1903 (3) TMI 1 - HC - Indian Laws

Summary

Issues Involved:
1. Competency of an infant to contract.
2. Imputation of knowledge from agent to principal.
3. Applicability of estoppel under the Indian Evidence Act.
4. Obligation to return consideration under Section 64 of the Indian Contract Act.
5. Applicability of Section 65 of the Indian Contract Act.
6. Discretion of the Court under the Specific Relief Act.
7. Principle of "one who seeks equity must do equity."

Detailed Analysis:

1. Competency of an Infant to Contract:

The primary issue was whether the mortgage executed by the respondent, who was an infant at the time, was valid. The judgment clarifies that under Section 11 of the Indian Contract Act, a person who is an infant is not competent to contract. The court held that the Act makes it essential that all contracting parties should be "competent to contract," and a person who is an infant cannot make a contract within the meaning of the Act. The court concluded that the mortgage was void ab initio as it was executed by an infant, thus lacking the legal capacity to contract.

2. Imputation of Knowledge from Agent to Principal:

The court addressed whether the knowledge of Kedar Nath, the attorney acting on behalf of Brahmo Dutt, should be imputed to Brahmo Dutt. The court held that since Brahmo Dutt was absent and the transaction was entirely managed by Kedar Nath, his knowledge and actions were to be considered as those of Brahmo Dutt. The court found that Kedar Nath was fully aware of the respondent's minority, and thus, this knowledge was imputed to Brahmo Dutt.

3. Applicability of Estoppel under the Indian Evidence Act:

The appellants argued that the respondent should be estopped under Section 115 of the Indian Evidence Act from claiming he was an infant when he executed the mortgage. The court clarified that Section 115 does not apply in this case as estoppel cannot be claimed where the truth is known to both parties. Since Kedar Nath knew the respondent was a minor, there was no estoppel.

4. Obligation to Return Consideration under Section 64 of the Indian Contract Act:

The appellants contended that the respondent should return the Rs. 10,500 advanced as part of the consideration for the mortgage under Section 64 of the Indian Contract Act. The court held that Section 64 applies to voidable contracts, not to contracts that are void ab initio. Since the contract with an infant is void and not voidable, Section 64 is inapplicable.

5. Applicability of Section 65 of the Indian Contract Act:

A new argument was raised regarding Section 65 of the Indian Contract Act, which deals with the obligation to return benefits received under an agreement that becomes void. The court held that Section 65, like Section 64, assumes the existence of a valid contract between competent parties. Since there was no valid contract due to the respondent's infancy, Section 65 does not apply.

6. Discretion of the Court under the Specific Relief Act:

The appellants argued that under Section 41 of the Specific Relief Act, the court should require the respondent to return the money advanced. The court noted that both the Court of first instance and the Appellate Court exercised their discretion under the Specific Relief Act and concluded that justice did not require the return of the money. The court found no reason to interfere with this discretion.

7. Principle of "One Who Seeks Equity Must Do Equity":

The appellants invoked the equitable principle that one who seeks equity must do equity, arguing that the respondent should return the money advanced. The court referred to the case of *Thurstan v. Nottingham Permanent Benefit Building Society*, where it was held that a court of equity cannot compel repayment in respect of a transaction declared void by the Legislature. The court held that this principle applies, and the respondent was not required to return the money.

Conclusion:

The appeal was dismissed, and the court upheld the decisions of the lower courts, declaring the mortgage void and inoperative due to the respondent's infancy at the time of execution. The appellants were ordered to pay the costs of the appeal.