240

CHAPTER-VII

Quasi Contracts in India

We have already seen that contracts in India are codified under

Indian contract Act 1872, Chapter-V of this Act deals with Quasi
Contracts as we popularly call. But the heading of the Chapter is ―Of
certain relations resembling those created by contract‖ The chapter
consists of only five sections as against volumes of cases under common
law. We can undoubtly state that out of these fiv e sections, Sec.68 and
71 are quite necessary in this chapter. So only three sections Sec.69, 70
and 72 remains and their limit and scope are restricted to a great extent.
But there are other sections in the contract Act like Sec.65 which is based
on unjust enrichment but which is not included in Chapter-V obviously as
it is an enforceable provision for amounts got under certain contracts
which are declared void under the Act at different places. But in English
Common law they are dealt under general Common Law of Quasi
Contracts. We discussed them in Chapter-III.

7-1 Sec.68:- Claim for necessaries supplied to person incapable of

contracting or on his account. It read as follows:-

―If a person, incapable of entering into a contract, or anyone whom

he is legally bound to support is supplied by another person with
necessaries suited to his conditions in life, the person who has furnished
such supplies is entitled to reimbursed from the property of such
incapable person‖
 241

Two illustrations (a) & (b) are also given under this section.

This section and Sec.11 of the contract act gives us the scope to
discuss the important aspect of minors (or otherwise incapacitated)
contracts both under English common law and the Indian Law.

At common law, the only class of contract to which minority did not
afford some sort of defence was a contract for necessaries. In all other
cases, common law treated minor‘s contracts as being voidable at his
option either before of after the attaining of his majority. But these
voidable contracts were divided into two classes. Firstly there were
certain contracts in which the minor acquirfed an interest of a permanent
or continuous nature, these were valid and binding on him until he
disaffirmed them, either during minority or within a reasonable time after
his majority.

Exdamples of such contracts were those by which he acquired

shares in a company, or an interest in land. They may be termed ―
Positive voidable contracts‖ Secondly in the case of contracts which were
not thus continuous in their operation, the common rule was that they
were not binding on him unless he ratified them within a reasonable time
after majority. These may be termed ― Negative voidable contracts‖

Thus we can see from common law that minors contraces are
divided into three classes valid, void and voidable ( Positive or Negative).
Contracts for necessaries supplied to a minor are valid contracts. For
purchase of shares by a minor lent or to be lent, goods supplied or to be
supplied (other than necessaries) and all accounts stated are void.
Agreement for exchange of goods are also void.
 242

For a considerable time after the Indian Contract Act, 1872, In India
too the contracts by minors are classified as valid, void and voidable.

But after an Important leading case "Mohri Bebi Vs Dharmadoss

Ghosh" in 1903 (30 T A 114; 30 cal 5391 ) the privy concil held that in view
of sec 11 of the Act, a contract with a minor is void abinitio as the section
held that a minor is not competent to enter into a contract. The section
reads as follows

Sec.II:- WHO ARE COMPETENT TO CONTRACT:

―Every person is competent to contract who is of the age of the

majority according to the law to which he is subject and who is of sound
mind, and is not disqualified from contracting by any law to which he is
subject."

This section positively excepts minor's completely to enter into any

contract. So the question of validity of contracts for necessity and
voidibility of certain nature of contracts does not arise. All contracts with a
minor or by a minor are void in India after Mohribeebi Vs Dharmadoss
Ghosh (30 CAL 539)1. In this case several aspects arose. The principle of
Estoppel in minor contracts; Restitution, sec 65 of the I C Act and the void
or voidablity nature were discussed. Regarding the necessities supplied
to a minor, the privy council referred sec 68. The said section according to
privy council was introduced in that chapter since sec 11 positively
declared all the contracts with a minor are void. If all the contracts with a

