Doctrine Of Necessity In Indian Contract Act

SUBMITTED TO :
Mr.Vijay kumar Vimal

(Faculty of Contract)
Submitted by:MOHAMMAD ESHTYAQUE ALI ROLL NO. 943 2nd SEMESTER

ACKNOWLEDGEMENT

Writing a project is one of the most significant academic challenges I have ever faced. Though this project has been presented by me but there are many people who remained in veil, who gave their all support and helped me to complete this project. First of all I am very grateful to my subject teacher Mr. Vijay kumar Vimal without the kind support of whom and help the completion of the project was a herculean task for me. He donated his valuable time from his busy schedule to help me to complete this project and suggested me from where and how to collect data. I am very thankful to the librarian who provided me several books on this topic which proved beneficial in completing this project. I acknowledge my friends who gave their valuable and meticulous advice which was very useful and could not be ignored in writing the project. I want to convey my sincere thanks to all the people who have helped me directly or indirectly throughout the project.

Mohammad Eshtyaque ali

Roll No. 943

2nd semester

CHAPTER 1: INTRODUCTION Quasi contract:- ................................................................................................................................. Rationale and Principles ................................................................................................................... Quasi Contracts as per Indian contract Act....................................................................................... CHAPTER 2: SUPPLY OF NECESSARIES ............................................................................... 1. Nature of the relief: ....................................................................................................................... 2. Minors contract for necessaries ................................................................................................... 3. What are necessaries? ................................................................................................................... 4. Minors marriage .......................................................................................................................... 5. Costs of litigation .......................................................................................................................... 6. Money paid to liquidate debts ....................................................................................................... 7. If the minor has parents or guardian .............................................................................................

8. What are not necessaries? ............................................................................................................. 9. Burden of Proof............................................................................................................................. 10. Enquiry by the lender .................................................................................................................. 11. Interest.........................................................................................................................................

CHAPTER 3: RELATED JUDGMENT ......................................................................................

CHAPTER 4: CONCLUSION.......................................................................................................

BIBILIOGRAPHY .....................................................................

CHAPTER 1: INTRODUCTION
Quasi contract:A quasi-contract' is a legal substitute for a contract. A quasi-contract is a contract that should have been formed, even though in actuality it was not. It is used when a court wishes to create an obligation upon a no contracting party to avoid injustice and to ensure fairness. It is invoked in circumstances of unjust enrichment. Quasi-contracts are defined to be "the lawful and purely voluntary acts of a man, from which there results any obligation whatever to a third person, and sometime a reciprocal obligation between the parties." It "is not legitimately done, but the terms are accepted and followed as if there is a legitimate contract.

Quasi Contracts are so-called because the obligations associated with such transactions could neither be referred as tortious nor contractual, but are still recognized as enforceable, like contracts, in Courts.

Rationale and Principles The rationale behind quasi-contract is based on the theory of Unjust Enrichment. Lord Mansfield is considered to be the founder of this theory. In Moses v. Macferlan he explained the principle that law as well as justice should try to prevent unjust enrichment, i.e., enrichment at the cost of others. A liability of this kind is hard to classify. Since it partly resembles liabilities under the law of tort and partly it resembles contract since it owed to only a party and not a person or individual generally. Therefore, it comes within the ambit of an implied contract or even natural justice and equity for the prevention of unjust enrichment. The principle underlying a quasi-contract is that no one shall be allowed unjustly to enrich himself at the expense of another, and the claim based on a quasi-contract is generally for money. Quasi Contracts as per Indian contract Act In Indian context, the quasi-contracts are put under chapter V of the Indian Contract Act as OF CERTAIN RELATIONS RESEMBLING THOSE CREATED BY CONTRACTS. The framers avoided the direct term quasi-contract in order to avoid the theoretical confusion regarding the same. Sections 68 to 72 provide for five kinds of quasi-contractual obligations: The same are discussed as under: 1. Section 68- Supply of necessities: - Claim for necessaries supplied to person incapable of contracting, or on his account. If a person, incapable of entering into a contract or any one whom he is legally bound to support is supplied by another person with necessaries suited to his condition in life, the person who furnished such supplies is entitled to be reimbursed from the property of such incapable person.

