Holding

A contract entered into by a guardian on behalf of a minor is enforceable if it is for the minor’s benefit, and a decree for specific performance may be granted.

Summary

The plaintiffs, two minors, entered into an agreement through their mother and natural guardian to purchase a house for Rs 11,000, paying Rs 1,000 as earnest money. The seller failed to perform, and the minors sued for specific performance. The trial court decreed in their favour, but the High Court dismissed the suit on the ground that a contract entered into on behalf of minors lacks mutuality and cannot be specifically enforced. On appeal, the Supreme Court held that under the Hindu Minority Act, 1956 a guardian may bind a minor in a contract that is for the minor’s benefit, and that such a contract is enforceable despite the minor’s incapacity under the Contract Act. The Court rejected the contention that Section 8 of the Hindu Minority Act or Section 55(5)(b) of the Transfer of Property Act precludes the guardian’s personal covenant, and restored the trial court decree granting specific performance.

Issues considered

Whether a contract entered into by a guardian on behalf of a minor for the purchase of immovable property is enforceable.
Whether such a contract suffers from lack of mutuality under Section 11 of the Contract Act.
Whether Section 8 of the Hindu Minority Act, 1956 or Section 55(5)(b) of the Transfer of Property Act bars the guardian from binding the minor by a personal covenant.
Whether the contract is for the benefit of the minor, satisfying the statutory test for enforceability.

Legislation cited

Hindu Minority Act, 1956s. 55(5)(h), s. 8
Indian Contract Acts. 11
Transfer of Property Acts. 55(5)(b)

Subjects

specific performanceminor's contractguardian's authorityHindu Minority ActTransfer of Property Actmutualityenforceabilitypurchase of immovable property

Judgment

MANIK CHAND AND ANR.
A. v.
RAMACHANDRA SON OF CHAWRIRAJ
May 8, 1980
[S. MURTAZA FAZAL ALI ANO P. S. KAILASAM, JJ.]
1-~

B
Specific performance-Enforceability of a contract for purchase of property •
by a guardian for the benefit_ of the 1ninor--Contract Act, Section I I-Section
8 of the Hindu .Winority Act read with Section 55(5)(h) of Transfer of Pro-
perty Act.

The appellants-plaintiffs who were minors entered into an agreement on
.
,...
c 30-9-1961, through their mother and guardian with the respondent to purchase
a house for a sum of Rs. 11000/-. A sum of Rs. 1000/- was paid as earnest
1noney and the balance was to be paid at thei time· of the registration of thC sale
deed. Since the respondent did not carry out his part of the agreement, the
appellants filed a suit for specific perlormance ofi the contract on 28-3-1962· in
1

the Cou11 of Additional District Judge, Gwhlior. The suit was decreed on
15-4-1966. The appellants deposited J1s. 10,500/- the balance of the price on
13-7-1966. The respondent appealed -,o the High Court against the judgment
D
and decree of the trial court which 'J.llowed the appeal and dismissed the suit:
holding that as the contract was entered into on behalf of the minors a decree
for specific performance could not be granted ro( want of mutuality.

AIJowing the appeal by special leave, the Court
HELD : I. The contract entered into by the guardian on behaJf of the
E minors is enforceable. [1108 EJ

2. A minor has no legal con1petence to enter into a contract or authorise
someone else on his behalf to enter into a: contract. But under the Hindu
Law, the natural guardian is empowered to enter into a contract on behalf of
the minors and the contract would be binding and enforceable if the contract
is for the benefit of the minor. [1106 Bl

' Krishnaswami v. Sundarappayya, IL~ 18 Mad., 415; relferr'edl to.
/
Mir Sarwarjan v. Fakhruddin Mohd. Chowdhary, JLR 39 Cal. I (PO);
1
Srikakulam Subrahmanyam v. Kurra Subba Rao, Il..R 75 Mad. 115; HanUlJO..
1nanPrasaud Pandey v. Mussamat Nabooee Munraj Koonwaree (1856) 6 Moor
I.A. 393; Mo/10ri Bibee v. Dhuramodas Ghose, LR. 301 IA 114, Srik(l-
kulam Subrahmanyam v. Ku"a Subba Rao, ILR 1949 Mad. 143; Suryaprakasam
v. Ganga Raju, A.I.R. 1956 Andb. 33; explained.

