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PROJECT ON

Compensation by Minor – Comparison of English and Indian Law

SUBMITTED TO

Professor Tanmay Agrawal

United World School of Law (UWSL),
Karnavati University
(Faculty- Law of Contract)

SUBMITTED BY

Name: - Devang Rao Name: - Divyarajsinh Gohil

Roll No: - 31 Roll No: - 11
Semester: -2 Semester: -2
Section: -B Section: -B

United World School of Law,

Karnavati University.

Professor’s Signature: -

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CERTIFICATE OF DECLARATION

I hereby declare that the project work entitled “Compensation by Minor – Comparison of
English and Indian Law” submitted to United world school of law, Gandhinagar, is record
of an original work done by us under the able guidance of Professor Tanmay Agrawal,
Faculty Member, United world school of law, Gandhinagar.

Name: - Devang Rao Name: - Divyarajsinh Gohil

Roll No: - 31 Roll No: - 11
Semester: -2 Semester: -2
Section: -B Section: -B

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ACKNOWLEDGEMENTS

We would like to express our special thanks of gratitude to our teacher Professor Tanmay
Agrawal sir who gave us the golden opportunity to do this wonderful project on the topic of
“Compensation by Minor – Comparison of English and Indian Law”, which also helped
us in doing a lot of Research and we came to know about so many new things we am really
thankful to them.
Secondly we would also like to thank our parents, friends and seniors who helped us a lot and
have given us valuable suggestion pertaining to the topic and in completing this project
within the limited time frame.

Thanking everyone.

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INDEX
1) Significance of the topic …………………………………………………….........……(05)

2) Aims and Objectives of study.…………………………………………...……………..(05)

3) Literature Review ………………………………………………………………...........(05)

4) Research Questions …………………………………………………………………….(06)

5) Introduction …………………………...………………………………………….........(06)

6) Doctrine of restitution in English law…………………………………………………..(08)

7) Compensation by a minor in Indian law…………………………………………..........(10)

a) Compensation under Section 64, 65 and 70 of Indian Contract Act, 1872. ….........(10)

b) Compensation under Special Relief Act, 1963…………………………..................(12)

i) Lahore High Court’s View…………………………………………………......(14)

ii) Allahabad High Court’s View…………………………….………………........(15)

8) CONCLUSION……………………………………………….……………………......(17)

9) Bibliography……………………………………………………………………..……..(18)

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Significance of The Topic: -

In the Contract law “Compensation by minor” has different views and different
implication in Indian Laws as well as in English Laws. It has been noted that in England
Restitution, that is, the restoring back the property by fraudulent minor is permitted, if the
property can be traced. According to Leslie v. Sheill, the money obtained by the minor cannot
be recovered from the minor as the same cannot be traced. If a minor is asked to pay back the
money, it may mean enforcing contractual obligation against a minor, which the law does not
permit.

Aims and Objectives of Study: -

The main objective of study of this subject is to understand the difference between
Indian law which regulates compensation by minor and ‘English law: The Doctrine of
restitution’. Through the Indian contract act, 1872 is borrowed from English laws is it
different in nature.

Literature Review: -
Bare Act: -

Indian Contract Act, 1872

Specific Relief Act, 1877

Case Laws: -

Leslie v. sheill (1914) 3 K.B. 607

Stocks v. Wilson (1913) 2 K.B. 235, at 247
Mohari Bibee v. Dhamodardas Ghose (1914) 3 K.B. 607. (1903) 30 I.A. 114 (P.C.).
Bankay Bihari Prasad v. Mahendra Prasad, A.I.R 1940 Pat. 324
State of West Bengal v. B.K. Mondal & Sons, A.I.R 1962 SC 779, at 789
Khan Gul v. Lakha Singh A.I.R 1928 Lahore 609
Ajudhia Prasad v. Chandan lal A.I.R 1937 ALL. 610

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Research Questions: -
The question which has arisen in India is,
1- How far a minor can be asked to restore back the benefit wrongly obtained by him
under a void agreement? Can a minor be asked to pay compensation to the other
party?
2- Whether a minor can be asked to pay the compensation under the section 64 and 65,
Indian Contract Act, 1872 for the benefit obtain by him under a void agreement?
3- Whether a minor can be asked to pay compensation in view of the provision contained
in section 39 and 41, Specific Relief Act, 1877?

Introduction: -
In the Topic we are going to study that if a minor obtains property or goods by
misrepresenting his age, can he be compelled to restore it or not. The minor is compelled to
restore it as long as the property is traceable. The law of restitution is the law of gains-based
recovery. It is linked with the law of compensation, which is the law of loss-based recovery.
Obligations to make restitution and obligations to pay compensation are type of legal
response to events in the real world.