The above Section covers the case of necessaries supplied to a person incapable of contracting (say, a minor, lunatic, etc.) and to persons whom the incapable person is bound to support (e.g., his wife and minor children). However, following points should be carefully noted: (a) The goods supplied must be necessaries. What will constitute necessaries shall vary from person to person depending upon the social status he enjoys. (b) It is only the property of the incapable person that shall be liable. He cannot be held liable personally. Thus, where he doesnt own any property, nothing shall be payable.

Example: - A supplies B, a lunatic, with necessaries suitable to his condition in life. A is entitled to be reimbursed from Bs property1 Case: Moharibibee v DhunndasGhose 114, 1903 ILR 30 Cal 539:- In this case it was held that this section applies to minors as well as to persons of unsound mind and others. It was also held that this section will not apply where necessaries have been supplied to someone, who a person competent to contract is bound to support. BenarasBan Ltd v Dip Chand AIR 1936 All 172: - In this case it was held that a creditor can recover monies advanced to a minor for necessaries. Necessaries have included money urgently needed for the requirement of the minor to save his property from being sold for arrears of revenue, money advanced for repair of houses or for saving minors property being sold for arrears.

2.

Section 69 - Payment by interested persons: - Reimbursement of person paying money due by another,in payment of which he is interested.

This Section provides that a person, being interested in the payment of money, which another is bound by law to pay, is entitled to be reimbursed by the latter, if he has paid it. A person who is interested in the payment of money which another is bound by law to pay, and who, therefore, pays it, is entitled to be reimbursed by the other.

Qusai contract, Dr kailash Rai Contract I 3 edition 2011,p 359

rd

The following are Conditions of liability under this section: Firstly Payer must is interested in Making Payment. Secondly but should not be bound to pay. Thirdly should be under Legal Compulsion to pay

Case:-GovindramGordhandasSeksaria V State of Gondal AIR 1950 PC 99 77 IA 156:- In this case the company had contracted to buy the mills of a Maharaja, and they were imminently threatened with a forced sale which would defeat its purchase. Maharaja had sold certain mills without paying overdue municipal taxes, was sued by the buyer who had to pay to save the property from being sold. The Maharaja (Seller) showed no signs of paying the taxes to municipality so the company paid. The court held that the general purport of the section is to afford to a person who pays money is furtherance of some existing interest, an indemnity in respect of the payment against any other person, who rather than he, could have been made liable by law to make payment.

3.

Section 70 - Liability to pay for non-gratuitous acts: - Obligation of person enjoying of non-gratuitous act.

This section creates liability to pay for the benefits of an act which the doer did not intend to do gratuitously It states, 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 delivered2. Case:-In the State of W.B. vs B.K. Mondal& sons (AIR 1962 SC 779 (1962) 1 SCR 876:- laid three conditions must be fulfilled before this section can be invoked A person should lawfully do something for another person or deliver things to him In doing the said things or delivering the said thing he must not intend to act gratuitously and The other person for whom something is done or to whom something is delivered must enjoy the benefit thereof.
22

Section 70, Dr kailash Rai Contract I , 3 edition 2011,p 365

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In the case of NehaBhasin V Anand Raj anand (2006) 132, DLT 196, the plaintiff was singing for the firm of defendants, her song were recorded, by them, During the process of recording she did not seem to have acted gratuitously, when the defendant marketed the cassettes and CDs of her song recordings, the court said because they did make business use of her work a quasicontract arose under Section 70 making the defendants liable to pay from her services. Section 71- Responsibility of finder of goods: - A person, who finds goods belonging to another and takes them into his custody, is subject to the same responsibility as a bailee. Rights of the finder: Entitled to retain the goods until he receives the lawful charges and compensation for retaining the goods and taking care of the goods. He cannot sue for such compensation unless a specified reward has been advertised. Can sell the goods if goods are perishable Liabilities of the finder: Responsibility of the finder to take care of the goods as if they were his own. Must with reasonableness diligence trace the true owner of the goods.

