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Minerva Films
BY: PRIYAMBADA
Ection 11 of the Indian Contract Act, 1872 provides as to who are competent to
contract and reads as follows:
Section 3 of the Majority Act, 1875 sets out the age of majority as eighteen years.
The minor lacks the capacity to contract. The reason being that the minors are
presumed to be naïve, inexperienced, and easily taken advantage of, hence some
protection is required. Contract, which obviously involves obligations on the part of
the parties to it, is one such instance.
In Devan Singh vs Minerva Films Ltd (1956), the Punjab High Court held that
there is no legal bar to a minor becoming a member of a company by
acquiring shares (by way of transfer) provided the shares are fully paid up
and no further obligation or liability is attached to them. In this case ,
transfer of shares had been held valid as it is a fully paid up shares and
there is no mention about who had signed the transfer deed form. Further ,
this case , deals with a doctrine of indoor management and has stressed
that a minor cannot be held for further obligation or liability is attached to
them. Similarly, in S. L. Bagree v. Britannia Industries Ltd — 1980, CLB
upheld transfer in favour of a minor but silent about who has to sign the
transfer deed in case of a transfer of shares.
As per Diwan Singh Vs Minerva Films Ltd., A minor can become a member
of a company by acquiring shares subject to the following conditions
- should be by way of transfer
- The shares are fully paid up
- No further liability is attached to the shares
Hence a minor can become a member only by way of secondary market
and not by primary market
Dewan singh hira singh
Minerva films ltd.
Minerva Ltd has received an application for transfer of 5,000 equity shares
of Rs 10 each fully paid-up in favour of one Mr Rehan. On scrutiny of the
application form it was found that Rehan is a minor.
Under the circumstances, the following issues are considered: