contract made by the minor? In my opinion, it does not. The agreement sought to be enforced is the promise of the mortgagor who is of full age to repay the money advanced to him accompanied with a transfer of his interest in certain specific immoveable property for the purpose of securing the repayment of the amount. The infant has already advanced the money which formed the consideration for the promise of the mortgagor and there is no question to be considered of enforcing any promise on the part of the infant. It is probable that an analysis of the transaction would show that the minor made the advance in pursuance of a promise express or implied; but as he has performed his part, nothing remains to be done by him, It is however argued that a promise involves a proposal on one side and acceptance on the other and both the promisor, i.e., the person making the proposal and the promisee, i. e., the person accepting it, must have attained majority. Reliance is placed for this purpose on Sections 10 and 11 of the Contract Act, but these sections speak of persons competent to contract the word " parties" in Section 10 is used, there can be no doubt, in the sense of " persons" which is the word used in Section 11--and that, according to the definitions of "contract" and "agreement", undoubtedly means persons making the promise sought to be enforced. No doubt a proposal may be of a character that its acceptance would involve a promise on the part of the acceptor to do something. For instance A proposes to sell a house to B for Rs. 10,000. Here if B accepts the proposal it means that he promises to pay Rs. 10,000 to A, in addition to assenting to the transfer of the house to himself by A. Supposing B has paid the price and A has not conveyed the house to him. The promise or agreement to be enforced in such a case would be that of A. A proposal may however be such that its acceptance does not involve any promise on the part of the acceptor. This is clearly illustrated in Section 25 which mentions certain classes of agreement which would not be void even though made without consideration. Both clauses 1 and 2 of that section furnish clear examples of a contract where the person to whom the promise is made has to do nothing but assent to the proposal. Could it be said that infants are excluded from the benefit of these clauses so that an agreement made by a registered writing on account of natural love and affection would not be binding if the near relation in whose favour it is made happened to be a minor or that the promise to compensate a minor who has voluntarily done something for the promisor would be invalid, though a similar promise would be enforceable if made to a person of full age? Such a proposition unless there was strong and clear authority to support it, would be prima facie untenable and I am not aware of any such authority. All that the infant has to do in these cases is to signify his assent to the proposal, which under the Contract Act, is the definition of 'acceptance'. In cases therefore covered by Section 25, where there is an agreement in favour of a minor without any consideration and so also in cases where the consideration for an agreement was the undertaking by the minor to do something and he has already carried out that undertaking, there is no question of any agreement or contract on the part of the minor being enforced. It may be that if an infant is of an age when he is unable to understand the meaning of a proposal made to him, the law will not regard his assent to it as a valid acceptance. But I am not aware of any general proposition that an infant is incapable of performing any juristic act whatever even if he is of sufficient age to understand the meaning and scope of the Act. An infant is capable of acquiring property by gift which the law requires must be accepted. It was indeed contended by Mr. Ganapathi Aiyar that acceptance of a gift by a minor is not valid. There is however no warrant for such a proposition. Section 127 of the Transfer of Property Act shows that a donee who is not competent to contractan infant is within that category--can accept a gift even of property burdened with an obligation though he will not be bound by the acceptance and can repudiate it when he becomes competent to contract, Subramania Aiyar v. Sitha Lakshmi. L.R.(1903) A.C. 6 Then, an infant may be admitted to the benefits of a partnership though he cannot be made personally liable for any obligation of the firm (Section 247 of the Contract Act). Similarly a minor may accept a trust and can be a trustee though he cannot execute a trust involving the exercise of discretion (Section 10 of the Indian Trusts Act), All this indicates that what is meant by the proposition that an infant is incompetent to contract or that his contract is void is that the law will not enforce any contractual obligation of an infant.
9. As for the infant's legal position with reference to transfers of property, he is undoubtedly capable of holding property and can acquire property not only by inheritance or bequest but also by gift. Section 7 of the Transfer of Property Act lays down generally that a person competent to contract may make a transfer but that Act nowhere says that a person cannot be a transferee of property unless he is competent to contract. It has however been held in Navakoti Narayana Chetty v. Logalinga Chetty 5 Bing N.C. 76 by Benson and Krishnaswami Aiyar. JJ. that a transfer by way of sale in favour of a minor is void while the Allahabad High Court holds a different view (see Munni Kunwar v. Madan Gopal (1894) L.R. 3 Ch. 589). Mr. Justice Krishnaswami Aiyar who discussed the matter at some length in the Madras Case seemed to think that the proposition laid down by him logically followed from the ruling of the Privy Council in Mohori Bibee v. Dharmodas Ghose. (1882) L.R. 19 Ch.D. 603 The gist of his reasoning seems to be that as a contract of a minor has been held to be void and not voidable and as a sale presupposes a contract on the part of the vendor and the vendee, the sale to a minor must be void. But this really ignores the substantial distinction between a contract for a sale and a sale, viz., that a sale effects a transfer of the property, while a mere contract for a sale does not. A transfer need not be founded on a contract at all. What, therefore, we have primarily to look to in cases like this is the competence of the transferor to make the transfer. Where there has been a completed sale in favour of an infant the only question that might arise on his side is, whether not being competent to transfer, he would not be entitled to recover the money which he has paid to the vendor as consideration for the sale. I think he would be so entitled, though the Court of Equity will help him only on the condition that he restores the property to the vendor. The result no doubt would be that if an infant chooses to avoid a sale in his favour the transaction will be treated as void ab initio. This seems to be strictly deducible from the combined provisions of the Transfer of Property Act and the Contract Act, bearing on the subject. It is also in accordance with the English law on the point as summarised in Halsbury's Laws of England (Volume XVII, pages 75 and 76). It is stated there " the acquisition of property being generally beneficial; an infant can take property, both real and personal in any manner whatever, either by descent, intestacy or will, or by purchase or gift or other assurance inter vivos except where it is necessarily prejudicial to do so (paragraph 200). A purchase of property, or the acceptance of a gift of property, by an infant is voidable by him ;.... But in the meantime the property is vested in him.
10. If he avoids it after attaining full age the purchase or gift is void ab initio and the property revests in the vendor or donor (para. 201)". The disability of an infant to make a contract or to transfer property is intended for his protection and there is nothing in reason why the other party to the bargain who was fully competent in these respects should be permitted to repudiate it. If the law were otherwise, a very numerous class of infants engaged in profitable employments will be seriously affected and an element of uncertainty would be introduced into many dealings hitherto regarded as unimpeachable. There are cases, however, in which the question of mutuality arises and these stand on a different footing. For instance, if an infant seeks to enforce a contract for sale of immoveable property, the Court of Equity will refuse to grant specific performance as it could not enforce any engagement entered into by the minor and there would thus be a want of mutuality (Mir Sarwarjan v. Fakhruddin Mahomed Chow dhury (1881) 18 Ch.D. 109 at 121). I am therefore of opinion that the decision in Navakoti Narayana Chetty v. Logalinga Chetty L.R.. (1903) A.C. 6 is wrong in so far it lays down that a purchase by a minor is void and can be set aside at the instance of the vendor or objected to by third parties.
11. The mortgage in favour of a minor for money already advanced by him differs from a sale only in this, that in addition to a transfer by the mortgagor of an interest in immovable property for purposes of security, there is a promise on his part to repay the loan. But as there is no question in such a case as to the validity either of any transfer or of any contract made by the infant there is nothing that prevents the court from upholding the transaction. It may be that an infant having advanced money on mortgage on certain terms, for instance, that he will not require repayment until a specified date, would still be at liberty to repudiate the bargain and to sue before the due date to recover his money in spite of the stipulation to the contrary. But that is, because the law considering him incompetent to make a contract the matter would stand on the footing that the mortgagee was in possession of the infant's money without any title. Among writers of textbooks Dr. Rash Behari Ghosh, the learned Author of the Law of Mortgages in India, states the law correctly when he says (page 195) that an infant being a person capable of holding property can well be a mortgagee and that the disabilities which attend the creation of a mortgage do not attach to the acceptance of a security. In America also the law seems to be that an infant can take a mortgage (see Jones on Mortgages, Article 131)
Srinivasa Aiyangar, J.
12. Whether a mortgage executed in favour of a minor who has advanced the whole of the mortgage money is enforceable by him or by another person on his behalf " is the question referred to us for determination. The question is one of Considerable importance and difficulty and I have come to the conclusion, though not without hesitation, that it must be answered in the affirmative.
13. A mortgage transaction according to the definition in the Transfer of Property Act imports the existence of a loan or debt or an engagement which may give rise to a pecuniary liability and a transfer of an interest in specific immoveable property to secure the repayment of the debt or the performance of the engagement. Unless therefore there is a binding promise to pay money either personally or out of the property of the person bound, there cannot be any mortgage at all. It is unnecessary to deal with statutory penalties, liens or judgment debts which may be recoverable, as debts ; for we are concerned only with consensual obligations. A debt has been defined as a sum of money due by certain and express agreement"; Bouvier's Law Dictionary, Vol. I, page 786 citing 3 Blackstone, page 154. That there must be an enforceable promise to pay, is clearly brought out in Nottingham Permanent Benefit Building Society v. Thurston 1, There an infant contracted a loan and granted a mortgage on her land and spent the money in building on it. By the Infants Relief Act, her contract was void. A transfer of property by her at any rate of immoveables was not affected by the Act. She sued for the cancellation of the mortgage and the return of her land. The House of Lords held that she was entitled to recover without returning the money, for in law there was no debt and the mortgage therefore could not take effect. See also Fergusson v. Norman L.R. (1903) A.C. 6 In the case of simple mortgage, (as in this case),, it is also necessary that the mortgagor should bind himself personally to pay the debt. Different modes of enforcing the security are prescribed by the Transfer of Property Act and the only mode by which a simple mortgagee can enforce the security is by bringing the property to sale through Court. In the absence of an enforceable promise to pay personally, the transaction, though in form a simple mortgage, would not really be one and the mortgagee cannot in any manner avail himself of the socalled security. He is not likely to obtain any benefit by calling his mortgage an anomalous mortgage as defined by Section 98 of the Transfer of Property Act; for without a contract, express or implied, giving a right of a sale to the mortgagee, there is no means of enforcing the socalled security ; nor is it any more use in calling the transaction a charge, for even then, there must be an obligation to pay money. It is only after the mortgage money has become payable, that is, under the terms of the contract, that the security can be enforced. Section 67 of the Transfer of Property Act.
14. The first question therefore for consideration is whether in law there can be a contractual obligation in favour of a minor, as without such an obligation the banding over of a sum of money by a minor to another person cannot result in a loan or debt. This depends upon an examination of the relevant sections of the Indian Contract Act. The starting point for discussion is the decision of the Privy Council in Mohori Bibee v. Dharmodas Ghose (1891) 139 U.S. 21 at 60, which definitely settled that an infant cannot, bind himself by a promise; but, whether the converse follows is the question. A promise in law or an enforceable promise is a contract as defined by the Contract Act. A promise to be enforceable, that is, in order that it may become a contract, should, except in the cases provided for by Section 25 of the Act, be supported by lawful consideration ; if it is, the promise is an enforceable promise, that is, it becomes a contract. If the consideration is an executed, or past consideration, (to a limited extent past consideration under the Indian Contract Act is sufficient consideration), the contract is an unilateral contract. It is no doubt true that in every contract, even in unilateral contracts, there must be two parties and there must be an assent or agreement of the minds of both the parties. This follows from the very definition of a promise as accepted proposal. As has been well said in unilateral contracts, " only one of the parties is under a legal obligation. The contract is therefore onesided, though the consent of both parties is essential; " (Street's Foundation of Liability, Vol. II, p. 53). Though it is necessary that there should be at least two parties to a contract whether unilateral or bilateral and though there must be the assent or agreement of both parties to the contract, it is not necessary that both parties should be competent to contract, that is, should have the capacity to make binding promises. That, I think, is not required by Section 10 of the Act. Section 10 provides for both unilateral and bilateral contracts and the words ' the free consent of the parties competent to contract' should be taken distributively. If the words " promises " and " every set of promises forming the consideration for each other" are substituted for the word 'agreement' in Section 10, the meaning becomes quite clear; and as I shall show presently there is nothing in the Act to prevent an infant from being the promisee. It is no doubt true that if the infant is incapable by reason of tender age of assenting to a proposal, there can in fact be no contract at all. As pointed out in Parsons on Contract, Vol. I, page 340 " an infant, using the word in its common meaning, that of a child who had not left his mother's arms, cannot make a contract in fact." The question then, whether a minor who has assented to a proposal and has therefore become a promisee, is entitled to enforce the promise, depends upon the question whether the promise is supported by consideration. This rule would equally apply to mutual promises. " Consideration " as defined by the Contract Act may consist in an act or forbearance or a promise to do or forbear on the part of the promisee or of a third person. This definition to some extent differs from the doctrine of consideration in the English Law, but I do not pause here to consider the different theories of consideration which has been the subject of subtle and learned discussion among eminent jurists like Professors Ames, Langdell, Williston and Sir Frederic Pollock. Most of the difficulty is met here by the positive provisions of the Contract Act.
15. Taking first, cases where consideration moves from a third party, there can scarcely be any doubt that a promise made to a minor by an adult would be enforceable by him. If for example a father gives consideration and requires the promisor to pay money or do some other thing for the benefit of his minor son the minor son can enforce that promise. It is really a purchase of an obligation by the father for the benefit of the son and in no way differs from the purchase of property for his benefit. In such a case whether the promise is made or property transferred to the minor himself or to somebody else on his behalf, makes no difference. In cases where the consideration moves from the minor himself, unless there is any provision of law which precludes a minor from giving consideration, there can be no question that there can be a lawful consideration, for the promise. If for example the minor at the request of the promisor does some service or refrains from doing any act whether it is of value or not, that would be sufficient consideration for the promise and there is nothing, so far as I can see to prevent the minor from enforcing the contract. Again in the exceptional cases coming under Section 25, inasmuch as there need be no consideration for an enforceable promise, the minor can as pointed out by Abdur Rahim, J., enforce that promise. Where the consideration for the promise of the adult is a promise by the minor, inasmuch as the minor cannot make a promise enforceable in law, the consideration necessarily fails and the promise of the adult does not therefore become a contract; as a learned writer says, " The promise of infants should never have been held to be promises in law or to constitute a consideration for another promise." If, however, at the time when the promise of the adult is sought to be enforced by the minor, the minor has performed his promise and that performance has been accepted by the adult, I should hold that the minor can enforce the promise. Although the adult promisor is not bound to perform his promise and may decline to accept performance of the minor's promise, (which is the result of the agreement being void) and although the adult promisor if he had performed his promise may decline to accept performance of the minor's promise and seek to get back what he has given, (so long at least as the infant is in possession of it), if the adult promisor does accept performance, I do not see why that should not form a sufficient consideration for his promise. By the acceptance of performance by the infant, he may be taken to have renewed his promise; that is, although the original bilateral engagement was void, the accepted performance may and, I think, does, give rise to an unilateral contract. There is nothing therefore in the Contract Act which prevents an infant from being a promisee ; on the other hand the provisions contained in the Act as regards minor partners, minor agents and in the Negotiable Instruments Act as to minor drawers and indorsers, suggest that the Indian Legislature recognised the capacity of the minor to accept a promise. I therefore think it clear that in cases where consideration passes from a third party, or when a competent consideration passes from the ..minor, the minor can enforce the promise of an adult promisor.
