As per the Contract Act, 1872 it is clearly stated that for an agreement to become a contract, the parties must be br competent to contract, wherein age of majority is a condition for competency. A contract in the name of a minor cannot be held valid, simply because it is in the interest of the minor unless he or she is represented by his or her natural guardian or guardian appointed by the court.
In Raghava Chariar vs. Srinivasa Raghavachariar (1916) 40 Madras 308 and Thakur Das vs. Mt. Pulti, AIR 1924 Lah. 611, it was held that every contract with a minor is not necessarily void, and a contract for a minor’s benefit is enforceable and the validity of such a contract can be considered during trial.
However, these judgements are not good law in the light of the decision in the Supreme Court in Mathai Mathai vs. Joseph Mary Alias Mary Kutty Joseph and Ors (2015) 5 SCC 622 wherein it was held:
“18. … Many courts have held that a minor can be a mortgagee as it is transfer of property in the interest of the minor. We feel that this is an erroneous application of the law keeping in mind the decision of the Privy Council in Mohori Bibee case [Mohori Bibee v. Dharmodas Ghose, (1902-03) 30 IA 114 : ILR (1903) 30 Cal 539].
19. As per the Contract Act, 1872 it is clearly stated that for an agreement to become a contract, the parties must be competent to contract, wherein age of majority is a condition for competency. A deed of mortgage is a contract and we cannot hold that a mortgage in the name of a minor is valid, simply because it is in the interest of the minor unless she is represented by her natural guardian or guardian appointed by the court. The law cannot be read differently for a minor who is a mortgagor and a minor who is a mortgagee as there are rights and liabilities in respect of the immovable property would flow out of such a contract on both of them. Therefore, this Court has to hold that the
mortgage deed, Ext. A-1 is void ab initio in law and the appellant cannot claim any rights under it. Accordingly, the first part of first point is answered against the appellant.”
In Mathai Mathai vs. Joseph Mary Alias Marykutty Joseph (2015) 5 SCC 622, the Supreme Court opined that a 15 year old could not have entered into a valid contract in her own name and she ought to be represented either by her natural guardian or a guardian appointed by the Court in order to lend legal validity to the contract in question. The same view was taken by the Privy Council’s decision in Mohori Bibee vs. Dharmodas Ghose, ILR (1903) 30 Cal 539.
In KRISHNAVENI VERSUS M.A. SHAGUL HAMEED & ANR CIVIL APPEAL No. 002591/2024, the Supreme Court followed the decision in Mathai Mathai (supra) and held that the judgments in Raghava Chariar (supra) and Thakur Das (supra) are no longer good law.