4.

Case :-Union of India v Amar singh (1960) 2 SCR 75, AIR,1960 SC 233 :- In this case goods booked for Quetta before the partition of the country were found to be missing when the wagon containing the goods was received at New Delhi railway Station. The owner sued the East Punjab Railway which was handling the wagon from Indo- Pakistan border into India . The East Punjab Railway was held to be an agent of the receiving railway and a bailee with the implied authority of the consignor under section 194 of contract Act. Section 71 was also applicable, in that when railway administration in Pakistan left the wagon containing goods within the borders of India and the forwarding railway administration took them into their custody; it could not deny liability under section 71 Union of India v Mahommad Khan AIR 1959 Ori 103:- Taking of the goods under custody is important; in this case the plaintiff timber was lying on the piece of land which was subsequently

leased out to the defendant. The latter gave notice to the owners of the timber to remove it, but it was not removed. The defendant than cleared the site and the timber was damaged or removed. The plaintiff claim under section 71 of the contract Act was dismissed as the defendant had not taken the goods into his custody.

5. Section 72 - Mistake of coercion:-.Liability of person to whom money is paid,or thing delivered, by mistake or under coercion, must repay or return it. A person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it. The term mistake as used in Section 72 includes not only a mistake of fact but also a mistake of law. There is no conflict between the provisions of Section 72 on the one hand, and Sections 21 and 22 on the other, and the true principle is that if one party under mistake, whether of fact or law, pays to party money which is not due by contract or otherwise, that money must be repaid. Illustration :- A and B jointly owe 100 rupees to C. a alone pays the amount to C and B no knowing this fact pays 100 rupees over again to C. C is bound to repay the amount to B. Case: - RakrutiManikyam v MedidiSatyanarayyana AIR 1972 AP 367 The contract was for sale of paddy in contravention of the Andhra Pradesh Paddy Maximum Price control Order. The acceptance of such a delivery could not create a lawful relationship between the contractors. It cannot therefore be said that the plaintiff lawfully delivered the paddy to the defendant so as to attract the provisions of section 70 of the contract Act. Sales Tax Officer, Banaras v KanhaiyalalMukundLalSaraf and others 1959 SCR AIR 1959 SC 135:-. A certain amount of sales tax was paid by a firm under the UP sales Tax law on its forward transactions and subsequently to the payment; the Allahabad High court rules the levy of sales tax on such transactions to be ultra vires. The firm sought to recover back the lax money. Initially the tax authorities, rejected the contention based on English, American and Australian laws which do not allow payments made under mistake of laws to be recovered, the Supreme Court allowed the recovery by the appellant. Supreme Court stated this section in terms does not make any distinction between a mistake of law and a mistake of fact. Payment towards tax or duty which is without authority of law is a payment made under mistake within the meaning of section 72 of the Indian contract Act. Section 72 is based on equitable

principles. Therefore by claiming to retain the tax which has been collected without authority of law, the government cannot enrich itself and it is liable to make restitution to the person who mad made payment under mistake or under coercion. In this judgment it was held that when tax has been collected without authority of law, the state is bound to refund the same.