16. Where however the consideration for the promise is a transfer of property by the minor and if a minor is wholly incompetent to transfer property, there can be no consideration for the promise and the promise would be unenforceable. Section 7 of the Transfer of Property Act makes capacity to contract the limit of the capacity to transfer ; the section applies to property in general and cash would be property for this purpose, though no doubt in the matter of reclaim there may be a difference. (See Section 8, last paragraph and Section 118 of the Transfer of Property Act). If as in this case the minor made a loan to the defendant in exchange for his promise to pay and if the title to the money did not pass to the defendant is there any consideration for the promise? If instead of money we assume that it was immoveable property which was transferred, the matter becomes plainer. It is possible to hold that if any person sui juris knowing that he is taking money or property from a minor, which he is incapable of transferring, chooses to make a promise, that there was consideration for that promise in the mere act of an infant executing a document or delivering property. This however is scarcely likely to be the bargain as it may enable the minor to recover back the property which he purported to transfer and yet hold the other party to his promise. If however the position is that so long as the possession of the property transferred, is not resumed by the minor and so long as the promisor has the benefit of the enjoyment of the property transferred, he is bound to perform his promise, even then the same difficulty might arise.
17. Is then a transfer by a minor wholly void and a nullity as a minor's promise is, as now settled by the decision of the Judicial Committee? ; for if an infant is wholly incompetent to transfer property he can pass no title to the other, in which case there will be no consideration for the promise to repay and the relation of debtor and creditor could not arise. The fact that the minor may recover his money in an action in tort would not make any difference.
18. Is it possible to distinguish moveables from immoveables, at any rate cash which passes by delivery and which is not capable of being recovered in specie and hold that if cash is paid by a minor the property sufficiently passes to the promisor so as to disable the minor from getting back his money, at any rate so long as he had the quid pro quo for it.
19. The answer to these questions depends on a correct interpretation of Section 7 of the Transfer of Property Act. The section, it will be seen, does not in terms declare that a transfer by a person incapable of contracting is wholly void ; nor does it prohibit it. The implication of course is that persons who are incapable of contracting are capable of transferring. If the section is construed as enacting that a transfer by an incompetent person is wholly void, it would lead to this result ; that a minor cannot even purchase anything for cash ; and that every shopkeeper will have to deal with the public at his peril ; that if he purchase for cash a packet of sweets and eat it, he can recover his money back, so long certainly as it was with the vendor and probably even after it had been spent by him, in an action in tort, either detinue or conversion. A boy in the street cannot sell oranges and a child cannot spend his pocket money. It was said by the Master of the Rolls " there is nothing illegal or improper in an infant's carrying on a trade ; thousands of infants do so every day and the man who deals with an infant on credit trusts to the infant's honour to pay him." (Ex parte Jones 1). But if a minor cannot sell or buy even for cash, there is no possibility of his trading. Such unreasonable consequences should, if possible, be avoided.
20. It must be remembered that provisions relating to transfer of moveables are to be found in the Contract Act and there is nothing in that Act to prevent us from construing those provisions in the way in which the Infant's Relief Act has been construed in England. The Transfer of Property Act when enacted came into force only in limited areas though now it has been extended to nearly the whole of British India. In places where both the Acts were in force the two Acts should be read together and we are not bound to hold in the absence of express language to that effect, that transfers by infants at any rate of moveables are absolutely void. These provisions after all were enacted for the benefit of incapacitated persons and need not be interpreted so as to enable an adult party to defeat or impair the obligation of his contract by his own act or to profit by his own fraud (Maxwell, page 337). The incompetency to transfer of course prevents the minor being bound by it. That has been the law in England both before and after the Infant's Relief Act and the Sale of Goods Act. Ryder v. Wombwell (1914) A.C. 898 and Hamilton v. VaughanSherrin Electrical Engineering Company (1886) 118 U. Section 290. Even a gift of money by an infant was held good in Taylor v. Johnston (1898) 171 U. Section 138, though the correctness of this decision has been questioned. (William's Vendors and Purchasers, page 786). At any rate in the case of money in which not merely possession but title passes by delivery, a payment or delivery of money, even by an infant should be held sufficient to pass property. This view of course does not differentiate between the case of a person who is competent to transfer, but has no title and a person who has title but who cannot transfer; and I do not forget that delivery in such cases is only a mode of transferring property. I am therefore inclined to hold that a payment of money for the purchase of goods, or an advance of money as a loan, by a minor, passes the property in the money ; whether it passes absolutely or whether the minor can avoid the transaction at his option is a question which it is unnecessary to consider.
