A Project

On

Doctrine of Unjust Enrichment Under ICA

Subject: Contract

[Submitted as a partial fulfilment of the requirements for

B.A. LL.B. (Hons.) 5 Year Course]

Session: 2021-2022

Submitted on : 04 February 2022

Submitted by: Submitted to:

Rahul Bagari Ms. Arti Sharma

Roll No. - 64 (Faculty)

Class- 3rd Semester

Section- A

University Five Year Law College

University of Rajasthan, Jaipur

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 DECLARATION

I, Rahul Bagari, hereby declare that project titled "Doctrine of Unjust

Enrichment Under ICA" is based on the original research carried out by me under
the guidance and supervision of Ms. Arti Sharma.

The interpretations put forth are based on my reading and understanding of the
original text. The book, article and website etc. which have been relied upon by me
have been duly acknowledged at the respective places in the text.

For the present project which I am submitting to the university, no degree or diploma
has been conferred on me before, either in this or in any university.

DATE: SIGNATURE
04 February 2022 Rahul Bagari
Roll No. - 64
Semester: lll 'A'

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 CERTIFICATE

Ms. Arti Sharma ; Date: 04 February 2022

Faculty of Contract
University Five Year Law College
University of Rajasthan, Jaipur

This is certify that Mr. Rahul Bagari, student of 3rd semester 'A' of University
Five Year Law College, University of Rajasthan has carried out the project
titled "Doctrine of Unjust Enrichment Under ICA" under my supervision and
guidance.

It is an investigation report of a minor project. The student has completed research

Work in my stipulated time and according to the norms prescribed for the purpose.

Supervisor

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 ACKNOWLEDGEMENT

I have written this project, "Doctrine of Unjust Enrichment Under ICA"

under the supervision of Ms. Arti Sharma, Faculty of Contract, University Five
Year Law College, University of Rajasthan, Jaipur. Her valuable suggestions here
in not only helped me immensely in making this work but also in developing an
analytical approach this work.

I found no words to express my sense of gratitude for Director Dr. Aruna

Chaudhary.

I am grateful to librarian and library staff of the college for the support and
cooperation extended by them from time to time.

Rahul Bagari

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 RESEARCH METHODOLOGY

The researcher has adopted doctrinal method research. The researcher has made extensive use of
available resources at the Library of University Five-year Law College, University of Rajasthan,
and also internet resources.

RESEARCH QUESTIONS :-

1. What is doctrine of unjust enrichment under ICA?

2. What are the remedies for doctrine of unjust enrichment?

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 TABLE OF CONTENT

CERTIFICATE..............................................................................................................................02

DECLARATION...........................................................................................................................03

ACKNOWLEDGEMENT.............................................................................................................04

RESEARCH METHODOLOGY...................................................................................................05

ABSTRACT..................................................................................................................................07

CHAPTER-1
EVOLUTION OF THE DOCTRINE OF UNJUST ENRICHMENT..........................................08

CHAPTER- 2
DOCTRINE OF UNJUST ENRICHMENT ............................................................................09-10

CHAPTER-3
REMEDIES FOR DOCTRINE OF UNJUST ENRICHMENT...............................................11-12

CHAPTER- 4
RELATED CASES LAW.............................................................................................................13

CONCLUSION..............................................................................................................................14

BIBLIOGRAPHY..........................................................................................................................15

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 ABSTRACT

The principle of unjust enrichment is simply stated as:-

A person who has been unjustly enriched at the expense of another is required to make restitution
to the other. The meaning of this line is that if a person has gained benefit from other person and
thereby causing loss to the other person, then the person who has gained is required to reimburse
the plaintiff equal to the amount of benefit received by the defendant.
In a contract, if a party is not paying any restitution or consideration against the service
received, he is liable, which we state as a breach of contract in layman terms. However, legally the
beneficiary is liable for unjust enrichment mentioned in Sections 68-72 of the Indian Contract Act,
1872. Unjust enrichment can be defined as a benefit received at the expense of another, which is
neither legal nor can be comprehended as a gift, against which the beneficiary has to pay
reimbursement or restitution. It means that an individual should not unfairly gain profit through
unjust means causing loss to another.
In such a case, the beneficiary should provide restitution to the person suffering loss by paying
a reasonable value against the benefit received. This article would analyze and understand the
theory of unjust enrichment or unjust benefit and the importance of restitution in unjust
enrichment. Furthermore, we would also define the concept and the point of the question
analytically with proper case laws.

