Minors Can Reject Unauthorized Property Sales

Source : Indian Express  

Introduction 

In a landmark ruling that simplifies property rights protection for young adults, the Supreme Court has held that individuals can reject property sales made by their guardians without court approval through their conduct, not just formal lawsuits. The October 7 judgment by Justices Pankaj Mithal and Prasanna B. Varale in a Karnataka property dispute reaffirms a century-old legal principle while making it more accessible. This decision has significant implications for thousands of property transactions involving minors across India, clarifying long-standing confusion about the proper method of repudiation. 

What Does the Law Say About Minors' Property Rights? 

• Indian law provides robust protection for minors' property through three key statutes. Section 11 of the Indian Contract Act, 1872, establishes that minors lack contractual competence, rendering agreements made by them void ab initio. However, guardians may act on behalf of minors under specific conditions. 
• The Hindu Minority and Guardianship Act, 1956, under Section 8, permits natural guardians to manage a minor's property "for the benefit of the minor." Crucially, Section 8(2) prohibits guardians from selling, mortgaging, or leasing immovable property without prior court permission. If such a transfer occurs without judicial sanction, Section 8(3) makes it "voidable at the instance of the minor" upon attaining majority. 
• The Guardian and Wards Act, 1890, reinforces this protection under Section 29. Together, these provisions create a safety mechanism: unauthorized transactions aren't automatically void but remain voidable—giving the individual a choice to ratify or reject them after turning 18. 

What Were the Facts of the Davanagere Case? 

• The dispute involved two plots in Davanagere, Karnataka, purchased in 1971 by a father in his three minor sons' names. Acting as natural guardian, he subsequently sold both properties without court permission—Plot 56 to B.T. Jayadevamma and Plot 57 to K. Neelamma. 
• Upon attaining majority, the sons executed fresh sale deeds for both plots in favor of K.S. Shivappa, triggering ownership disputes. While Jayadevamma's case was settled in 2003 with courts upholding the sons' repudiation, Neelamma filed suit in 1997 claiming ownership of Plot 57. 
• The trial court dismissed Neelamma's claim, holding that the father's unauthorized sale was voidable and the sons had validly repudiated it through their subsequent sale. However, the appellate court and High Court reversed this decision, reasoning that formal litigation was necessary to set aside the guardian's sale deed, thereby recognizing Neelamma as the lawful owner. This prompted the appeal to the Supreme Court. 

How Did the Supreme Court Rule on Repudiation? 

• The apex court settled the central legal question: whether repudiation requires formal litigation or can be accomplished through conduct. The bench held that "a voidable transaction executed by the guardian of the minor can be repudiated and ignored by the minor within time on attaining majority either by instituting a suit for setting aside the voidable transaction or by repudiating the same by his unequivocal conduct." 
• The Court found that the sons' actions constituted clear repudiation. They executed fresh sale deeds within the three-year limitation period prescribed by the Limitation Act, 1963, their names remained in revenue records, and the original buyers never took possession. Once repudiated, the Court held, the earlier sale becomes "void from the beginning, and no rights pass to the buyer." 
• The judgment also addressed evidentiary issues, noting that Neelamma's failure to personally testify was fatal to her case. The Court emphasized that power-of-attorney holders cannot substitute for principals on matters within the principal's personal knowledge. 

Why Does This Ruling Matter for Property Transactions? 

• This ruling simplifies the process for adults seeking to challenge unauthorized property transactions from their minority. By recognizing conduct-based repudiation, the Court eliminates the mandatory requirement of costly, time-consuming litigation. However, actions must be unequivocal and within the statutory three-year limitation period. The judgment protects minors' property rights while providing certainty to property transactions, balancing individual rights with commercial practicality. 

What Makes a Contract with a Minor Void Ab Initio? 

• The Indian Contract Act 1872 does not explicitly define the term "minor," but the Indian Majority Act, 1875, establishes that the age of majority in India is 18 years. Critically, even being one day short of this age disqualifies a person from being a competent party to a contract. 
• In India, any agreement with a minor is considered void ab initio—meaning void from the very beginning. This differs from "voidable" transactions discussed in the Supreme Court ruling. A void contract is a formal agreement that is effectively illegitimate and unenforceable from the moment it is created, regardless of any subsequent actions. 
• The landmark case of Mohri Bibee v. Dhurmodas Ghose (1903) established the foundational principle when the Privy Council declared that "any contact by a minor or any minor's agreement is absolutely void." This means that unlike the voidable transactions by guardians discussed in the recent Supreme Court ruling, direct contracts made by minors themselves cannot be enforced under any circumstances. 

Can a Minor Ratify a Contract After Attaining Majority? 

• A crucial distinction exists between contracts made by minors themselves and property transactions made by their guardians. There is no provision for ratification of a minor's own contract under Indian law. If a person was a minor at the time of entering into a contract, that contract remains void even after the individual attains majority. 
• The minor, after becoming a major, cannot ratify or validate the contract retrospectively. Even if the now-adult person attempts to rectify or affirm the contract, it will not become valid. This principle is grounded in the legal reasoning that if a minor lacked the mental capacity to comprehend the implications of entering into a contract initially, they should not be given the authority to ratify it later, as this would effectively circumvent the protective provisions of the law. 
• This stands in contrast to the Supreme Court's ruling on property sales by guardians, where the now-adult individual has the choice to either accept or repudiate the transaction. 

Conclusion 

The Supreme Court's judgment represents a pragmatic approach to protecting minors' property rights without imposing unnecessary litigation burdens. By affirming that clear conduct can substitute for formal lawsuits, the Court has made justice more accessible while maintaining the integrity of property transactions. This ruling will serve as crucial precedent for countless property disputes involving unauthorized sales by guardians, ensuring that young adults can effectively vindicate their rights through either judicial proceedings or unequivocal actions within the prescribed limitation period.