CHAPTER 2: SUPPLY OF NECESSARIES 68. Claim for necessaries supplied to person incapable of contracting, or on his account.If a person, incapable of entering into a contract, or any one whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person. Illustrations: (a) A supplies B, a lunatic, with necessaries suitable to his condition in life. A is entitled to be reimbursed from Bs property. (b) A supplies the wife and children of B, a lunatic, with necessaries suitable to their condition in life. A is entitled to be reimbursed from Bs property. 1. Nature of the relief: The relief which is contemplated under this section is not dependent on any contract, but is quite independent of it. As pointed out by Anson, Circumstances must occur under any system of law in which it becomes necessary to hold one person to be accountable to another without any agreement on the part of the former to be so accountable, on the ground that otherwise he would be retainingmoney or some other benefit which comes into his own hands to which the law regards the other person as better entitled, or on the ground that without such accountability, the other would unjustly suffer loss. The law of quasi-contract exists to provide remedies in circumstances of this kind.3 According to Anson, the term quasi-contract is not a happy term. It has been rightly remarked, The basis of quasi-contractual liability is unjust enrichment and the liability arises by implications of law, and not out of any agreement as in the case of contract. Hence, apparently the term quasi-contract is rather misleading and is apt to confuse.4 Chapter V of the Indian Contract Act which deals with such relation rightly puts the title of Chapter as of certain relations resembling those created by contract. The distinctive features of such relations
3 4

Ansons Law of Contract, 23rd Edition, (1971) p. 589. G.M. Sen case Book on the Law of Contract, p. 205.

are: (i) It deals with the right to a sum of money; (ii) the liability is imposed by law and does not arise by agreement of parties; and (iii) the right is available only against a particular person or persons. The section does not create any personal liability, but on the other hand, creates a statutory claim against the property of the person who is incapable of entering into a contract and has been supplied with necessaries suited to his condition in life. Two things are necessary under this section, namely, (i) that the person against whom the suit is brought is incapable of entering into a contract, and (ii) another person (the plaintiff) has supplied him or any one of whom he (the person incapable of entering into a contract) is legally bound to support with necessaries suited to his condition in life.5 Under section 68, Contract Act, it must not only be shown that moneys advanced are to be expended on goods suitable to the condition in life of the infant but also that they are suitable to infants actual requirements at the time of sale and delivery.6 However, in a suit on the basis of a pro-note, if the defendant establishes his plea of minority at the date of execution of the pro-note, the plaintiff cannot be allowed at the reversion stage to invoke section 68, Contract Act, so as to alter the whole character of the suit.7

2. Minors contract for necessaries The rule of law is clearly established that an infant is generally incapable of binding himself by a contract. But to this rule, there is an exception introduced not for the benefit of the tradesman who may trust the infant, but for that of the infant himself. This exception is that he may make a contract for necessaries.8 In the Indian Contract Act, section 68 provides that a minor falls within the class of persons referred to in the section, and so, though he is not liable even for necessaries and no demand in respect thereof is enforceable against him by law, a statutory claim is created thereby against his property. But though the property of the minor may be liable for the necessaries under section 68 of the Contract Act, the minor himself is not personally liable as in English Law.8 Section 68 will not apply where necessaries are supplied to a person or to someone whom that person is bound to support when such person is competent to contract.
5 6

VishwaNath v. Shiam Krishna, 1936 All 819: 1936 ALJ 1120. DawNyun v. MaungNyipu AIR 1938 Rang 359: 178 IC 680. 7 AIR 1941 Mad 569: 53 LW 352: 1941 MWN 237: 198 IC 305. 8 Ryder v. Woombell, (1868) LR 3 Exch 90; 4 Exch 32, Walter v. Everard, 2 QB 309; foll in Jagon Ram v. Mahadeo, 36 Cal 768, 776 sc Sub nom Joyram v. Mahadeb, 12 CWN 643.

