Hey learners,
At the beginning of the 20th century, a young boy named Dharmodas Ghose inherited valuable property after the death of his father. Being underage, his affairs were looked after by his mother, Mohori Bibee.
A wealthy moneylender saw an opportunity. He offered Dharmodas a loan and, in return, took a mortgage over the minor’s property. The boy signed the agreement, even though the lender knew very well that Dharmodas was a minor.
Later, realizing the consequences of the transaction, Dharmodas (through his mother) approached the court to cancel the mortgage. The moneylender argued that since money had already been advanced, the contract should either be enforced or at least compensated.
This case raised a crucial question: Can a minor ever be bound by a contract under Indian law?
Mohori Bibee v. Dharmodas Ghose (1903) Case Details
| Particular | Information |
|---|---|
| Case Name | Mohori Bibee v. Dharmodas Ghose |
| Court | Privy Council |
| Year | 1903 |
| Area of Law | Contract Law |
| Relevant Law | Indian Contract Act, 1872 |
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Facts of the Case
- Dharmodas Ghose was a minor at the time of the agreement.
- He executed a mortgage deed in favour of a moneylender for a loan.
- The moneylender had actual knowledge of Dharmodas’s minority.
- Dharmodas, through his mother Mohori Bibee, filed a suit to cancel the mortgage.
- The moneylender argued that the contract should be enforced or that compensation should be granted.
Legal Issues Before the Court
- Is a contract entered into by a minor valid under the Indian Contract Act?
- Can a minor be forced to repay money received under such an agreement?
- Does the doctrine of estoppel apply against a minor?
- Can restitution be claimed against a minor?
Arguments of the Parties
Moneylender’s Arguments
- The contract was entered into voluntarily and money was advanced.
- Even if the contract was void, equity demanded that the minor return the benefit.
- The minor should be estopped from denying the contract.
Minor’s Arguments
- A minor is incompetent to contract under Section 11 of the Indian Contract Act.
- A contract with a minor is void from the beginning.
- No estoppel can operate against a minor.
- The lender knowingly entered into the transaction at his own risk.
Judgment
The Privy Council ruled in favour of Dharmodas Ghose and held that:
- A minor is not competent to contract.
- Any agreement entered into by a minor is void ab initio.
- The doctrine of estoppel does not apply against a minor.
- The lender cannot enforce the contract nor claim compensation when he knowingly dealt with a minor.
Legal Principle (Ratio Decidendi)
- A contract with a minor is absolutely void.
- No legal obligation arises from such a contract.
- Equity cannot be used to override clear statutory provisions protecting minors.
Why This Case Is Important
- It firmly established that minors cannot be bound by contracts in India.
- It protects minors from exploitation by adults.
- It remains the leading authority on minor’s capacity to contract.
- The ruling still governs Indian contract law today.
The judgment in Mohori Bibee v. Dharmodas Ghose laid the foundation of Indian contract law relating to minors. By declaring all minor agreements void from the beginning, the Privy Council ensured that children are shielded from legal and financial exploitation.