1
Mohribeebi Vs Dharmadoss Ghosh (30 CAL 539).
 243

minor are void/nobody would supply even bare necessities to a minor, by

the same section which declares minors contracts as void, for whose
benefit it is introduced. Law protects the minors, their Properties and
Rights, excuses their laches; Judges are their connsellors, Jury are their
servants. Law assists them in their pleadings and it is their guardian.
When such a protection is given to minors under law, the same law
deprives the minor to have his necessities. For that reason only the
contracts with minors to supply necessities are valid under common law.
With the same principle sec 68 is introduced in the contracts Act fixing an
obligation on the minor and other incapaciated persons to pay for their
necessities from their estates only as a Quasi contractual obligation.
Again what are necessities was and has been always debatable point
under common law as well as under sec 68. Minors are liable for
Necessaries and not merely necessities.

Certain things may be obviously outside the range of possible

necessaries like Earrings for a male, spectacles for a blind person, a wild
animal, a daily dinner of turtle and venison for a month for a clerk with a
salary of fl a week. In Ryder Vs Wombwell (1868 L.R. 3 Ex 10)2 the
defendant, a minor with income of ^500 an year, bought from the plaintiff
a pair of crystal ruby and diamand solitancs and an antique goblet in silver
gilt. It was held that neither of these articles could be a necessary even
though the defendant was the son of a deceased baronet and in the
highest society. Other things may be of a useful character but the quality
or quantity supplied may take them out of the character of necessaries.
Elementary text books might be necessary to a student of Law but not a

2
Ryder Vs Wombwell (1868 L.R. 3 Ex 10)
 244

rare edition of 'Littletons Termes or eight or ten copies of the present text -
book". In Nash Vs Inman (1908 to K.B.I.)3 a tailor supplied a Cambridge
under graduate with clothing which included eleven Fancy waist coats at
two guineas each. It was proved that although he was a minor, he had
already a sufficient supply of clothing according to his position in life and
ultimately the court of Appeal held that the tailor had failed to prove that
the clothing was suitable to his actual requirements at the time of the sale
and delivery.
But contracts of service, apprenticeship and the like, provided that
they are beneficial to the minor, have, however, always been regarded as
merely one variety of his contracts for necessaries. In Roberts Vs Gray
[(1913) 1 K.B 520]4 the defendant who was a minor entered into a
contract by which he agreed to pay a professional Billiards player for a
world tour to introduce him with famous Billiards players so that he can
become a champion in Billiards. The minor already had some
profieciency in the game and his life ambition was to become a world
champion. It was held that this contracts of service is valid as necessity for
a minor as it is for the benefit of a minor. Contracts for the benefit of a
minor also are held as for necessaries.
So far as sec 68 in India is concerned, the same principles of
English law are applied. The decission of the Calcutta Highcourt in
Jogam Ram Marwari Vs Mahadev Prasa Sahus [(1909) 36 cal 768]5
gives a summary of the points established in English law as to the
meaning and scope of the term "necessaries" In that case it was held
that wedding presents for the bride of the infant may be "necessaries".
different as laid down in AIR 1940 Nag 327 (Tikkilal Vs Komalchand)6.

3
Nash Vs Inman (1908 to K.B.I.), 4 Roberts Vs Gray [(1913) 1 K.B 520, ] 5Jogam Ram Marwari
6
Vs Mahadev Prasa Sahus [(1909) 36 cal 768] Tikkilal Vs Komalchand)
 245

But if such marriage is forbiddem by law the position may be The

debt incurred for performing the funeral obsequis of father of minor was
held to be a necessity. In Kedarnath Vs Ajudlna prasad [(1883) Rec 165
page 522]7 it was held that money advanced, to save a minor's estate
from sale in execution was necessary. Even when the liberty of a minor
is at stake by threatening arrest in a criminal case, the money advanced
must be taken to have been borrowed for necessaries as laid down in.
Shyam charan mal Vs. Chowdary Debya sing [(1894) 21 cal 872]8
Thus whether a particular transaction like a sale or service is for
necessity of a minor or not, depends upon the facts of each case
considering the conditions of the minor and relevancy of necessity.
But no hard or fast rule is enunciated by any courts.
Apart from the above few cases in India no cases of worth
mentioning are reported in any law reports under sec 68 of the
contract Act. Nobody is taking the risk of entering into any
contracts with minors for supply of necessaries as well.
Sec 68 is only introduced in the contract Act to give effect to the
common law contracts of Necessities.

