Gujarat High Court
Jaykant Harkishandas Shah vs Durgashanker Valji Pandya on 3 December, 1968
Equivalent citations: (1970)11GLR178, AIR 1970 GUJARAT 106
JUDGMENT B.R. Sompura, J.
1. Original defendant No. 1 has filed the present appeal against the decree passed by the learned District Judge, Rajkot, in Civil Appeal No. 21 of 1965 by which he confirmed the decree passed by the learned Joint Civil Judge, Junior Division, Rajkot, ordering him to pay the plaintiff a sum of Rs. 4810-25 as rent.
2. A few facts, out of which the present litigation has arisen, may be stated: The plaintiff-respondent owns the premises known as 'Pandya Nivas' situated in Street No. 3, Jagnath Plot, Rajkot. On 14th April, 1953, the same were taken on lease at an annual rent of Rs. 3251/- by one Nagindas Nagardas Shah as the guardian of Jaikant Harkishandas for running Jaikant Dinner Club therein. The lease deed was for a fixed period of one year and was a registered one. After the expiration of one year, the premises were continued to be occupied by the tenant and as some rent amounting to Rs. 3720-50 fell due upto 23-4-59 the same was demanded. As it was not paid, a suit was filed on 2nd November 1959, claiming Rs. 4813-04 out of which a amount of Rs. 4799-50 was for rent and the remaining amount for notice charges, etc. In the suit, guardian Nagindas Nagardas Shah was joined as guardian of minor Jaykant Harkishandas Shah. No separate relief was claimed personally against guardian Nagindas Nagardas Shah. In his capacity as a guardian, Nagindas Shah had filed his written statement at Ex. 9. While the suit was pending, an affidavit was filed by him on 26th April, 1960, stating that minor Jaykant was born on 20th October 1940 and that he has attained majority before the date on which the suit was filed. Under the circumstances, the plaintiff had filed an application to join Jaykant as major and the name of guardian Nagindas was deleted. A summons was duly served or Jaykant but he had remained absent, on the date fixed for hearing. Under the circumstances, an ex parte decree was passed against him. Subsequently, he filed an application to set aside that decree. In that application his deposition was recorded, the certified copy of which is produced in this case at Ex. 94. Thereafter, Nagindas Nagardas was also joined as defendant No. 2.
3. The defendants contested the claim of the plaintiff, Jaykant Harkishandas, who will hereinafter be referred to as defendant No. 1 denied that the suit premises were leased to him or that he was holding over after the expiry of the period of rent note. He denied that he was running Jaykant Dinner Club therein. He denied that defendant No. 2 was his de facto guardian and contended that the rent-note executed by defendant No. 2 was not binding on him. It was his case that the business was run by defendant No. 2 in partnership with his wife Vimla and thereafter defendant No. 2 has transferred or assigned the same to others. Defendant No. 2, in his written statement contended that he was running the business in partnership with his wife Vimla in the name and style of Jaykant Dinner Club. He adopted the other contentions raised by defendant No. 1.
4. The learned Civil Judge held that defendant No. 2 was a de facto guardian of defendant No. 1 and the transactions entered into by defendant No. 2 are binding on defendant No. 1. So far as defendant No. 2 is concerned, he held that the suit is barred against him as he was joined after three years of the accrual of the cause of action. In the result, he passed a decree against defendant No. 1 for the sum of Rs. 4810-25 p. The suit against defendant No. 2 was dismissed. From that decree defendant No. 1 had filed an appeal in the Court of the learned District Judge at Rajkot, who confirmed the decision of the learned trial Judge. The learned Judge, after considering various provisions of the Contract Act, 1872, and Transfer of Property Act, 1882, took a view that even though the minor is not competent to enter into an agreement, there is nothing in law which prevents him from being a transferee under the Transfer of Property Act. He observed: "If a sale or a mortgage in favour of the minor is valid, it is difficult to see why lease should be placed in a different category. The obligations to pay rent, perform covenants are obligations not arising out of the contract but originating in the transfer and arising out of the transfer of property. "He also took a view that the minor occupied the leased premises under the agreement of lease, and even after he attained majority he never avoided the agreement till the present suit was filed. He held that the minor had ratified the agreement entered into by defendant No. 2 on his behalf with the plaintiff. In the result, he dismissed the appeal with costs.
