Persons Disqualified by Law | Civil Law for Judiciary Exams PDF Download

Introduction

• According to the legal framework in India, there are specific categories of individuals who are not allowed to enter into contracts. These include alien enemies, convicts, insolvents, joint companies and corporations, as well as foreign sovereigns and ambassadors.
• On the other hand, individuals who have reached the legal age of majority and are of sound mind are considered capable of entering into contracts, unless any particular law disqualifies them. In essence, anyone meeting these criteria is considered legally competent to engage in contractual agreements.
• For example, let's consider a scenario where a person under the legal age of majority tries to enter into a contract. In such a case, the contract may not be legally binding due to the lack of competency based on age.

Who are The Persons Disqualified by Law?

• Definition of Alien Enemies:
  • An alien enemy refers to an individual from a country in conflict with India.
  • Contracts entered into with alien enemies during wartime are considered null and void.
  • Any agreement with an alien enemy requires prior approval from the Indian government.
• Validity of Contracts:
  • Contracts with alien friends, individuals from nations with friendly or neutral diplomatic ties with India, are legally recognized.
• Legal Disqualification:
  • Alien enemies are legally barred from executing agreements under Indian law.
• Judicial Perspective:
  • In the case of Feroza Begum and Ors. v. Dewan Daulat Rai Kapoor and Ors, it was emphasized that:
  • Section 83 of the Code of Civil Procedure delineates the rights of alien enemies and friends in India.
  • Alien enemies residing in India with government permission can litigate in competent courts, while those without such consent cannot.
  • Alien enemies residing in foreign countries are restricted from suing in Indian courts.

Convicts

• Convicts are individuals who have been sentenced by a competent court to death or life imprisonment, and they are legally restricted from entering into contracts during their period of serving the sentence.
• This restriction is lifted once the convict completes their sentence or receives a pardon.
• The disqualification for convicts to enter contracts was eliminated through the Criminal Justice Act of 1948.

Insolvents

• An individual is classified as insolvent when the total debt in their capital account exceeds the available cash on hand.
• Insolvents are restricted by law from certain activities until they are discharged. They can enter into specific contracts but are prohibited from selling their property, which is overseen by the official receiver.
• Post discharge, the insolvent individual regains their ability to enter into contracts, except concerning their property.
• Interpretation of "Property":
  • The term "property" in the context of an insolvent person refers to their personal belongings that they can freely dispose of.
• Trust Property:
  • Trust property owned by an insolvent is not considered their personal property according to the ruling in Banarasi Das v. Bhagat Ram.
• Insolvents are disqualified from holding certain positions such as magistrates, company directors, or local body members. However, they retain their contractual capacity except regarding their property.

Joint Companies and Corporations

• A company or corporation is a legal entity established by the law, with the ability to engage in contracts limited by its Memorandum of Association or specific legislative provisions.
• These entities can only enter into contracts related to their designated scope of activities and objectives, and not those of a personal nature.
• Individuals who act on behalf of the company in entering into contracts are considered representatives of the company rather than themselves.
• Conversely, they are prohibited from engaging in contracts that are purely personal in nature, as the law disqualifies them from doing so.

Foreign Sovereigns and Ambassadors

• Foreign sovereigns and ambassadors possess the ability to engage in contracts and can seek legal recourse in Indian courts to uphold contracts. However, they are immune to lawsuits in Indian courts, except under specific circumstances such as voluntary submission to the court or with the Central Government's approval.
• They are granted special privileges in legal proceedings and are typically deemed incapable of entering into contracts.
• Foreign ambassadors are individuals who are legally disqualified from entering into agreements.

Conclusion

• Certain individuals are legally incapable of entering into contracts under specific circumstances, rendering them incompetent for such agreements. This includes alien enemies, convicts, and insolvents who lack the capacity to contract.
• Joint companies and corporations are also restricted from contracting beyond the authority granted to them.
• Foreign sovereigns and ambassadors, however, have the ability to enter into contracts. Nevertheless, legal action cannot be taken against them in Indian courts without their voluntary submission or approval from the Central Government.
• These regulations are established to ensure that contracts are formed with individuals possessing the legal capability to fulfill their contractual obligations.