Overview

Mohori Bibee v. Dharmodas Ghose is a landmark case in Indian Contract Law. The case mainly deals with the capacity of a minor to enter into a contract. The Privy Council held that an agreement entered into by a minor is void from the beginning (void ab initio) because a minor is not competent to contract under Section 11 of the Indian Contract Act, 1872.

Facts

Dharmodas Ghose was a minor who owned immovable property in Calcutta. On 20 July 1895, he executed a mortgage of his property in favour of Brahmo Dutt, a moneylender, to secure a loan of ₹20,000 with interest. The moneylender’s attorney had already been informed that Dharmodas was a minor. Dharmodas, through his mother and guardian, filed a suit to have the mortgage declared invalid.

The moneylender argued that the agreement was only voidable and that Dharmodas should return the money received.

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Issue

The main issue before the Court was:

Whether a contract entered into by a minor is void or merely voidable under the Indian Contract Act, 1872?

The Court also considered whether the minor could be required to repay the money under Sections 64 and 65 of the Act.

Held

The Privy Council held that a minor’s agreement is void ab initio and not merely voidable. Section 11 requires a person to be competent to contract, and a minor is not competent to do so.

The Court further held that Sections 64 and 65 could not be applied because those provisions assume the existence of a valid agreement or contract between competent parties. Since there was no valid contract in the first place, the minor could not be made liable under those provisions. The appeal was dismissed.

Conclusion

The case established an important principle of Indian Contract Law: a minor cannot enter into a legally binding contract, and an agreement made by a minor is void from the very beginning. This rule continues to be a basic principle regarding contractual capacity under the Indian Contract Act, 1872.

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