3. After the passing of the Hindu Minority i\ct, 19'56, the guardian of a
1

llindu -minor ha') power to do all acts which are necessary or reasonable and
proper for the benefit of the minor's estates. The- guardian is entitled to act so
as to bind the minor if it is necessary or reasonable and proper for thei behefit
H of the minor. 'fhe power thus conferred by the Act is in no way restricted
than that wa.s recognised under the Hindu Law. Here,· it is quite strange that
the respondent should plead that the transaction is not for the benefit of the
(1104)
MANIK CHAND v. RAMCHANDRA (Kailasam, !.) 1105

nliner when the minor is convinced it is in his benifit and that it is worth A
pursuing the litigation upto Supreme Court. [1107 G·H, 1108 A-BJ

4. The guardian by the contract for purchase of property does not bind the
minor by bis personal covenant. As it is within tho· competence of the guar~
dian, the contract is entered into effectively on behalf of the minor ;;nd tbe1
• liability to pay· the money is the· liability of the minor under the Transfer of
Property Act. [1108 D~EJ · B
•
CIVIL APPELLATE JURISDICTION : Ovil Appeal No. 1548 of
.. 1970.
Appeal by Special Leav!:' from Judgment and Decree dated
9-2-1968 of the M.P. High Court in First Appeal No. 21 of 1976.
Shiv Dayal Srivastava and T. C. Sharma for the Appellant.
c
Y. S. Chitale, and Rameshwar Nath for Respopdent.

The Judgment of the Court was delivered by,

J(AILASAM. J. This appeal is by the plaintiffs by special leave D
granted by this Court against the judgment and decree dated 9-4-1968
pasi;ed by the Division Bench of the Madhya Pradesh High
Court in first appeal No. 21 of 1966 dismissing the suit for specific
pedormance. The plaintiffs l and 2 who were minors entered. into
an agreement on 30-9-1961 through their mother and guardian Smt.
Pboolibai with the respondent to purchase a house situated in Thandi E
Sllrak for a sum of Rs. 11,000/-. A sum of Rs. 1000/- was paid as
earnest money and the balance was to be paid at the time of the
registration. of the sale-deed. According to the plaintiffs/appellants,
the respondent .did not carry outi his part of the agreement and the
· appe!lants filed the present suit for specific performance of the cont-
ract on 28-3~1962 in the Court of Additional District Judge, Gwalior. F
The suit was decreed on 15-4-1966. The plaintiffs deposited
Rs. 10,500 the balance of the price on 13-7-1966. 'Thfl respondent
appealed to the High Court against the judgment and decree of the trial
court which allowed the appeal and dismissed the suit. The High
Court agreed with the findings of the Trial Court on the merits and G
found that it was the respondents who committed breach of contract
but dismissed the suit on the ground that as the contract was entered
into on behalf of the minors, a decree for specific perforanance could
not be granted to the appellants for want of mutuality.

Mr. Shiv Dayal Srivastava, learned counsel appearing for the appel- B
!ants, submitted that the lower Court erred in holding that the contract
for purchase of property by the guardian on behalf of the minors is
I '
1106 SUPREME COURT REPORTS (1980] 3 S.C.R.

A unenforceable due to lack of mutuality and submitted that so long as
the transaction is for the benefit of the minor, the defendants. cannot
resist the decree for specific performance.
A minor has no legal competence to enter into a contract or
authorise someone else on his behalf to enter into a contract. But
under the Hindu Law the natural guardian is empowered to enter into,
a contract on behalf of the minors and the· contract would be bind-
ing and enforceable if the contract is for the benefit of the minor.
One of the earliest cases which dealt with the right of the guardian
to enter into a contract on behalf of the minor, is Krishnaswami v.
Sundrappayyar, where a Bench of the Madras High Court held tbat
c S.11 of the Contract Act does not exclude the power of the guardian
of a minor to represent him and enter into contracts on his behalf
either beneficial or necessary to the minor under Hindu Law and that
the English Law that a minor cannot claim specific performance which
proceeds on the ground of want of mutuality, has no application to
this country. The position under the Hindu Law is that a guardian
D has legal competence to enter into a contract on behalf of the minor
fot necessit~· or for the benefit of the estate. Dr. Chitale, learned
counsel for the respondent submitted that he does not dispute the
competence of a guardian to enter into a con tract on behalf of the
minor if it is for necessity or for the benefit of the estate, but contended
tliat the right can only be confined to sale of property and would not
E extend to the purchase of property. His submission is that regarding
the purchase of the property, it involves a minor into an obligation
of making a payment and that it would amount to personal
covenant by the guardian binding the minor. In support of his
contention, he strongly relied on a decision of the Privy Council
in Mir Sarwarjan v. Fakhruddin Molwmad Chowdhury('), which re"
F
versed the view of a Bench of the Calcutta High Court which held that
there was no want of mutuality in the case and that the agreementis
enforceable against the minors and that the acts of the guardian in thiis
country bind the minor though there is no difference between his posi-
tion and powers and those of a manager. The Privy Conncil held that
G they were unable to accept the view of the Divisior\ Bench that there
was no difference between the position and powers of the manager and
those of a guard~dn. Holding that it is not within the competence of
a manager of a minor's estate or of a guardian of a minor to. bind the
minor or the minor's estate by a contract for the purchases of immova-
ble property arid that the minor was not bound by the contract for
H want of mutuality, the Privy Council held that a decree for specific• per-
(!) !LR 18 Mad 415
(2) !LR 39. Cal. I.
MA NIK CHAND v. RAMCHANDRA ( Kailasam, J.) 1 10 7

