Raghbir Singh vs Smt. Gian Devi and Another

Shamsher Bahadur, J.—There being a conflict of judicial authority on the question whether a minor obtaining a loan by misrepresenting himself as a major is bound to restore the amount in equity, between two Full Benches, one of the Lahore High Court in Khan Gul v. Lakha Singh ILR 9 Lab. 701, and the other of the Allahabad High Court in Ajudhia Prasad and Another Vs. Chandan Lal and Another , the case has been referred by my brother Mehar Singh J., -for decision by a larger Bench.

The indisputable facts which have been stated in the referring order may briefly be recapitulated. On January 29, 1949, Nathu Ram and Raj Pal minor, obtained an excise contract for the retail sale of opium and poppy-heads at Samrala. Some defaults having occurred, Raj Pal, who was then a minor, represented to the Appellant Raghbir Singh, that he was a major and also produced a medical certificate to support his statement. Raghbir Singh was induced to make a loan of Rs. 1,400 to enable Raj Pal and his partner Nathu Ram to discharge their liability for payment of an instalment. A promissory note (Exhibit P. 1), and also an agreement (Exhibit P. 3), were executed by Raj Pal for the return of the sum of Rs. 1,400 given on loan by Raghbir Singh Appellant. Having obtained this amount, Raj Pal and his partner were able to make the deposit of the instalment due from them. The minor, Raj Pal, having failed to discharge his obligation the Plaintiff brought a suit for recovery of a sum of Rs. 1,400 on basis of the promissory note (Exhibit P. 1), with interest at the rate of 12 per cent per annum. In defence, Raj Pal pleaded minority. Before the suit was decreed by the trial Court, Raj Pal died and was subsequently represented by his mother Gian Devi and his minor brother Jinder. Gian Devi preferred an appeal to the District Judge, who allowed the appeal. The second appeal to this Court came in the first instance before Grover J., who remanded the case to the trial Court for further inquiry on two points:

(1) Whether Nathu Ram, or Shadi Singh, were partners with Raj Pal; and

(2) Whether Rs. 1,400 had been deposited in the treasury by Raghbir Singh, Plaintiff on behalf of Raj Pal, alone or Raj Pal and his partner or partners?

The trial Judge reported and the learned District Judge has agreed with him that Nathu Ram was a partner in the contract with Raj Pal from the very inception of the partnership and Shadi Singh, became a partner only for a short time. The District Judge has further found that the sum of Rs. 1,400 was deposited in the treasury at the instance of and for Raj Pal. On the second finding the District Judge has reported that the Sum of Rs. 1,400 ought to be restored by way of restitution on the principle enunciated by the Full Bench of the Lahore High Court in Khan Gul v. Lakha Singh ILR 9 Lab. 701. This matter was heard by Mehar Singh, J., on 29th of April, 1960, and the conflict of judicial authority having been brought to his notice the matter has been referred for decision to this Bench.

The ease of Khan Gul v. Lakha Singh ILR 9 Lab. 701, came before a Full Bench presided over by Chief Justice Sir Shadi Lai, and of which Broadway, Harrison, Tek Chand and Dalip Singh, JJ., were the other members. On a review of the case law, Sir Shadi Lal, in the leading judgment of the Court came to the conclusion that a minor who by falsely representiag himsel to be a major has induced a person to enter into a contract, is not estopped from pleading his minority to avoid the contract. On the other question referred to it the Full Bench, (Harrison J., dissenting) reached the conclusion that "an infant, though not liable under the contract, may, in equity, be required to return the benefit he has received by making a false representation as to his age". In the words of Sir Shadi Lai, at page 715: "The equitable jurisdiction is founded upon the desire of the Court to do justice to both the parties by restoring them to the status quo ante, and there is no real difference between restoring the property and refunding the money, except that the property can be identified, but cash cannot be traced." The learned Chief Justice derived support for this conclusion from the principle embodied in Section 41 of the Specific Relief Act, which empowers a Court to require a party seeking cancellation of an instrument to make any compensation to the other which justice may require. If an infant borrows a sum by making false representation and thereafter executes a pronote for this amount, the document would stand cancelled being a void instrument, but restitution is to be made u/s 41 of the Specific Relief Act. It is true that there is no specific prayer for cancellation of the pronote in the present case, but in pith and substance that is the plea which has been taken by the Respondent. It matters not whether the plea is taken in the form of an attack or as a shield in defence. The minor truly speaking on his own showing has been instrumental in bringing about a void contract and ought to be liable for restitution by payment of compensation. In Khan Gul''s case, the Plaintiffs had asked for delivery of possession of property or in the alternative for a decree of Rs. 17,500, the consideration money, which had been paid to Defendant No. 1, who in a suit brought against him pleaded minority. The suit was decreed. Sir Shadi Lal, discussed the conflicting authorities of Leslie, Ltd. v. Sheill (1914) 3 K.B. 607., 607, and Stocks v. Wilson (1913) 2 K.B. 235, and reiterated the principle that a person should not be allowed to take advantage of his own fraud. In his words, "it would be sheer injustice if an infant would retain, not only the property which he has agreed to sell or mortgage, but also the money which he has obtained by perpetrating fraud." Chief Justice Sir Shadi Lal, rejected the distinction which has been created in the English authorities that the protection given by law to the infant "was to be used as a shield and not as a sword"-(vide Lord Kenyon in Jennings v. Rundall 4 R.R. 680,. The granting of an equitable remedy should not depend upon a mere accident, namely, whether it is the minor or his adversary, who has taken the initiative in bringing the transaction before the Court.