In common law or Under American law, necessaries supplied

to a minor were held to be "Quasi Contracts" directly.
If there is a contract with a minor for necessities it is enforced in
common law as a valid contract but not by any implied theory of contract
or constructive contract. But it is loosely termed as quasi contract. In view
of the fact that all the contracts with a minor are void ab initio under sec
11 of the Indian contract Act, it has had become necessary to introduce

7;
Kedarnath Vs Ajudlna prasad [(1883) Rec 165 page 522]
8
Shyam charan mal Vs. Chowdary Debya sing [(1894) 21 cal 872]
 246

sec 68 in chapter V as a "relation that resembles a contract". There con

not be any relation with a promise on one part and the estate of the
promisor - minor on the other. So strictly speaking it cannot be termed as
Quasi contract or a relation resembling that of a contract.
If the legislature intended to make contracts for necessaries
supplied to a minor are valid It could have been as well provided in
sec 11 itself as follows as a proviso in it.
―Provided that nothing in this section would disentile a person
who supplied a minor or person incapable of entering into a
contract, with the necessaries suited to recover, from the property
of such minor or incapable person‖.
This would satisfy the requirements of minors contracts in
necessities. In Mohibeebi Vs DharmadoGhosh it was held that sec.
65 has no application to contracts with minors which are abinitio void.
This proviso would also remove the obstacle if any in so far as
necessaries are concerned.
Thus Sec.68 of the India Contract Act can be deleted from
the Act and a proviso added to Sec.11 of the Act, to give effect to
the intention of legislature.
Thus we can say that Sec.68 is quite unnecessary in this Chapter
V as a Quasi Contracts obligation if a proviso is added to Sec.11. This
would suffice in India where the law of contracts is codified.

7 – 2. Sec.71:- Responsibility of Finder of Goods

―A person who finds goods belonging to another and takes

them into his custody is subject to the same responsibility as a
bailee‖.
 247

This is another provision which we can say that no such

importance need be given by placing Quasi contractual liability on the
principle of unjust enrichment. This section applies only to goods and a
finder of lost goods is but in the same position as that of a bailee.
The Supreme Court in Union of India Vs. Amarsingh (AIR
1960 Sec.233)9 remarked that it is a statutory fiction by which a
contract of bailment is inferred between a finder of lost goods and
the real owner.
The word Bailment, Bailor and Bailee are defined in Sec.148 of
the contract Act are as follows: ―A Bailment, is the delivery of goods by
one person to another for some purpose, upon a contract that they shall,
when the purpose is accomplished, be returned or otherwise disposed
off according to the directions of the person delivering them. The person
delivering the goods is called the bailor. The person to whom they are
delivered is called the bailee. Thus bailment is nothing but a contract.
The Bailee‘s duties are enumerated from Sec.151 onwards. As per
Sec.71 all these duties also apply to a finder of lost goods. So Sec.71 is
also indirectly made a contractual obligation itself instead of making it a
relation resembling that of a contract. So this provision as it stands is
quite irrelevant and unnecessary. Peculiarly two rights of a finder of lost
goods are introduced in the same chapter of Bailment in Sec.168 and
169. When the rights of finder if lost goods are inserted in this chapter,
we dont know why the duties of a finder of lost goods could not have
been inserted in the same chapter.
It would be suffice that the definition Bailee includes a Finder of
lost goods also. When the duties of Finder of lost goods are assigned on
him as a Bailee by analogy, it could as well be done by giving an

9
Union of India Vs. Amarsingh (AIR 1960 Sec.233)
 248

inclusive definition of Bailee. Consideration is a must for all contracts but

Bailment is excepted. There can be gratutious Bailees also. In such a
case nothing prevented that a contract of bailment can be conferred
between the owner and the Finder of lost goods even though there is no
delivery actually. Only one arm the 'delivery' is missing but the other arm
'Receiving' is there by finder.
So there cannot be any technical bar to include the finder of
lost goods in the Bailment chapter for puposes of his duties, by
adding the following explanation in sec 148.
"Explanation" Even though there is no actual delivery, term
'Bailee includes the finder or receiver of lost goods, and the provisions
of this chapter also applies to him with necessary variations'.