5. Mr. Chinoy, appearing on behalf of defendant No. 1, raised the following points for my consideration:
(1) Defendant No. 2 was not a de facto guardian of defendant No. 1 and the learned Judge has erred in relying upon the alleged admissions of defendant No. 1 which were never made by him in his cross-examination.
(2) Even if it is assumed that defendant No. 2 was a de facto guardian of defendant No. 1, he cannot impose liability upon defendant No. 1 by executing a lease deed in the name and on behalf of the minor. Such lease, if executed, would be null and void.
(3) De facto guardian has no right to start a new business on behalf of the minor and the minor is not bound if any liability is incurred in running such business.
(4) The lease was for one year only and thereafter the holding over by the de facto guardian is not the holding over by the guardian on behalf of the minor.
(5) The learned Judge was in error when he observed that the minor occupied the leased premises under the agreement of lease and even after he attained majority he never avoided that agreement till the present suit was filed and in holding that he ratified the agreement entered into by defendant No. 2.
6. The first point of Mr. Chinoy cannot be upheld. It is true that father and mother of defendant No. 1, who was minor, are alive. In the trial Court, it was conceded on behalf of defendant No. 1 that defendant No. 2 was de facto guardian of defendant No. 1 during the latter's minority and that the lodging and boarding house was of the ownership of defendant No. 1. Before the learned District Judge, no reliance was placed on any such concession. On scrutiny of the evidence, the learned Judge found that defendant No. 1 admitted in his cross-examination that the business running in the name of Jaykant Dinner Club was run by defendant No. 2 and he was de facto guardian of defendant No. 1. Defendant No. 2 is the maternal uncle of defendant No. 1. He also observed that it is in evidence that defendant No. 1 was residing with defendant No. 2. So far as the observa tion that defendant No. 2 is a maternal uncle of defendant No. 1 and that the business runing in the name of Jaykant Dinner Club was run by defendant No. 2 and that he was de facto guardian of defendant No. 1, the learned Judge is right. Defendant No. 2 is the maternal uncle of defendant No. 1. He also observed that it is in evidence that defendant No. 1 was residing with defendant No. 2 but he is not correct in this observation. So far as the observations that defendant No. 2 is a maternal uncle of defendant No. 1 and that the business in the name of Jaykant Dinner Club was run by defendant No. 2 are concerned, there is no dispute. Defendant No. 1 has not admitted in his cross examination that defendant No. 2 was his de facto guardian. There is nothing in the evidence to show that defendant No. 1 was residing with defendant No. 2. It is no doubt true that Naran Khimji examined on behalf of the plaintiff at Ex. 63 has stated that defendant No. 2 is the maternal uncle of defendant No. 1 with whom defendant No. 2 was residing. But in cross-examination in para 9 he has stated that he had no personal knowledge that defendant No. 1 was residing with defendant No. 2. Mr. Shah on behalf of the respondent plaintiff could not show anything from the evidence which would support the observation of the learned Judge that defendant No. 1 was residing with defendant No. 2. However, Mr. Shah relied upon the admissions made by defendant No. 1 in the deposition given by him in the application filed for setting aside the ex parte decree. A certified copy of that deposition is produced in the case at Ex. 94. There the defendant No. 1 has admitted that defendant No. 2 is his maternal uncle and during his minority he was working as his guardian. He has also admitted that he was Lodging and Boarding in Pandya Nivas which are the suit premises. He further admitted that Jaykant Dinner Club was of his ownership, which was being run in Pandya Nivas and that defendant No. 2 was working on his behalf. From these admissions made by defendant No. 1 in Ex. 94, it is clear that he has admitted that defendant No. 2 was working as his guardian and that the ownership of the Jaykant Dinner Club was his. Parents of defendant No. 1 were alive and yet as defendant No. 2 who was the maternal uncle was working as his guardian, it can well be said that defendant No. 2 was de facto guardian of defendant No. 1 and that the learned Judge was right in coming to that conclusion.
