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

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 quasicontract 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.
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.

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

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
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
3Ansons 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.
7AIR 1941 Mad 569: 53 LW 352: 1941 MWN 237: 198 IC 305.

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.

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
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.

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.
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

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

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
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.
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 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.

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.

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.

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
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.

14Ryder v. Woombell, LR 3 Ex 90.

15Ford v. Fothergill, 1 Peaka 301, 3 RR 695; Jagon Ram v. Mahadeo, 36 Cal
768.
16Sadasheo v. Shanker, AIR 1928 Nag 68.

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
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

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.

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
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

ActsThirteenthEd.,LexisNexisButterworthsWadhwa,Nagpur
Dr.Kailash Rai,Contract I Third edition,

Indian

Contract

and

Specific

Relief