This addition of explanation in sec 148 would be enough to

give effect to the intention of legislature on this subject.
Further very rarely we come across such incident where a Finder
fought in a court of Law. There is not even a single case in English law or
American law on this topic. In India only one case referred above (AIR.
1960 S.C. 23) is reported under this section and it shows how the litigant
public have not shown any interest on this topic of Quasi Contract. We
have seen that nobody goes to a court of Law to get this obligation
enforced. We can say that it is well settled that if a Finder of lost goods
would not discharge his statuory obligation and instead, appropriate the
goods to his own usefully knowing the owner, he is liable for punishment
for criminal misappropriation also under sec 403 I.P.C. Here again the
restistutionary provision of sec 357(3) Cr.P.C. also applies as the finder
can be sentenced to fine and the cost of the goods can be reimbursed
from the fine amount and the property can be restored to the real owner
under sec 452 Cr.P.C. while disposing of the case. This is the criminal
remedy.
 249

But as we have already seen in chapter IV of Part-I that this

obligation of a finder of lost goods is to be enforced under Specific Relief
Act. Even the Bailor has to approach the civil court for return of goods
bailed in case of breach under specific relief Act as there is no
corresponding enforceable provision in that chapter.
Again the Finder of lost goods also can take all the defences
open to him under specific Relief Act when the owner seeks
specific performance of the obligation.
So if a Dog or Horse or other article of personal interest (painting)
are lost by the owner and reaches a Finder and the said finder refuses to
deliver, then the owner necessarily has to approach the court under
specific Relief Act. Finder can take the defence that the dogs and horses
are available freely, in the market,the painting can be purchased and as
such compensation can be ordered. But of course there is an explanation
in sec 10 of the specific Relief Act as fallows :
10. (a) ...................................
(b) ...................................
explanation : Unless until contrany is proved, the court shall
presume i)

ii. that the brea'ch of a contract to transfer moveble property

can be so relieved except in the following cases.
a) Where the property is not an ordinary article of

commerce, or is special value or interest to the

plaintiff or consists of goods which are not easily
obtainable in the market.
b ) :
A dog, horse or a painting may be easily obtainable in a market
but the first part of (a) is applicable as a pet dog or own Horse may be
goods of interest to the plaintiff. So the owner in case of goods lost and
 250

found by another has to necessarily rely upon the presumption in this

section.
This section corresponds to sec 12 of the old specific Relief
Act 1877. In that section an illustration was added to the sec 12(b)
which correspond to present clause (a) as follows.
Illustration to clause (a) - A agrees to buy and B agrees to sell a
picture by a dead painter and two rare china vases. A may compel B
specifically to perform that contract for, there is no standard for
ascertaining the actual damage which would be caused by its non
performance. This illustration was based on Falcke Vs Gray (1859) 4 Dec
65710.
This illustration can as well apply to clause (b) ii (a) as it may have
special value or interest. So only by analogy we can make this
applicable to Finder of lost goods also.
So the remedy for an owner of lost goods from finder is quite
strenuous by seeking only the advantage of the presumption and
illustration of the old Act which for reasons better known is omitted in
the new Act of 1963.
Further how long the finder of lost goods have to keep the
goods with him if owner could not be found or traced. In this regard
sec 168 and sec 169 of the chapter of Bailment are relevant.
Sec 168 :-The finder of goods has no right to sue the owner...
but he may sue for reward, and may retain the goods until he receives
Sec 169 :- When a thing which is commonly the subject of sale
is lost, if the owner cannot with reasonable deligence be found, or he
refuse
...................... may sell it -
(1) When the thing is in danger of perishing or losing the greater

part of its value or

10
Falcke Vs Gray (1859) 4 Dec 657
 251

(2) When the lawful charges of the finder, in respect of the thing

found amount to two thirds to of its value.

