Accounts of Minors
person who has not completed 18 years of age is a minor. If a guardian of his
person or property is appointed by the Court before he completes 18th year, he remains
minor till he completes his 21st year.
to the Indian Contract act, 1872, a minor is not capable of entering into a
valid contract and a contract entered into by a minor is void. A contract for
the supply of necessaries of life to a minor is, however, a valid contract. A
banker should, therefore, be very careful in dealing with a minor and take the
1. The banker
may open a saving bank account (and not a current account) in the name of a
minor, in any of the following ways:
the name of the minor, to be operated upon by the natural guardin of the minor
or the guardian appointed by the Court. Such account can also be opened in the
joint names of two or more minors, to be operated upon by the guardian.
the name of the minor, to be operated upon by himself, if he has attained the
age of 10years. Two such minors can jointly open such an account, to be
operated upon by them jointly.
bank records the date of birth of the minor as given by the minor or his/her
guarding. On the attainment of majority, the account of the minor in the name
of the guardian should be closed and the balance paid to the minor (then major)
or be transferred to a new account in his/her own name. In case of a joint
account, the minor is also permitted to operate the account and his signature
are taken on the account opening form.
If the father of a Hindu minor dies, his
mother becomes his natural guardian. After the death of the mother, during the
minority of the boy there is either the testamentary guardian or the guardian
appointed by the Court. The banker may return the money to such guardian.
case the minor dies, the balance in the account is permitted to be withdrawn by
the guardian and in case of joint account the balance will be held at the
absolute disposal of the guardian.
risk is involved if an account is opened in the name of a minor so
long as the account is not overdrawn by the minor. But if an overdraft or
advance is granted to a minor, even by mistake or unintentionally, the banker
has no legal remedy to recover the amount from the minor. The assets of a minor
pledged with the banker as security for the advance taken by the minor are not
legally available to the banker because such pledge itself is invalid. The
banker shall have to return these securities to the minor and he cannot
exercise this right of sale in case of default by the minor.
If an advance is granted to a minor on the
guarantee of a third party, such advance cannot be recovered from the guarantor
also because the contract of guarantee is invalid on the ground that the
contract between the creditor and the principal debtor (minor) itself is a void
contract. According to Section 128 of the Indian Contract Act, 1872, the
liability of the surety is co-existence with that of the principal debtor,
unless it is otherwise provided by the contract. The surety, therefore, cannot
be held liable on a guarantee given for default by a minor. According to the
law a minor cannot enter into a valid contract and he cannot undertake a
liability upon himself. Thus he cannot default. Suerty’s liability is a
secondary one and does not arise, if the liability of the primary debtor does
not arise. In Edavan Nambiar vs. Moolakai Raman (A.I.R. 1957 Madras 164), the
Madras High Court also upheld the above viewpoint. The liability of a
surety is ancillary. It materializes if there is a valid obligation on the part
of the debtor whose debt or obligation is guaranteed. However, if the contract
of guarantee specially provides contrary to the above, the guarantor may be
held liable for the debts of a minor.
if a minor enters into an agreement by representing himself as major
and later on claims such a contract as void on account of his minority at the
time entering into contact, the minor must restore the benefit derived by him
under the agreement. In M/S Thiru Arooram Sugars Ltd. Vs. State Bank of India,
the High Court observed as above on the basis of Section 65 of the Indian Contract
Act which states that " when an agreement is discovered to be void or when
a contract becomes void, any person who has received any advantage under such
agreement or contract is bound to restore it or to make compensation for it to
the person from whom he recovered it."
minor may draw, endorse or negotiate a cheque or a bill but he cannot be held
liable on such cheque or bill. He cannot be sued in respect of a bill accepted
by him during his minority. Such bill or cheque, nevertheless, will be valid
instrument and all other parties will be liable in their respective capacities
(Section 26 of the Negotiable Instruments Act, 1881). The banker should,
therefore, be very cautious in dealing with a negotiable instrument, to which a
minor is a party.
minor can be admitted to the benefit of partnership with the consent of all the
partners but he will not be liable for the losses or debts of the firm. Within
six months after he attains majority he should repudiate his liability as
partner otherwise he will be held liable as a partner of the firm from the date
he was admitted to the benefit of the partnership [Section 30(7) (a) of the
Indian Partnership act, 1932].
minor may be appointed as an agent to act on behalf of his principal. According
to Section 184 of the Indian Contract Act, 1872, "as between the principal
and third person may become an agent; but no person who is not of the age of
majority and of sound mind can be appointed as an agent, so as to be
responsible to his principal." Thus a minor agent cannot be held
responsible to his principal. The principal may be held responsible to the
third parities in respects of the acts of his minor agent. Therefore, all of
his dealings with the banker will be valid and binding on his principal. The banker
should obtain written authority of the principal specifying he power and the
extent of authority entrusted to the agent in this regard and should see that
the minor-agent does not deal beyond such delegated powers.
