Contract Entered by Guardian on Behalf of Minor Must Be for Minor’s Benefit: Punjab and Haryana High Court

High Court dismisses appeal for specific performance, emphasizing the need for guardian's contracts to be legally valid and beneficial to the minor.

The Punjab and Haryana High Court has dismissed an appeal for specific performance of a contract involving a minor’s property, emphasizing the legal principle that a guardian’s contract must be both legally valid and beneficial to the minor. The judgment, delivered by Justice Deepak Gupta, underscored that agreements entered by guardians on behalf of minors must meet stringent conditions to be enforceable.

In the case of Anil Kumar Mehta through his legal representatives and another vs. Sukhwinder Singh and another, the plaintiffs sought specific performance of an agreement to sell land, part of which was owned by a minor, Sukhwinder Singh. The agreement was executed on behalf of the minor by his mother and natural guardian, Ranjit Kaur. Despite the minor’s share being included in the agreement, the subsequent sale deed excluded this share. The plaintiffs filed a suit for specific performance, which was initially decreed in their favor by the trial court but was later overturned by the first appellate court.

The court emphasized two critical conditions for enforcing a guardian's contract on behalf of a minor: the guardian must be competent to bind the minor, and the contract must benefit the minor. "If either of these two conditions is not satisfied, the contract cannot be specifically enforced at all," the court stated, citing the principles established in the Shri Kakulam Subrahmanyam and another vs. Kurra Subba Rao and Sunder Singh and others vs. Jiwan Singh and others cases.

Section 20 of the Specific Relief Act 1963 and Sections 6, 8, and 12 of the Hindu Minority and Guardianship Act 1956 were pivotal in the court's decision. The court noted that a guardian cannot sell a minor’s undivided share in joint family property without appropriate court permission, which in this case was found lacking. "The mother of the minor was not competent to sell the share of the minor in the joint Hindu family property," Justice Gupta observed.

Justice Gupta pointed out that the proposed sale price of Rs.700 per biswa was significantly lower than the market value, which was Rs.4300 per biswa according to a subsequent agreement. "The proposed sale was not in the interest and benefit of the minor," he stated, emphasizing that courts must scrutinize whether the terms are favorable to the minor.

The court also found that the earnest money for the minor's share had already been adjusted in the sale of the remaining property, rendering the agreement unenforceable. "Once the entire earnest money stands adjusted towards the sale consideration of part of the property agreed to be sold, the agreement of sale will not survive in respect of the remaining part of the property," Justice Gupta explained.

Justice Deepak Gupta remarked, "The necessary condition is that contract in itself must be legally valid and capable of enforcement otherwise the Court’s discretion in granting or refusing its specific performance will not arise." He further noted, "The proposed sale was not in the interest and benefit of the minor-defendant and so rightly refused to enforce specific performance of the contract."

The Punjab and Haryana High Court’s decision reinforces the stringent requirements for enforcing contracts involving minors. By upholding the appellate court's findings, the judgment underscores the judiciary's commitment to protecting minors' interests in legal agreements. This decision is expected to influence future cases involving guardianship and minor's property, ensuring contracts are both legally valid and beneficial to minors.

Date of Decision: April 15, 2024

Anil Kumar Mehta through his LRs and another vs. Sukhwinder Singh and Another