The principle of law enunciated in the Full Bench of the Lahore High Court has come to be accepted by various Courts in India. In a subsequent Division Bench of the Lahore High Court (Tek Chand and Hilton JJ.,) in Budha Singh v. Lakhmi Chand ILR 11 Lah. 167, this principle was re-affirmed. Edgley J., of the Calcutta High Court in Manmatha Kumar Shaha v. Exchange Loan Company Ltd. I.L.R 1937 Cal 283, following the decision in Khan Gul''s ease held that the Court has a discretion in equity to direct the minor to return the benefit he has received by false representation to the person he has deceived. In this authority, there is an extensive discussion of both the Indian and the English law on the subject. Malimath, J., of the Mysore High Court in Dyaviah and Anr. v. Shivamma and Anr. AIR 1959 Mys 188, observed that Section 41 of the Specific Relief Act, is not only applicable to cases where an instrument is specifically got cancelled under the provisions of Section 39 of the Act, but also to transactions where they were void ab initio and needed no cancellation of any instrument. The learned Judge specially discussed the case of restitution by a minor, who cannot be allowed to retain the benefit he has secured under the very contract which he seeks to set aside. Such conferment of a double advantage should be avoided so far as it is possible.

The discordant note was struck by the Allahabad High Court in the Full Bench decision of Chief Justice Sulaiman, Thorn and Bennet JJ., in Ajudhia Prasad v. Chandan Lal A.I.R 1937 All. 610, As stated in the judgment of the Court, delivered by Chief Justice Sulaiman, as a minor cannot be estopped from pleading that a contract is void on ground of minority, an infant is not liable on a contract which is induced by false representation about his age." The Full Bench was persuaded to take this view on a consideration of the decision of the Court of Appeal in Leslie Ltd. v. Sheill (1914) 3 KB. 607, and it was observed that a new rule of equity cannot be invented by an Indian Court for the first time contrary to the principles of the English Law. In the words of Chief Justice Sulaiman: "If the law in England is clear and there is no statutory enactment to the contrary in India, one should hesitate to introduce any supposed rule of equity in conflict with that law." In Leslie Ltd., v. Sheill, the Plaintiffs, who were a firm of registered money-lenders, had sued the Defendant to whom they, had made two advances on the ground that these advances had been obtained by fraudulent representation by the Defendant about his full age. Though Norridge J., decreed the suit of the Plaintiffs, this judgment was set aside by the Court of Appeal. The basis of decision, as stated by Lord Summer at page 619 was this:

There is no question of tracing it, no possibility of restoring the very thing got by the fraud, nothing, but compulsion through a personal judgment to pay an equivalent sum out of his present or future resources, in a word nothing, but a judgment in debt to repay the loan. I think this would be nothing, but enforcing a void contract. So far as I can find, the Court of Chancery never would have enforced any liability under circumstances like the present, any more than a Court of law would have done so, . . .

The cause of action was in substance ex contractu and in the opinion of the Court of Appeal the plea of infancy was a good answer to the action, and that the Defendant was under no equitable liability to the Plaintiffs. This rule of the English law cannot be fully applicable to this country where Section 41 of the Specific Relief Act provides relief in cases of this nature. It would be pertinent to observe that in Halsbury''s Laws of England (Lord Simonds edition), Volume 21, at page 148, the position of English law now is stated to be in these terms:

Where an infant has obtained an advantage by falsely stating himself to be of full age, he is bound in equity to restore property so acquired and to release persons whom he has deceived from obligations induced by the fraud.

On a review of these authorities, I do not feel persuaded to depart from the salutary principles enunciated by so great master of law as Sir Shadi Lal is Khan Gul v. Lakha Singh I.LR. 9 Lab. 701, and being in respectful agreement with his views I do not think that this case calls for any re-consideration. In the result, this appeal must be allowed. The Plaintiff, however, in my opinion, is entitled to no more than the principal amount, that it to say, Rs. 1,400 and a decree for this amount should be passed in his favour. The Plaintiff would be entitled to interest at the rate of 4 per cent per annum from the date of the suit till realisation. The parties would bear their own costs.

Mehar Singh, J.

I agree.