3. What are necessaries? There is, however, no definition of the term necessaries in the Contract Act. It is, therefore, necessary to turn to judicial decisions to determine its precise import. Now, it was ruled by Baron Parke in Peters v. Fleming, that from the earliest times down to the present, the word necessaries is not confined in its strict sense to such articles as were necessary to support life, but extended to articles fit to maintain the particular person in the state, degree and station in life in which he is; and therefore we must not take the word necessaries in its unqualified sense but with qualification as above pointed out. To put the matter concisely, necessaries means goods suitable to the condition in life of the defendant and to his actual requirements at the time of the sale and delivery, and whether an article supplied to an infant is necessary or not, depends upon its general character and upon its suitability to the particular infants means and station in life. It must further be observed that as necessaries include everything necessary to maintain the infant in the state, station, or degree of life in which he is, what is necessary is a relative fact, to be determined with reference to the fortune and circumstances of the particular infant; articles therefore that to one person might be mere conveniences or matters of taste, may in the case of another be considered necessaries, where the usages of society render them proper for a person in the rank of life in which the infant moves. The infants need of things may also sometimes depend upon the peculiar circumstances under which they are purchased and the use to which they are put. For instance, articles purchased by an infant for his wedding may be deemed necessary, while under ordinary circumstances the same articles might not be so considered. The word necessaries, therefore, includes money urgently needed for the requirements of a minor and cannot be restricted to what is necessary for the elementary requirements of the minor such as food and clothing.9 Thus cash lent to him to affect necessary repairs in his house, and payment of Government revenue is necessaries of the minor proprietor. In the case of a minor Muslim girl, marriage is a necessity the person incurring expenditure for marriage is entitled to relief under section 68. A debt incurred by guardian for improving or developing minors estate is not binding on such estate. Money borrowed for its upkeep or its preservation binds the estate.

Mahmood Ali v. Chinki, 52 All 381: 1930 All 128: 123 IC 827.

Expenses incurred for minors education, marriage of his sister, expenses incurred in funeral of minors parents, expenses incurred for necessary litigation etc. have been held to be necessaries. Expenses incurred for minors marriage have also been held to be necessaries. The obligation to defray the expenses of the marriages of sons and daughters is cast by the Hindu law upon a father if there is any joint family property in his hands and not in other cases. A wife who spends for the marriage of her minor daughter cannot recover the amount personally from the husband. Neither section 68 nor sections 69 and 70 will apply. Further, the term necessaries is comprehensive and is not confined to necessaries of the person of the infant himself but extends to necessaries provided for other members of his family, e.g., sisters marriage, but the money spent cannot be recovered, unless it constitutes a debt and is not a bounteous gift. As necessaries include everything necessary to maintain an infant in the state, station, or degree of life in which he is, what is necessary is a relative fact to be determined with reference to the fortune and circumstances of a particular infant. Where the guardian of a minor borrows money for the payment of rent due to lambardar, which the minor was bound to pay, the minor is liable under the transaction, as the guardian can do, what the minor himself would do. The house leased to a minor for the purpose of living and continuing his studies is for a necessity, suited to the conditions of minors. The advancing of funds to a male Hindu minor for meeting his own marriage expenses is not supplying him with necessaries suited to his condition in life within the meaning of section 68 of the Contract Act, and a person advancing such funds is not entitled to be reimbursed from the property of such a minor. The Hindu law does not enjoin the marriage of a Hindu male before the age of majority.10

4. Minors marriage Although the principle enunciated in section 68 of the Contract Act would not apply to the expenses of marriage of a minor under English law, the principle has been extended in India to cover the marriage expenses of Hindu minors. Where a minor in order to secure funds for his marriage expenses entered into an agreement for the sale of certain immoveable property, held that the minor was bound to repay the amount received and that the minors property was liable

10

Tukkilal v. Kamal Chand, AIR 1940 Nag 327: ILR 1940 Nag 632: 193 IC 178.

for such amount. By general principles of Hindu law, a minor is under an obligation to provide out of the family property, the funds necessary for performance of the marriage ceremonies of his sister, in a manner suitable to the social position of the family and its pecuniary sources. Such provision is necessary and one which the minor is legally bound to make within section 68.

5. Costs of litigation Money advanced to a minor to provide for his defence in a criminal prosecution, or for meeting the necessary costs of a civil proceeding affecting his estate,though it proves unsuccessful, or to save a valuable property of the minor from sale in execution of a decree,11 would be necessaries. But any money spent for securing the services of a lawyer, which were neither necessary nor beneficial to the minor could not be recovered. It must be proved that the money advanced for the expenses of a minors litigation was necessary for the minor and not merely that it was spent for the purpose of the minor.