7. It may be stated that prior to this, one Jaykant Dinner Club was run by defendant No. 2 in the premises near Prahlad Cinema in Rajkot. Those premises were taken on lease by defendant No. 2 from Shah Navranglal Karsanji by a rent-note dated 27th November 1951. The lessees shown in that rent-note were Jaykant H. Shah and Shah Nagindas Nagardas i.e. defendant No. 2. But defendant No. 2 had signed in this lease deed on his own behalf as well as on Jaykant H. Shah. It is not stated in this rent-note that the lease of these premises had been taken by defendant No. 2 as the guardian of Jaykant Harkishandas, presumbly Jaykant H. Shah, defendant No. 1 in the present suit. There is nothing on the record to show that this business of Jaykant Dinner Club run near Prahlad Talkies was of the ownership of the minor defendant No. 1 or that the same was transferred to the suit premises. Mr. Shah could not show anything on the record to connect this business near Prahlad Talkies with the business run in the suit premises.
8. It is the contention of Mr. Chinoy that a de facto guardian cannot impose liability by executing a lease-deed on behalf of the minor and if such lease-deed is executed the same would be null and void and that the de facto guardian has no right to start a new business on behalf of the minor and the minor is not bound if any liability is incurred for any such business. He relied upon a Privy Council decision in Mohori Bibee v. Dharmodas 5 Bom. L.R. 421, where their Lordships held that a contract entered into with an infant is not voidable but void and the infant is not under any obligation to repay the money that he received under the contract. This decision was considered by the Bombay High Court in Vijayakumar Motilal v. New Zealand Insurance Co. Ltd. , where Desai J. after considering the decision of the Privy Council in Mohori Bibee's case observed:
The proposition laid down by their Lordships of the Privy Council being in general terms would have led to startling results if very strictly applied. For in that case instead of guarding the interest of minors over whom the law throws its aegis of protection, it would have done incalculable harm to their rights and caused much hardship. Pushed to a logical conclusion the Privy Council decision would have made it impossible for a minor to get benefit under or enforce any contract entered into by him when the consideration had been wholly received by the other contracting party. But no such difficult position has arisen, since the Courts in India, have, as a rule, in effect, confined the application of the Privy Council ruling only to cases where a minor is charged with obligations and the other contracting party seeks to enforce those obligations against the minor.
Under the circumstances, where the minor is being charged with obligations by the other contracting party, the dictum laid down by the Privy Council in Mohori Bibee 's case that a contract entered into with an infant is not voidable but void will apply. Regarding the position of a de facto guardian, in a Full Bench decision of the Bombay High Court in Tulsidas Jesingbhai Parikh v. Raisingji Fulabhai Vaghela 34 Bom. L.R. 1483, Chief Justice Beaumont at p. 1493 observed as under:
Dealing with the matter as one of principle I apprehend that if a person claims the right to sell the property of another, he must establish his title so to do. In many cases the right to deal with the property of another may arise from the legal relationship between the parties. But it is certainly strange to suggest that such a power can be acquired by a relationship which has no legal sanction. A so called guardian de facto is not a guardian at all. He is merely a person who has assumed without authority to act as guardian, and it is a strong thing to hold that by such assumption he has acquired the right to deal with the minor's immovable property.
In that case the Full Bench held that under the Hindu Law a de facto guardian of a minor can validly sell the property of the minor to a third person for legal necessity. After referring to the above case, Divatia J, in MalkarjunAnnarao Gambhire v. Sanibai Shivyogi 45 Bom. L.R. 259 at p. 265 Divatia J, observed:
In the case of a person who is not a manager but a de facto guardian it has been held by a Full Bench of our High Court in Tulsidas v. Vaghela Raisingji 34 B.L.R. 1483 that such guardian can validly sell the minor's property only for his benefit or legal necessity. It would therefore be void if no legal necessity was proved. It is thus quite clear that if such alienation is made either by a manager of a Hindu family or a de facto guardian of the minor's interest in the property, it is not voidable but is void in its inception. If the alienation is made by a natural guardian or a guardian appointed by the Court then only it is required to be avoided within three years after attaining majority.