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 CHAPTER-1

EVOLUTION OF THE DOCTRINE OF UNJUST ENRICHMENT

In civil law systems, unjust enrichment is often referred to as unjustified enrichment. Its
historical foundation of enrichment without cause can be traced back to the Corpus Iuris
Civilis.[1]The very first traces of the doctrine of unjust enrichment can be found in English Law in
the rule of “assumpsit” or “had and received.” The doctrine’s idea could be tracked in the 18th-
century judgment of Moses v. Archie McFarland, in which Judge Lord Mansfield held that the
respondent should reimburse the money or benefit to the plaintiff being bounded by the ties of
natural justice and equity. This principle was predominantly applied by the court of equity in all
its future judgments being based on general conscience. Later in the twentieth century, the
principle was defined by American lawyers considering the broad principles of Joseph Story’s
equitable jurisprudence.

In India, the first steps of the doctrine of Unjust Enrichment can be observed in the 1860s
in Rambux Chittangeo v. Modhoosoodun Paul Chowdhry. In this case, the judgment was provided
based on the jurisprudence of Robert Joseph Pothier and John Austin. Following years, the
principle was developed and later codified in the Indian Contract Act, 1872, and later in the Central
Excise and Customs Law (Amendment) Act, 1991. In the recent past, the most remarkable
development in the doctrine was brought by the landmark judgment of the Indian Council for
Enviro-Legal Action vs. Union of India and others, where few environmentalists brought the
matter into light how enterprises are polluting or harming the fertility of the soil and contaminating
the water body by dropping hazardous waste into them and not disposing of them in an appropriate
manner. The Hon’ble Court, in this case, defined unjust enrichment and its relation with restitution
and benefited considering the enterprises guilty, which would be further elu 1cidated in the article.

1 Davrados, Nikolaos (2018). "Demystifying Enrichment Without Cause". Louisiana Law Review. 78.

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 CHAPTER- 2

DOCTRINE OF UNJUST ENRICHMENT

The doctrine of unjust enrichment is essential to the subject of restitution. The term
‘restitution’ is one of the fundamental bases of the doctrine. It has been stretched out to incorporate
reinforcing or offering back something to its legitimate owner. However, it also includes payment,
repayment, reimbursement, or reparation for benefits received from or for misfortune or injury
caused.

Civil law systems such as those of France and Germany typically adopt an "absence of basis"
approach. On this analysis, the defendant is obliged to make restitution if there is no "basis" for
his receipt: for example, because the contract under which the defendant received the benefit was
void ab initio. Some common law systems have shown signs of a possible shift towards this
approach.[1 2 ]

Unjust enrichment is regularly alluded to or viewed as a ground for restitution; it is maybe more
precise to see it as an essential, as ordinarily, there can be no restitution without unjust enrichment.
The Hon’ble Supreme Court explained ‘Unjust enrichment’ and ‘restitution’ as the two shades of
green; one inclining towards yellow and the other towards blue. With restitution, until the
misfortune of others has not been wholly reimbursed, injustice to that degree remains. The courts
have broad powers to allow restitution, and that is only the tip of the iceberg where it identifies
abuse or resistance with court orders.