So first section 168 applies when the owner is found and the
second section 169 deals with a case where the owner could not be
traced or refuse to pay. He can sell away the goods if they are
perishable and if the amount spent exceeds two third of its value.
Suppose a diamond Ring is lost and found by some other person
and if the owner could not be found or traced by the Finder, he is not
entitled to sell it as both the subjections in 169 have no application here.
He may keep safely in the house. But for how long? His right in this
section becomes a liability, waiting and waiting for years together
protecting it in his safety vaults. Unfortunately the Bailee's liability to return
the goods to Bailor will not apply here.
So here is the anomaly, and even though, he takes care of the
goods as required under sec 151 it would be an eternal liability.
So this section also can be convenienly repealed from that
chapter.

7- 3 Sec C. sec 64 & 65

Unlike under common law, Indian contract Act positively declares at

appropriate places which types of contracts are void and which are
voidable. Sec 2 (g) defines what is a void agreement. "An agreement not
enforceable by law is said to be void". It is exactly the reverse of the
definition of word "Contract" in sec 2 (h) which says that an agreement
enforceable by law is a contract. Unlike a valid contract the word void
agreement is only defined but not void contract. Because if the agreement
 252

is not enforceable by law there is no contract at all and as such the word
contract is not at all used in this definition. But sec 2 (i) defined void
contract as "A contract which ceases to be enforceable by law becomes
void when it ceases to be enforceable". From this definition we can as
well know that it speaks of a subsequent invalidity of a valid contract., due
to a supervening impossibility or illegality as laid down in sec 56 of the
Act. So if the agreement is not enforceable at law, there is no contract at
all and there is general confussion we come accross when we say that a
minor contract is void. But no where in the Act it is declared that a minors
contract is void. Capacity of parties is one of the essentialsof a contract
and if there is no such capacity the agreement is not enforceable at law
and it is only a void agreement. Definition of void contract in Sec 2(i) has
also no application to a minor because a contract cannot become or
ceases to be enforceable afterwards because of minority. A person
becoming minor after the agreement can be ill conceived,. But if a person
of sound mind (not necessarly a minor) enters into an valid agreement it
may become a void contract if the person become of unsoundmind later.
So this sec 2 (i) applies to such contengencies only. We have also seen
that consideration is required for set of promises forming consideration for
each other to constitute agreement as defined in sec 2(e). Even though
no consideration every promise is an agreement and to give effect to the
enforceability of such promise only sec 25 is introduced. Which says that
an agreement (not contract) without consideration is void. The definition of
sec 2(i) also has no application here as there can not be any contract
becoming ceasing to be enforceable afterwards for want of consideration.
So the question of void contract arises only under sec 56
when it becomes impossible after the contract, due to some
superveming impossibility. We can see the affect a contract
subsequently becoming impossible at appropriate place.
 253

Another necessity of valid contract is 'Free consent‘. Flaw in

consent may be caused as laid down in contract Act by coercion sec
(15) undue influence sec (16) Fraud (sec 17) rnisrepresentation (sec 18)
and mistake (sec 20, 21, 22). The first four are of one category and the
'mistake' is of a different category. That is why sec 19 and sec 19 A are
inserted after missepresentation and before mistake to show the affect
of these first four incidents of free consent.
Sec 19 of the Act declares that when consent to an
agreement is'caused by coercion, fraud, a misrepresentation the
agreement is a contract voidable at the option of the party whose
consent was so caused.
So the effect of coercion, fraud and misrepresentation makes the
contract voidable but not void. Glaringly the effect of undue influence is
omitted in this section. Obviously sec 19 A is introduced later by way of
an amendment to cover undue influence also. Sec 19 A :- when
consent to an agreement is caused by undue influence the agreement
is a contract voidable at the option of the party whose consent was so
caused.
This section further introduces the claim by restitution to the person
who caused such undue influene. It says "Any such contract may be set
aside either absolutely or if the party who was entitled avoid it, has
received any benefit there under upon such terms and conditions as the
court may seems just. So at the time of setting aside the contract itself the
court can order restitution by the theory of benefit had and received. No
such restitution is included in sec 19. But the general section in this
regard, sec 64 incorporates the restitution as fallows.
Sec 64 "When a person at whose option a contract is voidable
rescinds it, the other party thereto need not perform any promise therein
contained in which he is promissor. The party rescinding a voidable
contract shall if he has received any benefit the reunder from another
 254