When a court orders restitution it orders the defendant to give up his/her gains to the
claimant. When a court orders compensation it orders the defendant to pay the claimant for
his or her loss. If the money was spent by the defendant, there is no possibility of tracing it or
restoring the thing got by fraud. If the court will ask defendant to pay the equivalent sum as
that of loan which was received by him it would amount to enforcing a void contract. .

If a minor obtains property or goods by misrepresenting his age he can be compelled

to restore it, but only as long as the same is traceable in his possession. This is known as the
equitable doctrine of restitution. Where the minor has sold the goods or converted them, he
cannot be made to repay the value of the goods, because that would amount to enforcing a
void agreement. So, the doctrine will not apply where the minor has obtained cash instead of
goods.

If a minor enters into any agreement by representing that he is of full age, is he estopped
by Section 115 of the Indian Evidence Act, 1872 from setting up that he was a minor when he
executed the agreement or not. The point was raised but not decided in Mohoribibi vs.
Dharmodas Ghose case but the point was settled in Sadik Ali Khan vs. Jai Kishore where

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privy council observed that – a deed executed by a minor is a nullity and incapable of
founding a plea of estoppel. The principle underlying the decision being, there can be no
estoppel against a statue.

The position is – even if a minor has entered into a contract by misrepresenting his age,
he can at any later stage plead “minority” and avoid the contract. Minority in India is not
a privilege (as in England).

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Doctrine of Restitution In English Law

Under the equitable doctrine of restitution in English law, if minor has gained undue
benefit in any transaction, he is bond to restore back the benefits so received by him. Under
this doctrine he is asked to restore back the same and exact things taken by him. It is
applicable only to goods or property received by minor as long as they can be traced, and are
still in his possession. Since it is difficult to identify money and to prove whether it is same
money or different one, this doctrine does not apply to money. Even when it comes to goods
or property, if the same good or property have been consumed or transferred and are no more
traceable, the doctrine of restitution does not apple there.

This doctrine was explained in the case of Leslie v. Sheill1. In this case, the defendant
who was minor, falsely misrepresented himself to be a major, and obtained two loans of 200
euros from the plaintiffs. The plaintiffs brought an action to recover 475 euros, being the
amount of loan taken and interest thereon. The court held that the money could not be
recovered because if that were allowed, that would amount to enforcing the agreement to
repay loan, which is void under the infants’ Relief Act, 1874.

It was observed that the objective of doctrine of restitution is to restore back the
undue gains gotten by the minor, rather than enforcing the contract. It would amount to
enforce the agreement if we ask minor to pay money which cannot be traced and which he no
more possessed. The doctrine of restitution does not apply when it comes to repayment of
money.

This Doctrine has been explained by Lord Sumner in the following words:

“When an infant obtained an advantage by falsely stating himself to be of full age,

equity required him to restore him ill-gotten gains, or to release the party deceived
from obligations or acts in law induced by the fraud, but scrupulously stopped short
of enforcing against him a contractual obligation, entered into while he was an infant,
even by means of fraud.”2

1
(1914) 3 K.B. 607.
2
Ibid.

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When it comes to restoring back the property is concerned, Lord Sumner referred to
the following observation of lush J. of Stocks v. Wilson: 3

“What the court of equity has done in cases of this kind is to prevent the infants from
retaining the benefit of what he has obtained by reason of his fraud. It has done no
more than this, and this is a very different thing from making him liable to pay
damages and compensation for the loss of the other party’s bargain. If the infant has
obtained property by fraud he can be compelled to restore it.”4

As regards the question of refund of money which had arisen in Leslie V. Sheill5,
Lord Sumner further observed:

“In the present case the money was paid over in order to be used as the defendant’s
own and he has so used it and, I suppose, spent it. There is no question of tracing it,
no possibility of restoring the very thing got by 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.” 6

3
(1913) 2 K.B. 235.
4
(1913) 2 K.B. 235, at 247
5
(1914) 3 K.B 607.
6
(1914) 3 K.B 607, at 619. Emphasis added.

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Compensation By a Minor In Indian Law

We can derive from the doctrine of restitution of English law that, the restoring back
the property by a fraudulent minor is permitted, if the property can be traced. As the
judgment of Leslie V. Sheill7, the money obtained by minor cannot be recovered from the
minor as the same cannot be traced. If a minor is asked to pay back the money, it may mean
enforcing contractual obligation against a minor, which is not permitted by the law.

