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DR. RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY LUCKNOW Applicability and Legality of Doctrine of necessity in Contracts SUBMITTED TO : Dr. Visalakshi Vegesna Associate Professor (Law) Submitted by:- ROLL NO. 123 and 124

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Indian Contract Act Sections 65- 72

TRANSCRIPT

DR. RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY

LUCKNOW

Applicability and Legality of Doctrine

of necessity in Contracts SUBMITTED TO :

Dr. Visalakshi Vegesna

Associate Professor (Law) 

Submitted by:-

ROLL NO. 123 and 124

B.A. LL.B. (Hons.) 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.

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. Minor’s contract for necessaries

3. What are necessaries?

4. Minor’s 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 doesn’t 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 B’s property1

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

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.

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:-Govindram Gordhandas Seksaria 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.

In the case of Neha Bhasin 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 quasi-

contract arose under Section 70 making the defendants liable to pay from her services.

4. 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.

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

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.

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 B’s 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 B’s 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

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 infant’s 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

3Anson’s Law of Contract, 23rd Edition, (1971) p. 589.4G.M. Sen case Book on the Law of Contract, p. 205.5VishwaNath v. Shiam Krishna, 1936 All 819: 1936 ALJ 1120.6DawNyun v. MaungNyipu AIR 1938 Rang 359: 178 IC 680.

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. Minor’s 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.

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 infant’s means and station in life. It

must further be observed that as necessaries include everything necessary to maintain the infant

7AIR 1941 Mad 569: 53 LW 352: 1941 MWN 237: 198 IC 305.8Ryder 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.

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 infant’s 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 minor’s estate is not

binding on such estate. Money borrowed for its upkeep or its preservation binds the estate.

Expenses incurred for minor’s education, marriage of his sister, expenses incurred in funeral of

minor’s parents, expenses incurred for necessary litigation etc. have been held to be necessaries.

Expenses incurred for minor’s 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., sister’s 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

9Mahmood Ali v. Chinki, 52 All 381: 1930 All 128: 123 IC 827.

leased to a minor for the purpose of living and continuing his studies is for a necessity, suited to

the conditions of minor’s.

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. Minor’s 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 minor’s property was liable

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 minor’s litigation was necessary for the minor and not merely that it was spent

for the purpose of the minor.

10Tukkilal v. Kamal Chand, AIR 1940 Nag 327: ILR 1940 Nag 632: 193 IC 178.11Kidar v. Ajudhia, 185 PR 1883.

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 father’s 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.

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 minor’s 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,

12Nilkanth v. Chandra, 1922 Nag 247: 64 IC 851.13Call v. Ward, 4 Watts and Sergeant, 119; ref to in Jagon Ram Mahadeo, 36 Cal 768, 779.14Ryder v. Woombell, LR 3 Ex 90.

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 minor’s 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

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 minor’s estate is not

in fact used for his necessities or benefit. On the other hand, a person who lends money without

15Ford v. Fothergill, 1 Peaka 301, 3 RR 695; Jagon Ram v. Mahadeo, 36 Cal 768.16Sadasheo v. Shanker, AIR 1928 Nag 68.

such inquiries cannot thereafter have recourse to the minor’s 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 infant’s

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 infant’s necessities give him, cease when these necessities cease, and as nothing further is

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

17Jagon Ram v. Mahadeo, 36 Cal 768.18Umrao v. Banarsi, 1927 Lah 414: 101 IC 702.19Ramchandara v. Hari, 1936 Nag 12; see also AIR 1940 Mad 106.

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

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 purchase-

money--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

20(1917) 2 Pat. L.J. 627

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.

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 “Universal’s Digest of Cases on Law of Contract” 2002 Ed.Universal Law

Publishing Co.Pvt.Ltd

Padia,RG “Mulla Indian Contract and Specific Relief

Acts”ThirteenthEd.,LexisNexisButterworthsWadhwa,Nagpur

Dr.Kailash Rai,Contract –I Third edition,