21. As regards transfers of immoveable property in all cases where the transfer can only be made by an instrument in writing registered, a minor may not be able to make a transfer at all; for an instrument executed by a minor cannot be admitted to registration. Section 35 of the Registration Act.
22. I am supported in this view by the implication contained in Section 26 of the Negotiable Instruments Act. In a vast majority of cases promissory notes are made in consideration of a loan of money and if a minor were incompetent to pass property in money and cannot therefore be a payee, it would have been so enacted in the Act. A minor can evidently draw a bill or issue a cheque on his banker (a cheque is only a species of bill). No doubt he cannot be made liable on the bill, but his banker evidently can honour his cheque. Section 22 of the English Bills of Exchange Act which is quite similar to Section 26 of the Indian Act says in terms that the holder can receive payment of the bill. If a minor can pay by a cheque, it would be absurd to hold that he cannot pay cash so as to pass title to it. Again a minor partner can apparently transact the business of a partnership and if the partnership was a moneylending business, he can make loans. See Section 253 Clause (3) of the Contract Act. I may also point out that in Sinclair v. Brougham (1891) 139 U.S. 21 at 60, where both the borrowing and the lending in the course of the banking business, were ultra vires, nobody doubted that the loans and other investments made by the society could be recovered and realised. If the Birckbeck Society could not transfer property in money to the customers with whom it dealt in the banking business, there was nothing to prevent the borrowers from pleading that they were not liable on their contract of loan.
23. The construction which I have adopted of Section 7 of the Transfer of Property Act which I think did not enact anything new, is in consonance with the principles laid down in England and America in respect of transfers by persons of deficient or limited contractual capacity. In England on the construction of the Infant's Relief Act, questions have arisen as to the effect of infant's contract for sale or purchase of goods. The statute in general terms makes infant's contracts for goods supplied or to be supplied absolutely void. It must be remembered that contracts for sale of goods includes both agreements to sell and actual sales. It has been doubted whether the Act applies to sale of goods by the infants (Benjamin on Sales, page 44 ) and it has been suggested that the Act does not apply to purchases by minors for ready money. (Pollock on Contracts, page 66). Even when the minor pays cash and purchases goods, if the purchase is void, it is impossible to say that the minor cannot recover back his money on the ground that title to it did not pass. If he had consumed the goods, he may be even entitled to recover back the money without any duty of restitution ; (whether the minor is bound to make restitution is a matter of doubt; but the prevailing opinion seems to be that he need not. Parsons on Contract, pages 365, 366, especially Williston's note). In Valentini v. Canali (1891) 139 U.S. 21 at 60, which was a case of a contract of purchase of furniture by an infant, the infant after having paid part of the price chose to rescind the contract and sought to recover the money. That relief was disallowed. The Lord Chief Justice in his judgment said, " When an infant has paid for something and has consumed or used it, it is contrary to natural justice that he should recover back the money which he has paid "; and Bowen, L.J. concurred. In the Nottingham Society's 2 case the infant was allowed to keep the money, the property of the other party and yet recover his own. The distinction appears to be that in the one property passed and in the other, transfer which was only a security for a void promise was also void and no property passed. Sir Frederick Pollock referring to Valentini v. Canali (1891) 139 U.S. 21 at 60, says, "It does not follow that if the goods are delivered, no property passes, or that if they are paid for, the money may be recovered back. At all events an infant who has paid for goods and received and used them cannot recover the money back." (Pollock on Contracts, page 66). Nobody has ever suggested that Section 2 of the Sale of Goods Act which like Section 7 of the Transfer of Property Act enacted thai; " capacity to buy and sell is regulated by the general law (including of course the Infants' Relief Act) concerning capacity to contract and to transfer and acquire property ", made any difference.