In India the question of compensation by minor has arisen under two kinds of
provisions of Indian law.

(1) Section 64, 65 and 70 of Indian Contract Act, 1872.

(2) Section 39 and 41 of Specific Relief Act, 1877.

i. Compensation under Section 64, 65 And 70 of Indian Contract Act,

1872.
The question, whether a minor can be asked to pay compensation to the other party, under
section 64 and 65, Indian Contract Act, 1872 has arisen in Mohori Bibee V. Dharmodas
Ghose.8

a) Section 64 of Indian Contract Act, 1872 states that: -

Consequences of rescission of a voidable contract: - When a person at whose option a

contract is voidable rescinds it, the other party thereto need not perform any promise therein
contained in which he is the promisor. The party rescinding a voidable contract shall, if he
had received any benefit thereunder from another party to such contract, restore such benefit,
so far as may be, to the person from whom it was received

b) Section 65 of Indian Contract Act, 1872 states that: -

Obligation of person who has received advantage under void agreement, or contract
that becomes void: - When an agreement is discovered to be void, or when a contract
becomes void, any person who has received any advantage under such agreement or contract
is bound to restore it, or to make compensation for it to the person from whom he received it.
When an agreement is discovered to be void, or when a contract becomes void, any person

7
(1914) 3 K.B 607
8
(1914) 30 I.A. 114 (P.C.).

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who has received any advantage under such agreement or contract is bound to restore it, or to
make compensation for it to the person from whom he received it.

While discussing the case of Mohori Bibee V. Dharmodas Ghose9, it was held that
the question of compensation under section 64 and 65, Indian Contract Act, 1872 arises
where the parties are competent to contract, and these provisions do not apply to the case of a
minor’s agreement. The law commission disagreed with the interpretation put to Section 65
by the Privy Council.10

In its view compensation under section 65 be allowed, even if the invalidity of the agreement
is because of the fact that a party is incompetent to contract. It has recommended that an
explanation be added to section 65 to indicate that the section is applicable where a minor
enters into an agreement on the false representation that he is major. In spite of the above
stated recommendation by the law commission, no amendment has been made in the act so
far.

Section 70 of the Indian Contract Act, 1872 recognizes quasi-contractual liability to

compensate a person at whose cost some benefit has been enjoyed.

c) Section 70 of Indian Contract Act, 1872 states that: -

Obligation of person enjoying benefit of non-gratuitous act: - Where a person lawfully

does anything for another person, or delivers anything to him, not intending to do so
gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make
compensation to the former in respect of, or to restore, the thing so done or delivered. Where
a person lawfully does anything for another person, or delivers anything to him, not intending
to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to
make compensation to the former in respect of, or to restore, the thing so done or delivered.

It has been held that section 70 cannot be invoked against a minor.

Here it was observed that:

“The minor is excluded from the operation of section 70 for the reason that his case has been
specifically provided for by section 68. Besides, in the case of a minor, even the voluntary
acceptance of the benefit work done of thing delivered which is the foundation of the claim

9
(1914) 30 I.A. 114 (P.C.).
10 th
13 Report (Contract Act, 1872), 1958.

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under section 70 would not be present, and so, on principle, that section cannot be invoked
against the minor.”11

Here we can observe that above stated interpretation is neither logical nor in consonance with
the provision contained in section 70. Section 70 deals with the every person, which would
include minor, and there is nothing in the Indian contract act m, 1872 which prevents the case
of a minor being covered both under section 68 and 70 of the act.

a) Compensation under Special Relief Act, 1963

Whether a fraudulent minor can be asked to pay compensation in view of provision of

section 39 and 41, Specific Relief Act, 1877 came in for consideration in many cases.

a) Section 39 of Special Relief Act, 1877 states that: -

Any person against whom a written instrument is void or voidable, who has reasonable
apprehension that such instrument, if left outstanding, may cause him serious injury, may
sue to have it adjudged void or voidable; and the Court may, in its discretion, so adjudge
it and order it to be delivered up and cancelled.

b) Section 41 of Special Relief Act, 1877 states that: -

On adjudging the cancellation of an instrument, the Court may require the party to whom
such relief is granted to make any compensation to the other which justice may require.

In Mohori Bibee case, the minor had applied for the cancellation of the mortgage deed,
executed by him, under section 39, Specific Relief Act, 1877 and the Privy Council
considered the question of compensation to be paid by him under section 41 of that Act. It
was held that since in this case the loan had been advanced to the minor with the full
knowledge of his minority, the question of payment of compensation to such a
moneylender did not arise.