6. Money paid to liquidate debts Where the properties of the minor are threatened to be attached and there is imminent danger of the same being sold for revenue, if a creditor, realizing the difficulties the minor was in, advance money which is utilized to avert the danger, the creditor advancing money is entitled to be reimbursed from the property of the minor. A decree for the repayment of a loan taken by natural guardian of a minor during his minority for a purpose, which can be considered to be necessary within the meaning of section 68 can be enforced against his property. But money paid to a minor, for the discharge of his fathers debts cannot be called necessaries. 12 Section 68 did not apply to a case of mortgage made by the uncles and grand-mother of certain minors who did not purport to act on behalf of the minors but executed the mortgage as if they were the sole owners, though the mortgage money was paid to satisfy a money decree against theestate of the minors father. A minor is not liable at all on a contract made by his mother but he is liable for any sum spent on procuring necessaries for him.

11 12

Kidar v. Ajudhia, 185 PR 1883. Nilkanth v. Chandra, 1922 Nag 247: 64 IC 851.

7. If the minor has parents or guardian The mere fact that an infant has a father, mother, or guardian, does not prevent his being bound to pay for what was actually necessary for him when furnished, if neither his parents nor guardian did anything towards his care or support. The test to be applied is whether the articles supplied were needed for the use of the infant.13 Section 31 of the C.P. Court of Wards Act does not control this section so as to exempt the estate of a government ward from the liability for necessaries supplied to the ward. Where a guardian himself borrows money for the necessities of the minor in such circumstances as to give him a right to reimbursement from the minors estate, his creditor may, in a proper case, be subrogated to his right.

8. What are not necessaries? Articles which are purely ornamental and not useful are not necessaries. Even objects of common use, if of an excessively costly kind, would not be necessaries.14 Further, it is not sufficient to show that the contract was beneficial to the minor from a pecuniary point of view, such as goods supplied to enable him to carry on his trade, even though he obtains his subsistence thereupon; the contract must be for necessaries. In all cases, there must be personal advantage from the contract derived to the infant himself. Thus, contracts for charitable assistance to others, though highly to be praised, cannot be allowed to be binding. Money spent on the obsequies of the father of a minor cannot be deemed to be necessaries supplied to the minor. The word necessaries in section 68 has been used in a technical sense. It includes not only the bare necessities of existence of such as clothes and food, but all things that may be reasonably necessary for minors condition in life. It may include things such as a watch or a bicycle. But the word necessary does not include articles of luxury.

9. Burden of Proof As regards the burden of proof, the person who seeks to recover for articles furnished to an infant on the ground that they were necessaries, is bound to prove that the articles were in their nature

13 14

Call v. Ward, 4 Watts and Sergeant, 119; ref to in Jagon Ram Mahadeo, 36 Cal 768, 779. Ryder v. Woombell, LR 3 Ex 90.

necessaries suitable to the infant to whom they were supplied and were actually needed by the infant. But if there are special circumstances within the knowledge of the infant himself, who make those articles not necessaries, he may prove them, for instance, that he was fully supplied with similar goods.15 In the case of necessaries supplied to an infant, the onus of proof lies on the creditor.16 Mere statement in a bond executed by a guardian of a minor in his personal capacity that the money was borrowed to meet the necessities of the minor will not bind the minor.

