S. Basavaraj & Others v. Smt. V.N. Adilakashmamma — ILR [1998] KAR 2220
Section 12 ICA: capacity to contract and “unsound mind” — a clean, classroom-style brief with timeline, IRAC, mnemonics, and FAQs.
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Table of Contents
Quick Summary
The defendant promised to sell a small house to the plaintiff (25 June 1984). Later, he refused, saying he was of unsound mind and also alleged drunkenness. He had even executed a relinquishment deed to his minor children earlier that year. The trial court dismissed the suit, but the first appeal decreed specific performance. In the second appeal, the High Court held that the defence under Section 12, ICA was not made out. Appeal dismissed.
Issues
- Has the defendant shown entitlement to avoid the contract under Section 12 ICA (unsound mind)?
- If capacity is not disproved, is the plaintiff entitled to specific performance?
Rules
Section 12, Indian Contract Act
One may be generally unsound yet still contract during intervals of sound mind, if at the time they can understand the contract and judge its effects.
Specific Performance
Granted when a valid contract exists and equitable grounds support enforcing the promised transfer.
Facts (Timeline)
Arguments
Appellant (Defendant)
- Was under treatment for mental illness (1983–1987); lacked capacity at the time of agreement.
- Alleges drunkenness at the bar when signature was taken.
- Seeks protection under Section 12 ICA to avoid the contract.
Respondent (Plaintiff)
- Valid agreement to sell; advances paid; defendant defaulted.
- Treatment history does not prove incapacity at the time of contracting.
- Entitled to specific performance.
Judgment
Held: Appeal failed; dismissed. The defendant did not establish that he fell under Section 12 ICA at the time of the contract. The decree for specific performance stands.
Key point: Mere history of treatment or intoxication claims are insufficient without proof of incapacity when the agreement was made.
Ratio Decidendi
To avoid a contract on grounds of unsound mind, the party must show they lacked capacity at the time of contracting. A person treated for mental illness may still contract during lucid intervals. On facts, capacity was not disproved.
Why It Matters
- Clarifies the Section 12 ICA test: capacity is judged at the time of agreement.
- Prevents blanket avoidance of contracts based on general medical history alone.
- Guides suits for specific performance where capacity is disputed.
Key Takeaways
- Capacity is time-specific: prove incapacity when the contract was made.
- Lucid intervals count: contracts then are valid.
- Specific performance follows when a valid agreement exists and equities favour enforcement.
Mnemonic + 3-Step Hook
Mnemonic: “Time, Thought, Then Tie.”
- Time: Check the exact time of the agreement.
- Thought: Could the person understand and judge it?
- Then Tie: If yes, the bargain binds (specific performance possible).
IRAC Outline
Issue
Did the defendant lack capacity under Section 12 ICA so as to avoid the sale agreement?
Rule
Capacity depends on understanding and judgment at the time of contracting; lucid intervals validate contracts.
Application
Evidence did not prove incapacity at the material time; intoxication claim unsupported.
Conclusion
Defence fails; specific performance rightly decreed. Second appeal dismissed.
Glossary
- Unsound Mind
- State where a person cannot understand a contract or judge its effect.
- Lucid Interval
- A period of soundness during which a person can validly contract.
- Specific Performance
- Court order compelling a party to perform their contract promise.
FAQs
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