Provisions Regarding Guardianship of a Minor
The guardian of a minor may
(i) a natural guardian, or
(ii) a testamentary guardian, or
(iii) a guardian appointed by the
The first two of guardians are governed by
the provisions of the Hindu Minority and Guardianship Act, 1956, whereas a
guardian is appointed by a Court under the Guardians and Wards Act, 1890.
(i) Natural Guardian. According to Section
6 of the Hindu Minority and Guardianship Act, 1956, in case of a minor boy or
an unmarried girl, his/her father and after him the mother shall be the natural
guardian. In case of a married girl (minor), her husband shall be natural
guardian. The terms father or mother does not include step-father or
step-mother. If the father becomes a sanyasi or does not remain Hindu, he shall
not be entitled to remain as guardian. If the father is alive and is not
removed from guardianship, the mother does not become the natural guardian of her
Guardian. A Hindu father, who is entitled to act as the natural guardian
of his mother legitimate children may, by will, appoint a guardian for any of
them in respect of the minor’s person or property. Such guardian acts as after
the death of the father or the mother.
appointed by Court. A guardian may be appointed by the Court under the
Guardians and Wards Act, 1890, but the Court shall not be authorized to appoint
or declare a guardian of the person of a minor, if his father is alive and is
not, in the opinion of the Court, unfit to be guardian of the person of a
minor. Similar is the case with the minor girl, whose husband is not, in the
opinion of the Court, unfit to be guardian of her person. Thus the father (or
the husband in case of a married girl) is exclusively entitled to be the
guardian. The welfare of the minor shall be a paramount consideration of the
court while appointing a guardian.
as Natural Guardian
In a landmark judgement on the guardianship
of a minor under the above mentioned two Acts, the Supreme Court has held that
the mother can also act as natural guardian of a Hindu minor even during the
lifetime of the father. In (Githa Hariharan & another vs. Reserve Bank of
India 1999 (I) SC 524) the Supreme Court held that in all situations where the
father in nit in actual charge of the affairs of the minor either because of
indifference or because of an agreement between him and the mother
of the minor (oral or written) and the minor is in the exclusive care and
custody of the mother or, the father for any other reason is unable to take
care of the minor because of his physical and /or mental incapacity, the mother
can act as natural guardian of the minor.
Court further held that the definition of ''guardian'' and ''natural guardian'' do
not make any discrimination against the mother and she, being one of the
guardians mentioned Section 6 of the 1956 Act, would undoubtedly be a ‘natural
guardian’, as defined in that Act. The Supreme Court further clarified that the
words ‘ the father, and after him, the mother, need not necessarily mean ‘after
the lifetime of the father’. Rather the word ‘after’ means in the absence of
and the word absence refers to the father’s absence from the care of the minor’s
property or person for any reason whatever.
Bank has advised the banks to allow opening he minor’s account (fixed, saving
and recurring deposit accounts) with mother as guardian. Thus banks are now
permitted to open account of minors in the guardianship of the mother, even if
the father of the minor is alive.
RBI directives in the case of Minor’s
RBI circular DBOD.No.Leg.BC.158/C.90(H)-76
dated December 29, 1976 allowed minors’
accounts (fixed and savings deposit accounts) with mothers as guardians to be
opened subject to safeguards in allowing operations in such accounts by
ensuring that the minors’ accounts opened with guardian are not allowed to be
overdrawn and that these always remain in credit. RBI circular
DBOD.No.Leg.BC.19/C.90(H)-89 dated September 8, 1989 extended the facility, of
allowing opening of minors’ account with mothers as guardian, to Recurring
2. With a view to promote the objective of
financial inclusion and also to bring uniformity among banks in opening and
operating minors’ accounts, banks have been advised by RBI as under:
a. A savings /fixed / recurring
bank deposit account can be opened by a minor of any age through his/her
natural or legally appointed guardian.
b. Minors above the age of 10
years may be allowed to open and operate savings bank accounts independently,
if they so desire. Banks may, however, keeping in view their risk management
systems, fix limits in terms of age and amount up to which minors may be
allowed to operate the deposit accounts independently. They can also decide, in
their own discretion, as to what minimum documents are required for opening of
accounts by minors.
c. On attaining majority, the
erstwhile minor should confirm the balance in his/her account and if the
account is operated by the natural guardian / legal guardian, fresh operating
instructions and specimen signature of erstwhile minor should be obtained and
kept on record for all operational purposes.
3. Banks are free to offer additional
banking facilities like internet banking, ATM/ debit card, cheque book facility
etc., subject to the safeguards that minor accounts are not allowed to be overdrawn
and that these always remain in credit.