A T RAGHAVA CHARIAR Vs. OASRINIVASA RAGHAVA CHARIAR

JUDGEMENT

(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 benefitof 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.