This Article has been written by Abhinav Khadikar from NMIMS Kirit P Mehta School of Law, Mumbai

Table of Contents

Introduction:

Leslie vs Sheill is a case law from the United Kingdom in 1914. For years, there were a few case laws where when contracts were being made with minors, certain benefits were being transferred to them (many such cases involved the minor representing themselves as a major).

However, these are case laws where suits were filed to hold the contract void or voidable. If you take the Indian context, before the judgement in Mohiri Bibi vs Dharmodas Ghose, courts were holding said contracts to be voidable rather than void. Such decisions always led to claims for restitution by the party who has transferred benefits to the minor.

Often, they were denied restitution by the courts and faced losses. Sections 64 and 65 of the Indian Contract Act, 1872 (hereinafter “ICA”) are a sort of reference point that affirms the existence of doctrine of restitution. Regardless, our system has often taken the help of English case laws for disputes related to contracts and Leslie vs Sheill is one of them. The article is a case summary of said case with added commentary from a law student’s perspective.

A Quick Brief:

It is necessary to know what certain concepts are starting with the fact that minors are not considered to be competent to contract. Hence, they cannot enter any contracts because for a contract to be legitimate, there is a requirement of an agreement between parties competent to contract.

Doctrine of restitution is essentially restoring the position of victim to the original position they were present in before the contract and disallowing unjust enrichment of the other party i.e. disallowing them from making wrongful gains which are not permitted as per the law. This doctrine is present in various ways in various laws but when it comes to contract law in India, section 64 and 65 of the ICA come to mind.

Section 64 of the ICA, if a contract is voidable at the option of a party and that party rescinds the contract, then any benefit received from the other party must be restored.

Basically, if Mr. A received 20 rupees from Ms. X, and then decided to rescind the contract, then he must pay 20 rupees back to Ms. X provided that the contract was voidable at the option of Mr. A. Section 65 is similar but it is with regards to a contract becoming void or an agreement being discovered to be void. In such a case, any person who receives benefit under such agreement or contract must restore the benefit or make compensation to the person from whom they received the benefit.

A Quasi-contract is basically a legal obligation recognised by courts to prevent unjust enrichment. It is also known as a constructive contract or a contract implied by law. It is not a true contract and due to this, courts may impose an obligation without any regards to the intents of the parties.

Facts:

The defendant is a minor who has induced the plaintiffs in lending him money by misrepresenting his age as a major. He has done what you would expect from any minor. He has spent the money and the money is not traceable. The plaintiffs have claimed that they are entitled to damages due to fraudulent misrepresentation and recovery of money by deeming the contract to be a quasi-contract.

They have not even argued about the legitimacy of the contract being a traditional legal contract but have directly accepted that a traditional legal contract does not exist. A quasi-contract would create a legal obligation on the defendant and money can be recovered. The English court of appeal were left to ponder whether the plaintiffs’ claims are acceptable.

Judgement:

Lord Sumner in this case gave importance to equitable doctrine of restitution (also known as doctrine of equitable restitution).

As per this doctrine, it was held that if a minor has fraudulently obtained goods or properties, he can be compelled to restore said goods or properties provided he has them in his possession. This is the equitable doctrine of restitution. Considering this doctrine, it was held that the defendant cannot be made to pay the loan back. This is because –

The money has already been spent and hence, it is not in the possession of the defendant.
There is no way to trace the money or restore the thing attained by the defendant through fraud.
Restitution stops when repayment begins. If the minor is made to pay an equivalent sum from his current or future resources, then it would amount to enforcing the contract.
No contract can be enforced because a minor is considered incompetent to contract and any contractual obligation on him is void in law. Due to the same reason, a quasi-contract does not exist.

Analysis:

The question is where does this case leave us. At this point of the article, it is clear that the Indian context is what the article wishes to focus upon.

If you go on Manupatra which is one of the leading legal search engines and just search for “Leslie vs Sheill,” you will find 38 total case laws that have cited this judgement. Out of this, a few are not even Indian judgements.

Only one is a Supreme Court judgement of The Jumma Masjid, Mercara Vs. Kodimaniandra Deviah and in this judgement, the case law is a mere reference and it was declared to barely have had any relevance to the case at hand.

Before you wonder why you are reading this case law, it helped in answering the question whether this doctrine is applicable in India or not in the case of Khan Gul vs Lakha Singh.

Long story short, it this case, it was held that equitable doctrine of restitution can very well be used. The Leslie vs Sheill case had immense persuasive value. In the Indian context, it is applicable. However, it is to be noted that the Khan Gul case is a judgement of Lahore High Court.

Decisions in high courts only have persuasive value and have no effect on other high courts. These decisions are not precedents or law under article 141 of the Indian Constitution which puts supreme court judgements on a higher pedestal and mandates that the law declared by the supreme court is binding on all courts.

This is an issue because as of today, there is no law to apply the doctrine. Even if there was a law, it is still a discretionary power but it makes it easier for the courts to apply a doctrine explicitly allowed by law.

The current stance is that the doctrine could be applicable in India. Because of this, there is hesitancy in applying section 65 of ICA to order restoration of benefit. There was a 13^th Law commission report that specifically suggested to apply section 65 in cases where the minor has fraudulently represented his age as a major.

However, it should not be applied in cases where agreements have been with persons incompetent to contract and the party entering into such agreement with such persons have full knowledge of their incompetency to contract.

However, this has not been applied yet to the ICA so there is a question of whether minors could be able to commit fraud and get to keep their unjust enrichment. The jury is still out on that one with various opinions leaning towards the application of section 65 in cases where minors have achieved wrongful gains through misrepresentation of age.

Comments

Situations of minors fraudulently inducing parties to attain wrongful gains does not seem to be a big or even a rising issue in our nation. Again, if you go on manupatra and now, if you type “Khan Gul vs Lakha Singh,” you will find 39 Indian case laws that have cited this judgement in 96 years. Clearly, there is not a rise in minors waking up and thinking “Lets commit age fraud and acquire a loan.”

When it comes to age fraud, India has a bigger problem of age fraud in sports rather than age fraud to commit fraud. Regardless, there has not been much pressure on any single government to make a change to section 65 as suggested by the 13^th Law Commission Report. There is no urgency. The focus of the current government was highly on the new criminal bills and the telecommunications bill.

Contract laws have not been the centre of attention. Application of equitable doctrine of restitution is virtually a non-issue as the cases for which the doctrine would be applicable have been few and far in between.

The number of cases that reach the high courts is incredibly low and the current law seems to be good enough. You do feel sympathy for the few parties that have been victim of this fraud and this fraud is likely to survive for a long time unless the legislators do end up implementing the suggestion given in 13^th Law Commission Report soon.