24. The distinction appears to be quite sound on principle. An executory contract may be void, but if it has been wholly performed by one or both of the parties and that results in a transfer by one party and a promise by the other or in mutual transfers, it does not follow that the transfer or transfers would also be void. ' Rules governing contracts are not always and need not even generally be, the same as those governing conveyances though capacity to contract is generally the limit of capacity to transfer. If there had been part performance by an incompetent promisor, he may be able to avoid future performance, but may not be able to get back what he had paid or transferred by way of part performance. Both the positions were illustrated in Valentini v. Canali (1891) 139 U.S. 21 at 60. The promissory note given by the infant for the balance of the purchase money was cancelled and declared void, while his action to recover money paid in part payment for the goods was dismissed. If Valentini had not paid any money there can be no question, but that Canali cannot recover, that is, enforce the promise to pay, The contract being void, if Canali had delivered the goods, he could take them back if they were still with the minor, for title did not pass; but if the minor had consumed the goods, or sold them, the vendor may have no remedy, except in cases where he is able to obtain relief on the principle explained in Sinclair v. Brougham (1914) A.C. 898. If the goods were not delivered the minor would be unable to recover, for here again the contract being void the vendor may decline to perform. If however the minor had paid money for the goods and the vendor declined to deliver, whether the minor can recover his money back or enforce the contract is doubtful. In Warwick v. Bruce (1886) 118 U. Section 290 it was held that the minor can enforce a contract; that was before the Infants' Relief Act, but a learned writer thinks that the result would be the same even after the Act. (See the note in the reprint of the case in 14 Revised Reports, p. 634. A converse case arose in Cowen v. Nield (1898) 171 U. Section 138 where an infant trader sold hay and clover to the plaintiff and got the price and did not deliver the goods. The plaintiff sued for damages for breach of contract or for refund of the money as on failure of consideration. It was held that he could not recover on this basis as the executory contract was not enforceable against the minor. If the minor had delivered the goods there could be no manner of doubt that he could not recover it back. See Manby v. Scott (1775) (1903) I.L.R. 30 C. 539 Cowp. 841.
25. Apart from statutory enactments interesting questions have arisen on infants' contracts which have been wholly or partly performed and differing answers have been given, but the decision appears to depend on whether property passed from one to the other. The case of Drude v. Curtis (1914) A.C. 398 where both the parties were infants, raised the point neatly. There was a contract of sale, the infant plaintiff being the purchaser and the infant defendant being the seller. Neither of course could be compelled to perform the contract; but both had performed ; the defendant had delivered the goods and the plaintiff had paid the money. The plaintiff chose to avoid the sale and sued for the money, the defendant pleaded infancy to the Court on the implied contract to repay, which was upheld. There was a claim in Trover which again was disallowed on the ground that the money sufficiently passed to the defendant by the payment by the plaintiff. If property did not pass, there could be no question that Trover would lie. (See Latt v. Booth (1886) 29 Ch. D. 902).
26. In this connection the analogy of ultra vires contracts of corporations is useful. The question has often arisen for discussion in the Supreme Court of the United States. The principle is succinctly stated by Justice Gray as follows:--"A contract ultra vires being unlawful and void, not because it is in itself immoral but because the corporation by the law of its creation is incapable of making it, the courts while refusing to maintain any action upon the unlawful contract have always striven to do justice between the parties so far as could be done consistently with adherence to law, by permitting property or money, parted with on the faith of the unlawful contract to be recovered back, or compensation to be made for it. In such case however, the action is not maintained upon the unlawful contract, nor according to its terms; but on an implied contract of the defendant to return, or failing to do that, to make compensation for, property or money which it has no right to retain. To maintain such an action is not to affirm, but to disaffirm, the unlawful contract." (Central Transportation Company v. Pullman's Palace Car Company (1886) 29 Ch. D. 902). But according to the recent decision of the House of Lords in Sinclair v. Brougham (1914) A.C. 398 there can be in law no such implied promise to return or make compensation and it could not be made the basis of a legal claim. In Pennysylvania Railroad Company v. St. Louis Alton and Terreaute Railroad Company (1886) 29 Ch. D. 902, Justice Miller said that " the rule in such cases stands upon the broad ground that the contract itself is void and that neither what has been done under it, nor the action of the Court can infuse any vitality into it. Looking at the case as one where the parties have so far acted under such a contract and they cannot be restored to their original condition, the court inquires if relief can be given independently of the contract, or whether it will refuse to interfere as the matter stands ;" in the previous passage he says that the rule was formulated, in cases " where a void contract has been so far executed that property has passed under it and rights have been acquired under it, that the courts will not distrub the possession of such property or compel restitution of money received under such a contract." An excellent illustration of the principle is to be found in Pullman's Palace Gar Company v. Central Transportation Company (1909) I.L.R. 38 M 312 which arose out of the same lease as was in question in 139 U. Section 24. In the first case the lessor corporation sued the lessee corporation for rent; the plea was that the lease was void and the action for rent was dismissed. In the meantime as the lessor was suing for rents as they accrued due, the lessee corporation filed a bill for injunction and there was a cross bill by the lessor to recover the properties leased or their value and for compensation etc. The lessor recovered the value of the property leased as on the date on which the lease was repudiated. The property leased were sleeping cars and other personal property which had considerably deteriorated in value. The case established that the lessor was entitled only to recover the property as it stood at the date of the repudiation of the lease. The judgment was however based on the view that an ultra vires contract was unlawful and that courts should do justice on the principle "ex dolo malo non oritur actio" applied by Lord Mansfield in Holman v. Johnston (1909) I.L.R. 38 M 312. It is not clear from the American authorities whether an ultra vires conveyance is void ; a conveyance in pursuance of an ultra vires contract does not appear to be void.