10. Enquiry by the lender A person who has advanced money to relieve the necessities of a minor must make all reasonable inquiries as to the facts of such necessities, and having made such inquiries, and reasonably entertaining a bona fide belief in the existence of such necessities, he can advance his money in safety, even though the sum borrowed by the guardian, upon security of the minors estate is not in fact used for his necessities or benefit. On the other hand, a person who lends money without such inquiries cannot thereafter have recourse to the minors estate for the satisfaction of the debts. To recover the price of goods supplied, the question is, was the infant in actual need of the things purchased? Though an article may belong to a class of things that are unquestionably necessary, and though the particular article furnished may correspond in quality and price with the infants means, yet if it should turn out that the infant was already plentifully supplied with the thing purchased, it does not fall within the description of necessaries in that particular case. It is thus incumbent upon one who sells goods to an infant to enquire into his circumstances so as to determine not only whether the thing sold is such an article as an infant of the station in life of the purchaser would require, but whether in the particular case, the purchaser had need of it, for if the infant did not require it, the seller cannot recover it. Where he assumes the business of a guardian for the purpose of present relief, he is bound to execute it as a prudent guardian would and consequently make him acquainted with his necessities and circumstances. The credit which the infants necessities give him, cease when these necessities cease, and as nothing further is

15 16

Ford v. Fothergill, 1 Peaka 301, 3 RR 695; Jagon Ram v. Mahadeo, 36 Cal 768. Sadasheo v. Shanker, AIR 1928 Nag 68.

requisite when these are relieved, the exception to the rule is at an end. 17When no enquiry was made at the time when the goods were supplied as to the necessity, the plaintiff is not debarred from proving that the goods were necessary.18

11. Interest No interest can be allowed on a claim under this section as it does not arise out of a contract.19

CHAPTER 3: RELATED JUDGMENT Alfred Henry Lionel Leach, C.J. 1. This appeal raises the question of the liability of a minor to return a sum of money paid to his guardian as earnest money in respect of a contract of sale of immovable property entered into by the guardian on his behalf. On the 20th August, 1931, Andalammal, the mother and guardian of the appellant, agreed to sell to the respondent the minor's shares in a village. The price agreed upon was Rs. 7,125 of which Rs. 500 was paid in advance. It is common ground that certain creditors of the estate were pressing for the payment of their debts and the intention was to sell the minor's interests in the village to discharge these liabilities. The sale was not completed, and the property was sold by the mother to a third party, the second defendant in the suit out of which this appeal arises. The suit was for a decree for specific performance of the contract, but before the case came on for hearing it was realized that the Court could not grant this relief. An infant cannot contract in this country and a covenant by his guardian for the sale of immovable property cannot be enforced against him: Mir Sarwarjan v. FakhruddinMahomedChowdhuri (1911) 21 M.L.J. 1156: L.R. 39 I.A. 1 : I.L.R. 39 Cal. 232 (P.C.) and BatchuRamajogayya v. VajjulaJagannadham (1918) 36 M.L.J. 29 : I.L.R. 42 Mad. 185 (F.B.). An application was then made for leave to amend the plaint by adding a prayer for the return of the earnest money. This application was granted, and at the trial the only question which was raised was whether the respondent was entitled to the return of the Rs.500. The learned trial Judge held that he was on the ground that the minor was liable, unless it could be shown that he had not received the
17 18

Jagon Ram v. Mahadeo, 36 Cal 768. Umrao v. Banarsi, 1927 Lah 414: 101 IC 702. 19 Ramchandara v. Hari, 1936 Nag 12; see also AIR 1940 Mad 106.

benefit of the Rs.500. On this basis he granted a decree for the return of the amount with interest. The appellant challenges the correctness of the decision. The second defendant is not concerned with this question, and has, therefore, not been made a party to the appeal.

2. It may be taken that it was necessary to sell this property of the minor for the purpose of paying off pressing creditors. This was alleged in the plaint and it was acknowledged in the appellant's written statement that he had to sell the property to the second defendant "owing to the pressing necessities of the creditors". It would appear that it was out of the money which the mother received from the second defendant that the debts were in fact discharged. What has become of the Rs.500 paid to the appellant's mother by the respondent has not been disclosed. The learned Advocate for the appellant contends that there can be no decree for the return of earnest money paid under a void contract. On the other hand the learned Advocate for the respondent says that as the contract was entered into in order to raise money to pay off creditors the Rs.500 must be treated as having been paid to the guardian for necessaries or for his benefit.

