Explain the principle of ‘Unjust enrichment’ under the provisions of section 70 of the Indian Contract Act. Refer to decided cases.

Question: Explain the principle of ‘Unjust enrichment’ under the provisions of section 70 of the Indian Contract Act. Refer to decided cases. [HPJS 2016]

Find the answer to the mains question only on Legal Bites. [Explain the principle of ‘Unjust enrichment’ under the provisions of section 70 of the Indian Contract Act. Refer to decided cases.]

Answer

‘Unjust enrichment’ means retention of a benefit by a person that is unjust or inequitable. 'Unjust enrichment’ occurs when a person retains money or benefits which in justice, equity, and good conscience, belong to someone else.

The existence of the theory of unjust enrichment was justified by Lord Mansfield in the case of Moses v. Macferlan [(1760) 2 Burr 1005], where he said that the main aim of law & justice is to prevent “unjust enrichment” that is an enrichment of one person at the cost of another. That means no person should gain anything unjustly, when his gaining such a thing may mean a loss for another person.

The doctrine of 'unjust enrichment, therefore, is that no person can be allowed to enrich inequitably at the expense of another. A right of recovery under the doctrine of 'unjust enrichment’ arises where retention of a benefit is considered contrary to justice or against equity.

The juristic basis of the obligation is not founded upon any contract or tort but upon a third category of law, namely, quasi-contract or the doctrine of restitution.

In the leading case of Fibrosa v. Fairbairn, [1942] 2 All ER 122, Lord Wright stated the principle thus

“… Any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from another which it is against conscience that he should keep. Such remedies in English law are generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi-contract or restitution.”

The sum and substance of the defendants’ case are based on the doctrine of unjust enrichment which according to a bench decision of this Court (Rajamannar, G.J., and Viswanatha Sastri, J.) in Mahalingam Chettiar v. Ramanathan Chettiar and Ors, [AIR 1935 Mad 587] can be equated to Sections 69 and 70 of the Indian Contract Act. The basis of the doctrine is that if a person has received any property or benefit from another it is just that he should make restitution as otherwise he would be unjustly enriched at the expense of the other.

This doctrine so far as we are concerned is embodied in Sections 69 and 70 of the Indian Contract Act and it is generally recognized that these Sections are much wider in scope than the doctrine as applied in England and go far beyond it.

In the case of Neha Bhasin v. Anand Raaj Anand, [(2006) 132DLT 196]; the plaintiff was singing for the firm of defendants. Her songs were recorded by them. During the process of recording, she did not seem to have acted gratuitously. The defendants enjoyed the benefit of her recordings they commercially marketed the cassettes and CDs of her song recordings.

There was no formal contract. Defendants had no right to make any business by use of her performance. The court said that because they did make business use of her work, a quasi-contract arose under Section 70 making the defendants liable to pay for her services.

Also, in the case of Bank of India v. V. Swaroop Reddy, [AIR 2001 AP 260]; where a tenant bank overstayed and also did not pay the increased rent which it had acknowledged, the court said:

Having regard to the law laid down in various decisions of the Supreme Court and High Courts on the principle of “tenant-holding over” and its consequential effect making the tenant liable to pay damages or mesne prof it’s to the landlord for continuing in possession without any authority of law and similarly in view of the legal position as regards the principle of unjust enrichment under the provisions of Section 70 of the Act, the court came to the inevitable conclusion that the defendant bank was liable to pay the plaintiff the entire amount of the suit claim.

---

Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
4. Law of Contract Mains Questions Series Part-IV
5. Law of Contract Mains Questions Series Part-V
6. Law of Contract Mains Questions Series Part-VI
7. Law of Contract Mains Questions Series Part-VII
8. Law of Contract Mains Questions Series Part-VIII
9. Law of Contract Mains Questions Series Part-IX
10. Law of Contract Mains Questions Series Part-X