27. In cases where there is general competency to contract or to transfer property, but a particular mode is prohibited, a contract or transfer in the prohibited mode may not be void. In Ayers v. The South Australian Banking Company (1908) I.L.R. 80 A. 63 where a loan was given by a bank on a mortgage which was prohibited by the charter of the Bank, the loan and mortgage were held unimpeachable by the debtor. Lord Justice Mellish delivering the judgment of the Judicial Committee said, " whatever effect such a clause may have, it does not prevent property passing either in goods or in lands under a conveyance or instrument which under the ordinary circumstances of law would pass it. The only defence which can be set up here (there is no plea of illegality) is under the plea of not possessed, that the right of property and the right of possession never passed to the plaintiffs. Their Lordships are of opinion that, whatever other effect it has, it cannot have the effect of preventing the property passing." The same view has been taken in America Union Gold mining & Co v. Rocky Mountain National Bank (1912) I.L.R. 31 A. 296 at 306. (P.C.) and Union National Bank v. Mathews (1911) I.L.R. 83 A. 667. In the latter case the principle was stated to be "where it is a simple question of authority to contract arising on a question of regularity of organisation or of power conferred by the charter, a party who has had the benefit of the agreement cannot be permitted in an action founded upon it to question its validity. It would be in the highest degree inequitable and unjust to permit a defendant to repudiate a contract the benefit of which he retains". But if the contract or the transfer was really ultra vires, i.e.,beyond the powers of a corporation, the contract or the transfer would in law be nonexistent, i. e., cannot have any legal effect. This distinction was clearly brought out in Central Transportation Company v. Pullman's Palace Car Co., already cited.
28. A distinction has been already drawn between cases where the plaintiff comes into Court seeking equitable relief by way of rescission of a contract or conveyance and where he seeks a common law remedy. It is however difficult to see how any such distinction could be useful in the case of a transfer by a minor if it is wholly void; the infant has no need to seek a useless cancellation, but can simply bring an action to recover his property or its value. The Privy Council in Mohori Bibee v. Dharmodas Ghose appear to draw this distinction, though Sir Ford North curiously enough does not seem to note that in Sections 35 and 38 of the Specific Relief Act 'contract' is used which, as was pointed out in the earlier part of the judgment does not apply to a minor's promise. It may however be noted that the word 'contract' in that section is used in the sense of both executed and executory contracts, i.e., transfers and promises. It may therefore be that in the opinion of their Lordships of the Judicial Committee though a promise by a minor may be void and is not a contract, a conveyance by a minor was not void. In Sinclair v. Brougham in dissenting from Blackburn and District Benefit Building Society v. Cunliffe Brooks and Co., the House of Lords held that if money was paid to discharge an ultra vires loan, the money could not be recovered back; but the ground on which it was put by Viscount Haldane was not that any property passed or that the company was entitled or bound to pay back the money, but on the ground that the company was merely returning what was not theirs.
29. If however an adult is entitled to deal with or transfer the property of a minor, as for instance the managing member of a joint Hindu family, an adult partner, or a guardian, there can be no objection to his obtaining a contract or a transfer in the name of the minor.
30. That being the position under the Contract Act, the next question is whether a minor can be a transferee of property, whether such transfer is by way of sale, mortgage, lease, exchange or gift. The provisions of the Transfer of Property Act and the Trusts Act make it clear that an infant can be a grantee though he cannot ordinarily be a grantor. " Infants" it was said, "cannot make grants, they may accept them." (Palmer v. Low). In the consideration of this question it is necessary however to remember that certain transactions may necessarily involve both a transfer of property and contracts ; as for example a lease. In such cases, if a minor makes a promise in consideration of the transfer, or binds himself by obligations on account of the transfer the transaction would be void and the transfer may not take effect. But a distinction must be drawn between cases of contractual liability, which a minor agrees to undertake and obligations attached to the holding of property. Even in cases of pure gifts it is clear that there is an obligation on the part of the donee to pay the Government revenue and public taxes. In the case of a gift of a man's whole property, there is the obligation to discharge the donor's debts to the extent, of the value of the property. These" obligations do not prevent the vesting of the property in the minor by a transfer inter vivos any more than by inheritance or devise. Those covenants or obligations are attached to the property and are not really considerations for the transfer. This is the view taken by Sundara Aiyar and Spencer, JJ, in Munia Konan v. Perumal Konan. See also the observations of Jessel M.R. in Martin v. Gale. A transfer to a minor by way of a lease, he agreeing to pay rent or to perform any particular covenants which form an essential part of the transaction, may prevent the transfer from taking effect. In a sale, gift or mortgage ordinarily there can be no such essential consensual, obligations. A mortgage however is only a conditional transfer and when the condition is fulfilled, (as when the debt is discharged) the property revests in the transferor. That being my view of the question oh principle, I shall now deal with the cases in which it has been considered.