The court also stated that restitution and unjust enrichment, alongside a cross-over, must be
considered based on the two phases, i.e., pre-suit and post-suit. In the former case, it is a
substantive law (or common law) right that the court will consider; however, in the latter case,
when the parties are under the watchful eye of the court and any act/omission, or essentially lapse
of time, brings about the hardship of one, or unjust enrichment of the other, the court’s jurisdiction

2 Deutsche Morgan Grenfell v IRC [2007] 1 AC 558

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to equalize and do equity is autonomous. It should be promptly used; else, it will permit the court’s
process, alongside time delay, to do injustice.

In order to prevent, trivial suits and prevent individuals from procuring a rich collection of illicit
demonstrations through the court, the objective of the judicial system must be to discourage unjust
enrichment utilizing courts as a tool. The expenses forced by the Courts in all cases ought to be
the actual costs equivalent to the loss endured by the legitimate individual.” While summarizing
the judgment, the Hon’ble Court expressed that while adjudicating, the courts should keep in view
that ‘it is the obligation and commitment of the court to offset any unjust enrichment and gratuitous
increase made by any party by summoning the jurisdiction of the court.

The principle of unjust enrichment can be understood in three ways:-

 Unjust enrichment can be interpreted as a principle of Aristotelian equity, providing

correction when normally sound rules produce unjust results in particular cases
 .Unjust enrichment can be characterised as a ‘legal principle’ incorporating a broad ideal
for justice, from which courts can deduce solutions to particular restitution problems.
 Unjust enrichment can be understood simply as expressing a common theme of restitution
cases.

The doctrine of unjust enrichment is based on three key ingredients:-

 The benefit of one person,

 At the expense of another,
 Making the person with benefits liable to compensate for the losses of another.

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 CHAPTER-3

REMEDIES FOR DOCTRINE OF UNJUST ENRICHMENT

The remedy for unjust enrichment is restitution: the restoration of what was conferred to the
claimant. In short, the correcting of the injustice that occurred when the claimant suffered a
subtraction of wealth and the defendant received corresponding benefit.[1]. Various remedies have
been provided for unjust enrichment under Sections 68 to 72 of the Indian Contract Act, 1872.
These sections provide remedies considering the various circumstances. Section 68 of the Act
provides remedies to the person who supports and provides life-saving necessities to another
individual who is not capable of entering into a contract or to whom he is legally bound to support.
In the case of Jai Indra Bahadur Singh v. Dilraj Kaur Money was advanced to a minor for his
sister’s marriage, which under this section was found to be necessary and can be recovered from
his property. In English law, the orthodox view is that unjust enrichment generally triggers
personal, rather than proprietary remedies.[2]

Section 69 provides remedies to the person who is interested in the payment of money that another
is bound by law to pay and who therefore pays it is entitled to be reimbursed by the other.
In Govindram Gordhandas Seksaria v. the State of Gondal, the party had consented to buy certain
plants; he was permitted to recover from the dealer the measure of effectively overdue municipal
taxes paid by him to save the property from being sold at the auction.

Section 70 provides a remedy to a person who does an act or delivers something, not gratuitously,
causing benefit to another person, then the person who benefited is liable to provide compensation
or affect the restoration of the thing delivered. In the case of Great Eastern Shipping Company
Limited v. Union of India, the plaintiff, in this case, did not gratuitously deliver a coal carriage to
a defendant’s union. The defendant being benefited by the service had to reimburse the plaintiff
for the provided service.

Section 71 provides a remedy to the owner of a good or property from a person who finds the
owner’s goods or belongings and takes them into his custody by providing him with the same

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responsibility as that of the bailee. In the case of Newman v. Bourne and Hollingsworth, the
plaintiff lost his ring in the defendant’s shop. One of the defendant’s servants found the ring in the
shop and then kept it in a cupboard, Later when the plaintiff came back to the shop in search of his
ring, it was stolen. Here the defendant was held liable for not taking care of the same.