3. In our opinion, the appellant is entitled to succeed. It is true, that the guardian was compelled to sell the property of the minor to pay off debts for which the minor's estate was liable, and if a conveyance had been executed no doubt the respondent would have obtained a valid title to the property, but the Rs.500 can only be treated as being security for the performance of a contract which in law was no contract at all. Earnest money is paid as a guarantee that the contract will be performed. James, L.J., so held that in Ex parte Barrett: In re Parnell (1875) 10 Ch. App. Cases 512, where there was a contract for the sale of immovable property with a stipulation that a portion of the purchase money should be paid immediately, and his definition was accepted by the Court of Appeal in Howe v. Smith (1884) 27 Ch. D. 89 and by the House of Lords in Soper v. Arnold (1889) 14 A.C. 429. In the last mentioned case, Lord Macnaghten observed: The deposit serves two purposes - if the purchase is carried out it goes against the purchasemoney--but its primary purpose is this, it is a guarantee that the purchaser means business.

4. The price to be paid for the land in the present case was Rs.7125 and the Rs.500 was paid as a guarantee that the respondent would pay the balance. It cannot be regarded as a payment to the appellant or to the appellant's guardian for any other purpose. The respondent says that the

contract was not carried out because of the default of the appellant's guardian; on the other hand, the appellant puts the blame on to the respondent. It matters not on whose shoulders the blame must be placed. All that we have to consider is the purpose for which this money was paid. The respondent's advocate does not contend that a minor can be made liable for the return of earnest money paid under a void contract. He says that the payment must be treated as falling within Section 68 of the Contract Act or as being for the benefit of a Hindu minor and therefore repayable under his personal law. We are unable to regard the payment as falling within Section 68 or as being repayable under Hindu law on the ground that it was paid for the minor's benefit. We can only regard it as being paid by the respondent as a guarantee that he would fulfill his part of the contract and as far as we know it remained with the guardian for this purpose.

5. The learned Advocate for the respondent has referred us to Pathak Kali Charan Ram v. Ram Deni Ram20 which was a case in which a minor member of a joint Hindu family had executed an agreement of sale of immovable property and had received an advance of Rs.125 as earnest money. The object in selling the property was to defray the marriage expenses of the minor's brother. The Court treated the expenses as being necessary expenses and granted a decree for the return of the earnest money as the contract was not fulfilled. The learned Judges regarded the case as falling under Section 68 of the Contract Act. They did not consider the question whether the earnest money should be treated as security for the performance of a void contract. We are unable to accept this decision as embodying a correct statement of the law applying to a case like the one before us.

6. For these reasons the appeal will be allowed and the suit dismissed with costs in favor of the appellant in both the Courts. The costs of the appellant will include the fee paid to the Court guardian and also the cost of the printed papers supplied to him.

20

(1917) 2 Pat. L.J. 627

CONCLUSION The principle of quasi contract is often ignored but still it holds a very important place, since the principle is grounded on the principles of justice and equity, despite the fact that Quasi Contract is molded in the Indian Contract Act under a new name. However the basic nature and essence of the principles remain the same without any drastic change. Thus quasi contract forms an integral of the Contracts Act and it definitely comes to an aid of the victim when the person enriched unjustly over the former.

BIBILIOGRAPHY Dr. Justice Barukha G.C., Mulla on The Indian contract Act, Twelfth Edition, Lexis NexisButterworths, Wadhwa Nagpur. Cheshire, Fifoot&Furmstone, Law of Contract, 15th Edition, Oxford University Press. Saharay, H.K. Dutt on Contract, Tenth Edition, Eastern Law House, Allahabad. TreitelThe Law Of Contact, Twelfth Edition, Edwin Peel Thomson, Sweet & Maxwell. Soni, Ashok Universals Digest of Cases on Law of Contract 2002 Ed.Universal Law Publishing Co.Pvt.Ltd Padia,RG Mulla Indian Contract and Specific Relief ActsThirteenthEd.,LexisNexisButterworthsWadhwa,Nagpur Dr.Kailash Rai,Contract I Third edition,