Friday, 3 June 2022

Doctrine of Unjust Enrichment

 Doctrine of Unjust Enrichment

By Shagun Mahendroo

It is a general idea that no one should benefit at the expense of another, and if advantage is obtained, then restitution of the appropriate worth of service or other profits made and held unfairly must be made. Unjust Enrichment occurs when one individual benefits unfairly at the expense of another.

Let us take an example. Ram employs Sneha, an architect, to help him renovate his home. Ram quits the contract in the middle owing to a breach, and only some of the rooms had been furnished up to that point. Ram declines to compensate Sneha for the work she has already completed. Ram benefited unfairly from this situation.

The essential features of Doctrine of Unjust Enrichment are:

  1. Defendant who has benefited unfairly.

  2. The plaintiff has incurred loss because of enrichment received by the defendant.

  3. The gain has been obtained in an unjust or unfair manner.

  4. The defendant is liable to compensate for the losses of the plaintiff.

The Contract Act of 1872 (Sections 68-72), as well as the Central Excise and Customs Law (Amendment) Act of 1991, codify the concept of unjust enrichment in India.

Remedies For Unjust Enrichment

Section 68: Supply for necessary

If someone who is a minor/incapable of forming a contract gets help by someone who provides him/her the basic necessaries then in return he can get reimbursement from property of such incapable person.

As seen in case of Jai Indra Bahadur Singh v. Dilraj Kaur, it was decided that money provided by minors for his sister's wedding is a necessary expense that can be recovered from minors' property.

Section 69: Payment made by a Person Who Is Interested

 If an individual who is interested in a payment that some other person is legally obligated to make, and who thereby makes the payment, will be reimbursed.

In case of Govindram Gordhandas Seksaria v. State of Gonda , the court decided that the party had decided to purchase several mills and that he was entitled to collect from the seller the late municipal taxes that he had paid to keep the property from being auctioned.

Section 70: Obligation of Person enjoying the benefits of a Non-Gratuitous Act

If someone does something which is not gratuitous but benefits another person, the latter is obligated to compensate.

In the case of Great Eastern Shipping Company Limited v. Union of India  , it was decided that a person did not give coal carriage to a defendant's union gratuitously, and so the defendant was required to pay compensation.                                                             

Section 71: Responsibility of Goods Found

If a man gets goods that belong to someone else and takes possession of them, he has responsibility of the goods as the actual person will take care of.

In the case of Newman v. Bourne and Hollingsworth ,it was held that a person left her brooch in the shop and owner of the shop discovered it and stored in a drawer, but it was eventually discovered missing a week later so the owner of the shop was held liable to pay for the brooch,

Section 72: Money paid by Mistake or Under Coercion 

If a person acquires anything by accident or under coercion, he must refund or return it. As seen in  case of Kotrabarsappa v. Indian Bank ,it was held that the the bank incorrectly credits the user's account, and the person withdraws the funds. As a result, the consumer was obligated to repay the money plus interest.

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