Section 72 provides a remedy to the owner of goods whose belonging was delivered to another by
mistake or under coercion. The person who receives it should return it as per this section. In the
case of Associated Cement Company limited v. Union of India, the railway authorities were bound
to reimburse the extra fare as they considered that the goods would need to be carried for a longer
route.

3
Virgo, Principles of the Law of Restitution (3rd ed, 2015); Burrows, Law of Restitution (3rd ed, 2010).
2
Bank of Cyprus v Menelaou [2015] UKSC 66

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 CHAPTER- 4

RELATED CASES LAW

In the case of Govindram Gordhandas Seksaria v. State of Gondal, the party had agreed to
purchase certain mills, he was allowed to recover from the seller the amount of already overdue
municipal taxes paid by him in order to save the property from being sold at the auction.

In the case of Dakshina Mohun Roy v. Saroda Mohun Roy Chowdhry, it was held that money paid
by a person while in possession of an estate under the decree of the court for preventing the sale
of the estate for recovering the arrears of government revenue may be recovered by him under this
section.

In the case of Great Eastern Shipping Company Limited v. Union of India, the plaintiff lawfully
carried a cargo of coal and delivered it to the defendants union. The correspondence showed that
the plaintiff did not intend to do it gratuitously and the defendant had accepted the cargo and thus
defendant became liable to pay compensation to the plaintiff under section 70.

In the case of State of Rajasthan v. Raghunath Singh, a grantee of leeses of minor minerals is
entitled to recover by way of compensation various amounts deposited by him in pursuance of the
grant of the lease in the event of cancellation of lease.

In the case of Bhagavadas Krishnadas v. P.S. Soma Iyer, the purchaser of property allowed the
defendants to continue their residence in the building until they found other occupation and there
was no indication in the evidence that the plaintiff had done so gratuitously, the plaintiff was
entitled to remuneration for use and occupation.

In the case of Bhicoobai v. Hariba Raghuji, a property belonging to a caste is attached in execution
of a decree and a member of the caste pays to the decree holder the amount due to him under the
decree to save the property from sale in execution then it was held that he is entitled to be
reimbursed out of the caste property.

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 CONCLUSION
The theory of unjust enrichment means that no one should be unjustly enriched at the
expense of another. It also means that no person should take advantage of position of another
person which causes some loss to one party and gain to another party. The theory of unjust
enrichment came through English law. In the early 18th century, the general lawyers knew nothing
about the theory of unjust enrichment, even then in number of situations they had given remedies
that were later categorised under theory of unjust enrichment.

The researcher has assumed that the person is required to pay if he is liable. The hypothesis of the
researcher is true that if a person has taken benefit from another person and has not given anything
in return, then he is liable to pay back. In all the cases of unjust enrichment wherever the court
feels that one person has taken benefit out of another person and has not given anything in return,
the court makes the person liable and directs the person to compensate or return the benefit.

The main objective of conducting the project was to understand the decision of courts in Indian
Scenario on the topic of unjust enrichment. Various remedies are available for unjust enrichment
in Indian Contract Act, 1872. Section 68-72 deals with remedies available in the case of unjust
enrichment in various cases like when necessary goods are provided to one person, obligation of
a person enjoying benefit of a non gratuitous act, responsibility of the finder of goods, thing
delivered to another person by mistake or coercion. The courts also in most of the cases have
always tried to give decision in favour of plaintiff in the case of unjust enrichment. Whenever the
court feels that the defendant has taken benefit from the plaintiff and has not compensated him,
then court directs the defendants to either compensate the benefit received by the defendant.

In section 72 of Indian Contract Act, only thing delivered by mistake or coercion is taken into
consideration. Like coercion and mistake there are other ways also like undue influence,
misrepresentation , fraud which can be used by a person to take benefit out of another person. So
provision related to misrepresentation, fraud and undue influence should also be made under
Indian Contract Act, 1872.

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 BIBLIOGRPHY

1. https://legalsevicesindia.com
2. https://ipleaders.in
3. https://en.wikipedia.org

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