party to such contract restore such benefit, so for as may be to the

person from whom it was received.
So if a person whose free consent is obtained by coercin, Fraud
and misrepresentation has received any benefit under such contract
must restore it to the other person by the principle of benefit had and
received. Of course even if this restoration is specifically provided in sec
19 A so far as undue influence is concered still the person who
exercises undue influence can get back the amount if any paid by him
by wayof restitution.
In the case of undue influence and innocent misrepresent- tation
(simply misrepresentation) there may not be any criminal intent in
obtaining consent. But under coercjn and Fraud there is a criminal intent
on the part of the person who exercised. Coercion and Fraud. The
definition of Coercian itself in sec 15 is a criminal act to do an act which
is an offence under the Indian penal code to cause consent of the other
party in the contract. Similarly the word Fraud used in sec 17 sometimes
may be a criminal offence" also as 'Cheating' under sec 417 onwards
under Indian penal code.
Thus even a person who commited an offence to induce
consent of the other party of a contract is able to get back any benefit
he had given to consenting party, by the principle of restitution. The
maxim "Ex turpi causa non oritur action has become an exception here.
Even the maxim "In pari delicto potoir est conditio defendantis
is not applicable here as both theparties are not guilt. The person
whose consent is caused by coercion and Fraud is innocent but
has to make good the benefit he had received from the offender
(causing coercion and fraud) and the court can cause restitution in
spite of maxim "Ex Turpi ".
 255

So thus sec 64 of Indian contract is giving a helping hand to

offenders by way of restitution. The court ―shall‖ restitute and it has no
option as the word shall ― is used in sec 64.
The courts cannot go beyond this section and stop restitution.
The next section by way of restitution is sec 65. It reads as follows
"When an agreement is discovered to be void or when a contract
becomes void, any person who has received any advantage under
such agreement is bound to restore it or to make compensation for
it to the person from whom he received it.
In this connection we have to take up those agreements or
contracts which are declared void or subsequently becomes void under
the contract Act. We have seen the four incidents to cause flaw in
consent earlier and the fifth is ―Mistake‖ is dealt under sec 20, 21, 22.
Mistake may be a mistake of law or mistake of fact. Mistake of Fact
may be again Bilateral or Unlateral. Sec 20 deals with bilateral mistake,
Sec .22 with unilateral mistake and sec 21 with mistake of law.

7-3-1. Sec 20 reads as follows -

"Where both the parties to an agreement are under a mistake
as to a matter of fact essential to the agreement is, the agreement
is void.

7-3-1A So sec 20 positively declares that bilateral mistakes on facts

which are essential to the agreement are void. Generally the existence
of subject matter, title, identity, price, quantity and quality of subject
matterof the contract are essential facts to an agreement. It is the same
In English law also. But under sec 20 an explanation is added that
erroneous opinion as to the value of thing is not a mistake. So far as
English law is concerned, price is also an essential fact to an agreement,
bilateral mistake of which makes the contract void. In Webster Vs Cecil1
 256

a price of a property is quoted as 1250 by mistake when actually it is

2250 pounds. It was held that the contract becomes void as both parties
are under a mistake of price of subject matter. Similarly (Bilateral
mistakes regarding Existence etc makes contract void except in case of
'Quality‘ of the subject matter which stands on a different footing.