Again the question regarding the alienation by a de facto guardian had come up for consideration before a Division Bench of the Bombay High Court in Tattya Mohyaji Dhomse v. Rabha Dadaji Dhomse 55 Bom. L.R. 40. After referring to the observations made by Mr. Justice Divatia in Malkarjun's case, Their Lordships observed at p. 46 as under:
Apart from authorities, it seems to us that an alienation by a de facto guardian of the minor's property without justifying necessity must be held to be void ab initio, as has been held by Mr. Justice Divatia in Malkarjun Annarao v. Sarubai Shivyogi 45 B.L.R. 259.
8. Under the circumstances, it is clear that a de facto guardian cannot alienate the property of a minor without legal necessity. In the present case, it is clear from the evidence that the business started in the suit premises in the name and style of Jaykant Dinner Club was a new business. In the case of Benares Bank Ltd. v. Hari Narain 34 Bom. L.R. 1079, the Privy Council held that a manager of a joint Hindu family has no power to impose upon a minor member of the family the risk and liability of a new business started by him and that it makes no difference that the manager is the father of the minor. Under the circumstances, it is clear that a de facto guardian of a minor cannot start a new business on behalf of the minor, which would impose liability on the minor. Hence he cannot enter into a lease for starting a new business on behalf of the minor, by which the liability to pay the rent would be incurred on behalf of the minor. It is no doubt true that the above decisions refer to alienations of immovable properties on behalf of minors by de facto guardians, but the same principle would equally apply where the de facto guardian enters into a contract on behalf of a minor by which the liability of the minor is created and that the act of the de facto guardian is without any legal necessity.
9. Mr. Shah supported the reasoning of the learned District Judge. He relied upon Sections 6 and 7 of the Transfer of Property Act, 1882. According to Section 6(h) of T.P. Act no transfer can be made to a person legally disqualified to be transferee. Section 7 of the said Act provides that every person competent to contract and entitled to transferable property, or authorised to dispose of transferable property not his own, is compe tent to transfer such property either wholly or in part. There is nothing in the Transfer of Property Act according to which it can be said that a minor is disqualified to be a transferee. There is no question of applica tion of Section 7 because in the case under appeal the minor is not the transferor. Section 11 of the Indian Contract Act, 1872, would not come in the way of transfer of property in favour of the minor. But when a lease is created, it is not the transfer of immovable property or interest therein simpliciter in favour of a minor. The same is coupled with an obligation on the part of the minor to pay stipulated rent, and when obligation is created against a minor by such transfer, one has to consider whether the minor is bound by such transfer. Ordinarily, in a gift or other transfer of property in favour of a minor there is no reciprocal obligation cast on the minor, but in a lease reciprocal obligation is cast on the lessee (minor) to perform several obligations as mentioned in Section 108-B of the Transfer of Property Act. In this case, the lease-deed dated 4th April, 1953, is produced at Ex. 26. The same provides for a yearly rent and the time limit fixed is one year. The document is signed both by the lessor and the lessee and defendant No. 2 has signed therein as a guardian on behalf of defendant No. 1. By a lease deed, transfer of interest in the immovable property is created in favour of the lessee. But that transfer of interest is not similar to that where property is transferred to a minor by gift or otherwise. Here, by transfer of interest, an obligation is cast upon the lessee to observe and perform several covenants entered into by the parties. Under the circumstances, for the creation of a lease an agreement between two parties is necessary and for entering into that agreement there is a bar of Section 11 of the Indian Contract Act, according to which all agreements are contracts if they are made by free consent of the parties competent to contract for a lawful consideration and with lawful object and not expressed or declared to be void. In the present appeal, we are concerned with an act directly of a minor but of a de facto guardian on behalf of a minor. Under the circumstances, in cases of lease even if the property may be transferred to a minor, it is clear that the de facto guardian has no authority to create obligations to bind the estate of a minor by acts which are not for necessity.
