Persons Disqualified by Law

Understanding the Legal Implications and Restrictions

Alien Enemies

An alien enemy is someone from a country at war with India. Contracts made with alien enemies during wartime are considered void, and such contracts cannot be made without prior approval from the Indian government. However, contracts with alien friends (from countries with a friendly or neutral status with India) are valid. Thus, alien enemies are disqualified by law from entering into agreements.

Case: Feroza Begum and Ors. v. Dewan Daulat Rai Kapoor and Ors

It was observed that under Section 83 of the Code of Civil Procedure, "Alien enemies residing in India with the permission of the Central Government, and alien friends, may sue in any Court otherwise competent to try the suit as if they were citizens of India. However, alien enemies residing in India without such permission or residing in a foreign country shall not sue in any such court."

Convicts

Individuals who have been sentenced to death or life imprisonment by a competent court are disqualified from entering into contracts while serving their sentences. However, once their sentence is completed or they are pardoned, this disqualification is lifted. This concept of disqualification for convicts was removed by the Criminal Justice Act of 1948.

Insolvents

An individual is considered insolvent if they cannot cover their debt balance with available cash. Insolvents are disqualified by law from entering into certain contracts. Before an order of discharge, an insolvent person can enter into specific contracts, such as incurring debts or purchasing property, but they cannot sell their property, which is under the control of the official receiver. After an order of discharge, they regain their contractual capacity except concerning their property.

Case: Vraj Kuwar Bai v. Kunjbiharilal Krishna Chandra

It was held that the term "property" refers to the personal property of an insolvent, which they can dispose of at will. In Banarasi Das v. Bhagat Ram, it was held that trust property held by an insolvent is not considered their property. Insolvents cannot serve as magistrates, directors of companies, or members of local bodies, but they retain their contractual capacity except with respect to their property.

Joint Companies and Corporations

A company or corporation, as an artificial person created by law, can only enter into contracts within the scope of its Memorandum of Association or special Act provisions. However, they can engage in contracts concerning only their personal nature. Thus, they are disqualified by law when contracting outside the powers conferred upon them.

Foreign Sovereigns and Ambassadors

Foreign sovereigns and ambassadors can enter into contracts and sue to enforce contracts in Indian courts. However, they cannot be sued in Indian courts unless they voluntarily submit themselves to the court or have approval from the Central Government. They are generally considered privileged and are ordinarily deemed incompetent to contract.

So, foreign ambassadors are also persons disqualified by law from entering into agreements.

Conclusion

Certain individuals are disqualified by law from entering into contracts under specific circumstances and are not competent to contract. This includes alien enemies, convicts, insolvents, joint companies, corporations, foreign sovereigns, and ambassadors. These rules ensure that contracts are entered into with individuals who have the legal capacity to fulfil their obligations.