On the question of compensation under section 41, Specific Relief act, there is a sharp
difference of opinion between two sets of high courts, one view having been expressed by
Lahore high court and another by the Allahabad high court.

11
Ibid., p, 20.

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There is Sharp difference of opinion between two sets of High courts both have their own
respective opinions, one view is expressed by Lahore High Court and another is by Allahabad
High Court.

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1. Lahore High Court’s View

In the Case of Khan Gul v. Lakha12 Singh the question of compensation arose before the
Lahore High Court. There the plaintiff who had advanced a sum of Rs. 17,500 to a minor
brought an action against him to recover the amount. The minor was held liable to refund the
same.

While deciding the case, Sir Shadi Lal, C.J. made a liberal interpretation of the above stated
statutory provisions and also the equitable doctrine of English law, Decision on the following
two points in case are below:

1. According to Section 39, Specific Relief Act, 1877, a minor may sue for the
cancellation of an instrument pertaining to a void agreement, and when he so goes to
the court (as a plaintiff) to claim the relief, the court may ask the minor to pay
compensation to the other side under Section 41. In this particular case the minor was
not the plaintiff or the defendant.
2. Sir Shadi Lal, C.J. also made a significant departure from the English doctrine of
restitution and the decision of Leslie v. Sheill13, according to which there can be only
restoration of specific property wrongfully obtained by a fraudulent minor, if the same
can be traced in his hands, and he cannot be asked to pau back money as the same
cannot be identified, otherwise it would amount to enforcing an agreement which is
void.

According to the decision in the present case, asking a minor to return the ill-gotten gain
in the form of money, is not the enforcement of contract, but it is allowed not because
there is restoration of the pre contract position. The relief is allowed not because there is a
contract between the parties, but it is because there is no contract but one of the parties
has unjustly benefited at the cost of other.

12
A.I.R 1928 Lahore 609.
13
(1814) 3 K.B. 607.

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i. Allahabad High Court’s View:

In Ajudhia Prasad v. Chandan Lal14, the full bench of the Allahabad High Court
considered at length the decision of the Lahore High Court and expressed entirely the
opposite view. As regards the two points discussed above, i.e., firstly compensation under
Specific Relief Act, and secondly, the question of restitution or compensation, the
conclusions were different from those arrived at Lahore High Court.

1. Regarding the minor’s responsibility to compensate under Specific Relief Act, it was
held that a minor cannot be asked to give any relief to the other party when the minor
is defendant in the case. A minor can be asked to give relief when he himself is
plaintiff and wants some relief for himself. If the minor, who is defendant in the case,
is asked to provide relief, that is contrary to the spirit and language of Section 41,
Specific Relief Act,1877 and will also amount to enforcing a contract, which is void.
2. Regarding the question of paying money compensation by minor, the rule laid down
in Leslie v. Sheill15 was followed, and it was held that traced, but he cannot be asked
to pay money compensation because that would amount to enforcing void contract
against minor. Sulaiman, C.J., while expressing his disagreement with the views of
Sir Shadi Lal, C.J., said:16
“Where the contract of the transfer of property is void, and such property can be
traced, the property belongs to the promise and can be followed. There is every equity
in his favour for restoring the property to him. But where the property is not traceable
and the only way to grant compensation would be by granting a money decree against
the minor, decreeing the claim would be almost tantamount to enforcing the minor’s
pecuniary liability under the contract which is void.”

The View expressed by Sir Shadi Lal, C.J., in the Lahore case has been considered to be
better, by Pollock and Mulla17. The Law Commission also in its reports18, has preferred the
views of Shadi Lal, C.J. expressed in the Lahore case on both the points discussed above. In
other words, it was in favour of permitting an action against a fraudulent minor irrespective
of the fact whether in the case the minor to refund the money gain made by him unjustly did

14
A.I.R 1937 All. 610; followed by A.P. High Court in Gokeda Latcharo v. Vishwanathan Bhimayya, A.I.R 1965
A.P. 182; Also see Jagar Nath Singh v. Lalta Prasad, I.L.R (1909) 31 All. 21.
15
(1914) 3 K.B. 607.
16
A.I.R 1937 All. 610, at 617.
17 th
Indian Contract Act, 8 Ed. (1957), p. 77.
18 th th
9 Report, Specific Relief Act, 1877, p. 46; 13 Report, Indian Contract Act, 1872, p. 20.

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not amount to enforcement of the contract. It recommended a suitable amendment of Specific

Relief Act for the purpose of clarifying the position. The Law Commission’s views and
recommendations are as under:

Having considered the rival points of view we are inclined to prefer the view of Shadi
Lal, C.J. in the Lahore case19. We have already recommended the acceptance of the
doctrine of unjust enrichment20.

