Inder Singh v. Parmeshwardhari Singh

Facts

• The seller, previously certified as having limited mental capacity, sold property worth a substantial sum for a fraction of its actual value
• The transaction occurred shortly after this certification, raising doubt about his capacity to genuinely understand what he was doing
• His representatives sought to have the sale declared void for want of contractual capacity

Issue

1. What test governs whether a person is of unsound mind for the purpose of contractual capacity, and whether this specific seller met that test at the time of the transaction.

Held

• The test for unsoundness of mind is whether the person, at the time of contracting, is capable of understanding the contract and forming a rational judgment as to its effect on their own interests
• This is a functional test tied to the specific transaction and moment, not a general, permanent classification
• Applying this test, the seller's grossly disadvantageous sale, combined with his documented mental condition, indicated he lacked this capacity at the relevant time
• The sale was held void

Ratio Decidendi

Unsoundness of mind for contractual purposes is assessed functionally: whether the person could understand the specific contract and rationally judge its effect on their own interests at the time of contracting, not by reference to a permanent or general mental status label alone.