10. Mr. Shah, then submitted that the period for which rent is claimed is after the expiration of one year, and according to him, the provisions of Section 116 of the Transfer of Property Act would apply. He submitted that after the expiration of time, the plaintiff had accepted the rent and the lessee had continued in the possession and so the lease is renewed either from year to year or from month to month and now the possession of the defendant No. 1 is not by virtue of any agreement entered into by the de facto guardian but by the operation of the statute. According to him even if the original act of the de facto guardian is void ab initio, then no statutory liability under Section 115 or Section 116 read with Section 106 of the Transfer of Property Act, would arise. It is not shown that after the expiration of original lease, the minor was in occupation of the suit premises. It may be noted that there is no evidence to show that defendant No. 1 after attaining majority occupied the suit premises or that he at any time purchased articles for running the Jaykant Dinner Club or that he ever went and paid rent to the landlord. There is no evidence to show that defendant No. 1 during his minority or after attaining majority was an active participant in the management of the club or that he pocketed any money out of the income of that club. But Mr. Shah relied upon the admission made by defendant No. 1 in his deposition Ex. 94, which was given by him in the proceedings for setting aside the ex parte decree passed against him. In that deposition he had admitted: "I was the owner of Jaykant Dinner Club". But that may be his impression, because defendant No. 2 had executed the lease-deed, Ex. 26, in the name and style of Jaykant Dinner Club. But in the absence of any evidence, which would go to show that he was in fact the owner or that he occupied the suit premises after obtaining majority or that he took part in the management or received any income, it cannot be said that he was statutorily liable under Section 106 read with Section 110 of the Transfer of Property Act as urged by Mr. Shah. The observations of the learned Judge that the minor occupied the leased premises under the agreement of lease are not correct, and Mr. Shah could not support these observations by any evidence. He relied on the above-mentioned admission of defendant No. 1, according to which, under the circumstances mentioned above, it cannot be said that he occupied the leased premises under the agreement of lease. The agreement of lease entered into by defendant No. 2 on behalf of defendant No. 1 is void ab initio and the same does not require to be avoided. Mr. Shah could not show any evidence on the record which would go to show that defendant No. 1 had ratified the agreement after attaining the majority. Under the circumstances, the finding of the learned Judge that defendant No. 1 ratified the agreement after attaining the majority and therefore he is liable cannot be upheld.
11. Lastly, Mr. Shah relied upon Sections 65 and 70 of the Indian Contract Act, 1872. According to Section 65, when the 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 for whom he received it. According to Section 70, where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other persons 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. He contended that defendant No. 1 has enjoyed the benefit or received advantage of the lease and the possession of the demised premises, and so he is bound to pay compensation for it. But as stated earlier, there is no evidence to show that he ever occupied the suit premises or took part in the running of the Jaykant Dinner Club or pocketed any amount out of the income of the club. The admission of defendant No. 1 that he was the owner of the Jaykant Club would not mean that he had received any advantage or enjoyed any benefit out of the agreement of lease. The de facto guardian has no authority to start a new business on behalf of the minor or to enter into an agreement for that purpose and create liability against the interest of the minor. The transaction entered into by defendant No. 2 is null and void and is not binding on defendant No. 1. Under the circumstances, this contention of Mr. Shah requires to be rejected. Defendant No. 1 is not bound by any agreement entered into by his de facto guardian, defendant No. 2, by which any liability of defendant No. 1 is created for starting a new business in the suit premises. Hence defendant No. 1 cannot be made liable for the claim of the plaintiff, and the suit of the plaintiff requires to be dismissed.
12. In the result, the appeal is allowed. The decree passed by the learned District Judge confirming the decree of the learned trial Judge is set aside. The suit of the plaintiff is dismissed. Looking to the circumstances of the case, there shall be no order as to costs.
Mr. Shah requests for a certificate for filing a Letters Patent Appeal under Clause 15 of the Letters Patent. Certificate is granted.