According to that doctrine, the obligation to restore an unjust benefit should not depend upon
the mere accent of a person coming before the court as a plaintiff or defendant. We also agree
with the view that restoration of status quo ante would not amount to enforcement of the void
contract against the defendant. The principal applicable to a minor will also apply to the case
of a person of unsound mind. We recommend, therefore, that a sub-section should be
included in the new provision suggested by us21 to the effect that when a defendant
successfully resists a suit on the ground that the contract is void owing to his incapacity at the
time of contract, he must restore any benefit, whether proprietary or monetary, which he has
actually received under the contract. But no question of liability to make any compensation,
would arise in such a case.”

In accordance with the recommendation of the Law Commission, the principal of

compensation has now been incorporated in Section 33, Specific Relief Act, 1963. This
provision now requires the payment of money compensation by a minor irrespective of the
fact whether the minor is the plaintiff or defendant in the case. The provision is as under:

“33. Power to require benefit to be restored or compensation to be made when

instrument is cancelled or is successfully resisted as being void or voidable. -(1) On
adjudging the cancellation of an instrument, the court may require the party to whom
such relief is granted to restore, so far as may be, any benefit to that party which he
may have received from the other party and to make any compensation to him which
justice may require.
(2) Where a defendant successfully resists any suite on the ground –
(a) that the instrument sought to be enforced against him in the suit is voidable, the
court may, if the defendant has received any benefit under the instrument from the

19
Khan Gul v. Lakha Singh, A.I.R 1928 Lah. 609(F.B.).
20
Vide pp. 7-9 pf our Report on the Limitation Act (Third Report of the law commission).
21
Section 36 of App. 1.

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other party, require him to restore, as far as may be, such benefit to that party or to
male compensation for it;
(b) that the agreement sought to be enforced against him in the suit is void by reason
of his not having been competent to contract under Section 11 of the Indian Contract
Act (9 of 1872), the court may, if the defendant has received any benefit under the
agreement from the other party, require him to restore, so far as may be, such benefit
to that party, to that extent to which he or his estate had benefited thereby.”

In the view of the above stated provision, the present position in India can be summarized as
under:

1. If a minor goes to court as plaintiff for the cancellation of an instrument, the court
may, on adjudging the cancellation, require such a minor, to restore the benefit and to
make such compensation to the other party as justice may require. The object of the
present provision is to restore the parties to their original position, as far as possible.
2. When the minor is the defendant in a case and he resists the enforcement of the suit
on the ground that he is incompetent to contract, the court may ask him to restore such
benefit to the other party, to the extent his estate has been benefited thereby.

Though this provision the parties are tried to be put to the pre-contract position. Moreover,
compensation in terms of money is also permitted. In other words, it means that the rule of
English law laid down in Leslie v. Sheill is not applicable in India.

CONCLUSION

In English law, If a minor obtains property or goods by misrepresenting his age he can be
compelled to restore it, but only as long as the same is traceable in his possession. This is
known as the equitable doctrine of restitution. Where the minor has sold the goods or
converted them, he cannot be made to repay the value of the goods, because that would
amount to enforcing a void agreement.

In India compensation in terms of money is permitted. In other words, it means that the rule
of English law laid down in Leslie v. Sheill is not applicable in India.

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Bibliography: -

Bare Act: -
Indian Contract Act, 1872

Specific Relief Act, 1877

Case laws: -

Leslie v. sheill (1914) 3 K.B. 607

Stocks v. Wilson (1913) 2 K.B. 235, at 247
Mohari Bibee v. Dhamodardas Ghose (1914) 3 K.B. 607. (1903) 30 I.A. 114 (P.C.).
Bankay Bihari Prasad v. Mahendra Prasad, A.I.R 1940 Pat. 324
State of West Bengal v. B.K. Mondal & Sons, A.I.R 1962 SC 779, at 789
Khan Gul v. Lakha Singh A.I.R 1928 Lahore 609
Ajudhia Prasad v. Chandan lal A.I.R 1937 ALL. 610
Books: -
Indian Contract Act by Dr.R.K.Bangia,

Contract and Specific Relief by Avtar Singh

MULLA Indian Contract Act by Sir Dinshaw Fardunji Mulla.

Online resource: -

https://www.lawctopus.com/ (as accessed on 11/04/2019)

https://indiankanoon.org/(as accessed on 11/04/2019)

http://www.legalservicesindia.com/(as accessed on 11/04/2019)

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