fo·n~ance cannot be granted. The Privy Council in a later decision in A
Stikakulem Subrahmanyam and Anr. v. Kurra Subba Rao( 1 ), held that
a ;guardian of a mrnor is competent to enter into a contract on behalf
of the mfnor so as to bind him if it is for the benefit of the mmor.
Though the decision of the PriNy Council in Mir Sarwarian v. Fakhrud-
' dm Mohomed Chowdhury (supra) was brought to its notice, tlm
l'iiv1· Council did not refer to it but referred.to its earlier decision in
Han;toumanpersaud Pandey v. Mussumat Nabooee Munraj Koon-
•• WlirEt(') where it was stated that "the act of the mother and guardian
in enteri~g into a contract of sale was an act done on behalf of the
) minGr appellant." A passage from Pollock and Mulla's Indian Contract
l\{lci Specific Relief Acts wherein the observation of the Privy Connell c
,-A_ in lvlolwri Bi~ee v. Dhuramodas Ghose( 3 ), that "it is, however, diffe-
rent with regard to contract entered into on behalf of a minor by his.
guardian or by a manager of his estate," was referred to. In such a
ciise it has been held by the High Courts of India, in cases which arose
· subseqncn! to the decision of the Judicial Committee, that the contract
· can be specifically enforced as being within the competence of the D
guardian to enter into on his behalf so as to bind him by it, if it is for
t~ benefit to'the minor. But if either of these two conditions i~ want-
ing, ,the contract cannot be specifically enforced at all Though the
earlier decision of the Privy Council in Mir Sarwarian v. Fakhruddin
lffohomed Chowdhury (supra) was not referred to, the observation~
make it clear that it was not followed. In Srikakulam Subrahmcmyan' E
v. Kurra Subba Rao(') the Madras High Court expressed its view that
it hod no hesitation to hold that the considered· judgment of the Judi-
cial Committee in ILR 75 Mad. 115 must be taken as overruling all
the previous decisions based on 32 Cal. 232 (P.C.). The same view
was expressed by Subba Rao C.J. of the Andhra Pradesh High Court
F
(as he then was I in Suryaprakasam v. Gangaraju( 5 ), where he held
that there could not b~ any essential distinction betwe~n the contract of
sale and contract of purchase. It is unnecessary to go into this. ques-
tion any further as after the passing of Hindu Minority Act, 1g56, the
guardian of a Hindu Minor has power to do all acts which are neces-
sary or reasonable and proper for the benefit of the minor or for rea- G
lisation, protection .or benefit of the minor's estate. This provision,
makes it clear that the guardian is entitled to act so as to bind the
minor if it is necessary or reasonable and proper for the benefit of the

(I) !LR 75 Mad. 115
(2) [1856] 6 Moo. I· A. 393.
(3) L. R. 301 T. A. 114. H
(4) TLR 1949 M2.d. 143.
(') AIR 1956 Andh . 11.

#:''-'
1108 SUPREME COURT REPORTS [1980] 3 .s.mt.

A minor. The power thus conferred by the Section is in no way restrict-
ed than that was recognised under the Hindu Law. It is not disputed
in this case th"at the contract entered into by the guardian is for the
benefit .of the minor. It appears quite strange that the respondent
should plead that the transaction is not for the benefit of the minoi:
when the minor is convinced it is in his behefit and that it is worth
B pursuing the litigation uptq this Court. It is common knowledge tflat
the prices of immovable property have been on the rise and there clin
be no doubt that the transaction is for the benefit of the minor.
Finding himsel( faced with these insurmountable difficulties, Dr.
Chitale, sought to plead that in any event S.8 of the Hindu Minority
c Act specifically prohibits the guardian from binding the minor by his
personal covenant. The submission was that the contract by the
guardian which binds the minor to make a payment, would be in the
nature of a personal covenant and as such is excluded by S. 8. In
support of his plea, the learned counsel relied on S.55(5)(b) of the
Transfer of Property Act and submitted that so far as the payment
f) of the purchase price is concerned, there is personal covenant. We
are 1unable to accept this contention for it cannot be said that the
guardian by the contract was binding the minor by his pernonfil cove-
nant. As it is within the competence of the guardian, the contract
is entered into effectively on behalf of the minor and the liability to
pay the money is the liability of the minor under the Transfer of Pro-
perty Act. We are unable to accept the plea that in a contract for
purchase of property, the.guardioan would be binding the minor by his
personal covenant. In the result we find that the contract entered
into by the guardian on behalf of the minors is enforceable. The
appeal is, therefore, allowed with cost and the decree passed by the
Trial Court is restored.
F
I

S.R. Appeal allowed.
f.

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