Vaikuntarama Pillai minor by Guardian, Muthammal vs Athimoolam Chettiar

Wallis, J.—This is a suit by the plaintiff on a mortgage executed by the 1st defendant during minority in favour of the third defendant who

transferred it to the 4th defendant who again transferred it to the plaintiff. The transfer by the 3rd to the 4th defendant was attested by the 1st

defendant after he had attained majority. Before the date of the attestation but after he attained majority the 1st ''defendant executed a settlement

transferring all his property to his mother and wife on behalf of his minor son stipulating only for maintenance for himself. The District Judge has

found that the settlement was intended to be operative, but that it was executed by the 1st defendant with intent to defeat and delay his creditors

and there is no ground for questioning these findings. But he has also found that the plaintiff was a person defrauded, defeated or delayed by the

settlement, so as to be entitled to set it aside u/s 53 of the Transfer of Property Act. From this decision an appeal has been preferred by the son of

the 2nd defendant. It has been contended before us that the 1st defendant at the date of the settlement was a debtor of the 3rd defendant for the

money advanced to him on mortgage during minority as he was bound to refund it. Where a minor has obtained money by misrepresenting his age,

that amounts to fraud and he may be made to refund it. but I think it is now settled that, in the absence of fraud, a refund cannot be ordered. This

would appear to have been the rule in England even before the Infants Relief Act of 1874 which makes contracts entered into by minors void by

statute as the Contract Act does in India. In England there is an express decision of the point by the Court of Appeal in Levene v. Brougham 25

TL.R. 265 and the earlier decision of the Court of Appeal, Ex parte Jones (1881) 18 Ch. D. 109 to which Sir George Jessel was a party is, to the

same effect. All the cases have been reviewed recently by Lush J. in Stocks v. Wilson (1913) 2 K. B. 235 where it is shown on an examination of

all the authorities that the ground, on which equity interferes to make a person of full age return money or property which, he obtained during

minority, is fraud. In that case as in the earlier case of Ex parte The Unity Joint Stock Mutual Banking Association (1858) 3 De G.J.S. C. 63 : 44

E.R. 1192 fraud was found and a return ordered. As regards Indian cases it seems sufficient to refer to the well-known decision in Mohori Bibee

v. Dharmodas Ghose ILR 30 C. 539 in which their Lordships held that minors'' contracts are void and not voidable and that Section 65 of the

Indian Contract Act has no application to them and in which they cited with approval the observations of Romer, L.J. in Thurstan v. Nottingham

Permanent Benefit Society (1909) 1 Ch. 1 ""a Court of equity cannot say that it is equitable to compel a person to pay any moneys in respect of a

transaction which, as against that person, the legislature has declared to be void"". That is to say in the absence of fraud, an infant is not estopped

from pleading minority in answer to a suit for the return of the money advanced to him during minority. This has also been expressly decided by the

Allahabad High Court in Kanhai Lal v. Balu Ram (1911) 8 A.L.J. 1058. The finding in the present case is that there was no fraud or

misrepresentation by the minor as to his age when he borrowed on a mortgage from the 3rd defendant, consequently he could not then have been

ordered to refund and therefore the 3rd defendant was not one of his creditors at the date of the settlement. Both the lower courts, however, have

held that this does not debar the plaintiff from setting aside the settlement. The District Munsif relies on the fact that the 1st defendant always

treated the 3rd defendant as a creditor, endorsed payments on the mortgage after he attained majority, attested its transfer to the 4th defendant,

and lastly admitted the plaintiff''s claim in this suit. The District Judge apparently takes the same view. Now as regards the present question, the

admission of the 1st defendant during the suit cannot give the plaintiff the right to set aside the settlement as against the 2nd defendant. It has not

been found, or contended before us, that the settlement was void on the ground that it was intended to defraud subsequent creditors as distinct

from creditors existing at the date, of the settlement, and in these circumstances it appears unnecessary to consider whether the plaintiff would be

entitled as a subsequent creditor by estoppel of the 1st defendant to avoid it. The plaintiff was not a creditor of the 1st defendant at the date of the

settlement. There is no doubt a dictum in Holmes v. Penney (1856) 3. K.&G. 90 : 69 E.R. 1035 that where a debtor makes a settlement in fraud

of his creditors and pays them off and a new set of creditors stand in their places the settlement would be void against them also, but this proceeds

upon the language of the statute of Elizabeth, which is for the protection of "" creditors or others,"" not "" creditors"" only, which words are not

reproduced in the Transfer of Property Act; and besides, the plaintiff in this case cannot be said to stand in the place of the creditors at the date of

the settlement. In these circumstances I think the plaintiff is not entitled to set aside the settlement and that the appeal must be allowed and the suit

as against the 2nd defendant and the plaint second schedule property is dismissed with costs throughout. The memo of objections is dismissed with

costs.

Sadasiva Aiyar, J.

I entirely agree. Even if the 1st defendant were estopped by some conduct of his from denying as against the 4th defendant that he (1st

defendant) owed money to the 3rd defendant on the mortgage deed, this would not create a real debt on the date when the estoppel arose.

Estoppel. only prevents a man from pleading the real state of facts but does not make the false state of facts which the Court has got to assume as

true (as between the estopped man and the man in whose favour the estoppel works) to become for all purposes a true state of facts. So far as the

2nd defendant was concerned, no such debt as he was bound to discharge by the obligation imposed under the Hindu Law on a Hindu son really

arose at any time even after the date of the settlement, by reason merely of his father''s becoming estopped by the said father''s conduct from

denying that he owed a debt to the 3rd defendant or to the 3rd defendant''s assignee (4th defendant). An estoppel cannot overrule a plain

provision of law (See Arumugam Chetti v. Doraisinga Tevar ILR (1911) M. 38. In this case, the plain statutory provision that a minor is

incompetent to incur a contractual debt cannot be overruled by an estoppel. The 4th defendant does not actually become a subsequent creditor or

a prior creditor, by reason of the estoppel, but the 1st defendant is estopped from denying that there was a prior debt due by him to the 3rd

defendant and that estoppel works in favour of the 4th defendant and against the 1st defendant. In this view, it is unnecessary to go into the

question whether a future creditor can get rid of a voidable but real transfer u/s 53 of Act IV of 1882, that is a a question on which I feel grave

doubts whether the current of authorities is really consistent and whether the observations in some of the decisions are sound and in consonance

with justice and convenience.