Solved Problem (Section 11 of Indian Contract Act)

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Question

‘A’ during his minority takes a loan of Rs. 20,000/- from ‘B’ and executes a pronote in favour of ‘B’. When ‘A’ becomes major, he writes another pronote in favour of ‘B’ in the place of old pronote, but fails to pay the debt. ‘B’ files suit against A’ for recovery of said amount on the basis of new pronote. Will ‘B’ succeed?

Facts of the case

A during his minority takes a loan of 20,000 from B and executes a pronote in favour of B. When A becomes major, he writes another pronote in favour of B in the place of old pronote, but fails to pay the debt. B files suit against A for recovery of said amount on the basis of new pronote.

Issues

Whether the debt made by a minor is valid?
Whether the debt made during minority can be ratified on attaining majority?

Law involved

Section 11 of ICA clearly states, who shall be competent to contract. It provides that every person is competent to contract who is of age of majority according to the law to which he is subject, who is of sound mind and who is not disqualified from contracting by any law to which he is subject.
Section 25 An agreement without consideration is void.
Section 4 of Negotiable instrument Act 1881 defines that a promissory note is an instrument in writing containing an unconditional undertaking,signed by the maker to pay a certain sum of money to, or to the order of, a certain person or to the bearer of the instrument.
Section 10 of Indian Contract Act requires that parties must be competent to contract. All agreements are contract if they are made by free consent, parties must be competent to contract, for lawful consideration and with lawful object and not hereby expressly declared to be void.

Reasoning

In the case on hand, the pronote was executed and loan was taken by someone who has not attained the age of majority.i.e., a minor. As per section 11 of the ICA,1872, a minor’s agreement is void ab initio. Also, the classic decision of Mohiri Bibiee v.Dharmadas Ghosh upholds that a minor cannot be bound himself liable..
In UK Laws, a minor can ratify the agreements he has entered upon attaining majority. But the concept of ratification of minor’s agreement is not adopted in India as such. It was held in the Ramaswami Pandia Thalavar v Anthappa Chettiar, ((1906) 16 Mad LJ 224), the minor did not give any consideration while taking the loan, and when he becomes major, he wrote another pronote in favour of B, but he did not give any fresh consideration.It neither falls under any exceptions mentioned in section 25 nor any exceptions to a minor such as minor can be an agent, beneficiary, supply of necessaries etc. Hence, the person gave the promissory note in satisfaction of one executed by him for money borrowed when he was a minor. The court held that the claim thereunder couldn’t be enforced because there was no fresh consideration

Conclusion

In the light of the facts stated, issues analysed, precedents cited, it was clear that, in this case, the person who became major cannot ratify the loan he took during the minority by giving a pronote without fresh consideration. Mr B can never succeed in this case.

For more details read

Pollock and Mulla’s Laws of Contract

https://indiankanoon.org/doc/1971559/

https://indiankanoon.org/doc/820475/