31. Navakoti Narayana Chetty v. Logalinga Chetty, where, the learned Judges held that a sale' to a minor in consideration of a debt already due to him was void, was the first which came up for decision after the judgment of the Privy Council. Krishnaswami Aiyar, J., came to the conclusion that there was nothing in the Contract Act to prevent a minor from being a promisee, provided of course there was competent consideration for that promise. The other learned Judge was evidently of the same opinion, for he was a party to the decision in Sathrurazu v. Basappa, where it was held that a minor can be a payee under a promissory note. Krishnaswamy Aiyar, J., also held that there was nothing in the Transfer of Property Act to prevent the minor from being a transferee ; but yet the sale was held void on two grounds:--(1) that antecedent to the transfer there must have been a bilateral agreement, viz., a promise to pay a price (in that case the consideration was the release of a debt due to the minor) and a promise by the vendor to transfer the property, which agreement must be void ; (2) that a transfer by sale imposes liabilities on the minor which involves the notion of competency to contract. It will be seen that the first argument assumes that if a transfer takes place in pursuance of an unenforceable agreement, the transfer is void. As I have already endeavoured to show, there is no warrant for this assumption. If consideration passes at the time of the transfer, the fact that the antecedent promise was unenforceable does not matter. The position is exactly the same as if there was no agreement at all. Even in cases where a transfer is made for an illegal purpose or in pursuance of an illegal contract, the transfer takes affect though it may be avoided by the transferor in certain cases. (See Section 84 of the Trusts Act). A transfer cannot be void unless (a) the transferor is incompetent to transfer or the transferee is incompetent to hold the property, (b) the transfer is conditional on the passing of consideration and the consideration did not pass, (c) the transfer is part of a transaction in which transfer is made in consideration of covenants or contracts to. be performed by the transferee and the transferee cannot be compelled to perform them. I am not considering cases of failure of consideration. I do not therefore think that the mere fact that there has been an agreement of parties for the settlement of the price or the other terms of the sale or an antecedent promise to pay or convey, in any way makes the subsequent transfer, though in pursuance of the antecedent unenforceable contract, void.
32. As to the second ground, the obligations imposed upon the vendee of property subsequent to the conveyance are obligations imposed on the ownership. They are not contractual obligations though arising out of an accepted transfer and are not in any sense essential to the validity of the transfer so as to render a transfer void on the breach of such an obligation. I am in any event unable to appreciate the possible distinction between a sale and a mortgage suggested in Navakotti Narayana Chetty v. Logalinga Chetty.
33. In Meghan Dube v. Pran Singh, referred to and distinguished in Navakoti Narayana Chetty v. Logalinga Chetty, a loan was made by the adult members of a joint Hindu family and the mortgage obtained in the name of a minor member; the mortgage was held good. The learned judges however proceed on the ground that the mortgage was for the 'family' and not for the minor ; but if a minor was incapable of being a transferee, to the extent of the minor's interest at least, the mortgage must have been void, in the same way as a mortgage by a minor along with an adult is void so far as the minor and his share of the properties were concerned. Balwant Singh v. B. Clancy. Further although a joint Hindu family may for some purposes be treated as a quasi corporation, if such a term may be permitted, when a mortgage is taken on behalf of the family, it certainly means that the mortgage interest is vested in the individual members in existence at the date of the mortgage. That case however affords an illustration of the principle formulated by me, that where a debt could be created or where the minor's money or property could be paid or transferred by a person having authority so to do, an enforceable promise may be made to a minor and property transferred to secure that promise.
34. In Ulfat Rai v. Gouri Shanker, it was held that a sale by a guardian to his minor ward in discharge of a debt due to the minor by the guardian himself was held good. In an unreported case referred to in Ulfat Rai, v. Gouri Shanker, Knox and Piggot, JJ. following the decision inNavakoti Narayana Chetty v. Logalinga Chetty, held the sale by a father to a minor son was void. In that case however the question arose between the creditors of the father and the minor son, the creditors seeking to set aside the sale as being in fraud of creditors.
35. In Muniya Konan v. Perumal Konan, a transfer by way of sale to a minor for a price paid by the maternal uncle was held good.
36. The view taken in Navakotti Narayana Chetty v. Logalinga Chetty, was followed by a single Judge in Allahabad in a case, Munni v. Madan Gopal, but that was reversed in appeal, Munni Kunwar v. Madan Gopal.
37. The opinion of text writers is also in favour of the view taken by me. See Ghose on Mortgages page 195, Jones on Mortgages Vol. I, Article 131, Trevelyan on Minors page 27 and Sir H.H. Shephard in 19 M.L. Times, page 13.
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