7-3-1B. Existence :- In the case 'of couterior Vs Hastie an

agreement was entered for the sale of corn that is being sent in a ship.
But by the time of contract, the entire corn was unloaded at a port as it
is being damaged due to excessive heat. Hence it was held that there
is no existence of corn and as such the contract becomes void.

7-3-1C Title :- In the case of cooper Vs Phibbs the promissor has got
a right of fishing in a water course but he does not know about his right.
In ignorance of his right he executed a lease deed in favour of some
other person. Realising later that there is mistake of his private , rights
he filed the suit to set aside the lease deed. It was argued in defence
that mistake of law is no excuse as private rights emanate from law and
as such mistake of private rights also is no excuse. But the court held
that though private rights emanate from law they would become matter
of fact but not law and hence as it is a bilateral mistake regarding private
right, the contract becomes void.

7-3-1D.`In Henekel Vs Pope one person enquired dealer about the

cost of Riffles stating that he intended to purchase as many as "fifty
riffles". On receipt of reply from the dealer, the intending purchaser sent a
telegram to the dealer "send three Riffles" (He wanted to purchase only
three riffles). But the telegram was sent by mistake as "send the Riffiles.
By the tenor of the first letter, the dealer sent fifty Riffle's. The purchaser
 257

recieved only three Riffiles and the another went to court. It was held that
there is bilateral mistake regarding the quantity of goods and as such it is
void.

7-3-1E. Quality :- So far as quality of goods is concerned, it stands on

a different footing as bilateral mistake regarding quality will not effect the
validity of contracts in view of the important maxim of 'Caveat emptor‘ in
force in the entire commercial world.

The principle is, that there is no warranty of quality of goods and the
purchaser should be cautious in selecting thegoods which are required
for his purpose. If a pen is purchaserd there is no rule that it should write,
and if a pen-knife is purchased there is no rule that it should cut. There is
no responsibility on the seller and it is the headache of the purchaser.
That is why no party can avoid the contract on the ground that there is a
mistake about quality of goods. The word quality applies not only to
goods but also the personal quality of an individual.
In Bell Vs lever Bros ltd, an employee can be terminated by an
employer with two months notice, or paying two months salary. There is
another term as a rider that the employer has got a right to terminate the
service of the employee, without giving any such notice or such salary, if
it is found that employee is responsible for any misdeeds during his
employment. The employer decided to terminte the services of the
employee and they paid away the two months salary as per the contract
of service. But some time later they realised that the employee was
reponsible for several misdeeds during his employment and that they
can terminate services without any advance notice or paymet of any
salary. Contending that they are under a mistake as to the conduct
(quality) of the employee and paid amount, they filed the suit for refund
of the two rnonths salary. The court while applying the priniciple of
caveat emptor, held that it is a self induced mistake of the employer and
 258

they can not get the amount back by reason of mistake or by Restitution.
Of course the principle of self induced mistake has no application in
uberrima fidi contacts like Insurance contracts etc.

So there are various ways by which contracts, becomes void

due to bilateral mistakes and if any advantage is received by any
person to be restored under the principle of restitution as per Sec. 65.

7-3-2 . Unilateral mistake (sec 22) Sec 22 reads as follows:-

"A contract is not voidable merely because it was caused by
one of the parties to it being under a mistake as to a matter fact".

7-3-2A. Nature of Contract:-

Here the word voidable is grammatical variation of the word Void
as defined in Sec(2) but not the same meaning as the definition of
voidable agreement given in sec 2(i). So A contract is not void simply
because one of the parties is under a mistake. Eventhough there are no
any provisos added in this section, two exceptions are recognised as per
English common law. If this mistake is as to the nature of contract or
identity of party to the contract, and even though the mistake is
Unilateral, the contract can be avoided. If a person intending to enter into
one type of contract, by mistake enter into another type, the contract can
be avoided. In "Through goods case" certain papers were produced
before an illiterate land lord and his thumb marks were taken purporting
to be on a document giving up certain rents. But it happened to be a
document relinquishing certain pronote debts. The general doctine
applies for documents are "Litra Scripta maneat" (Written words would
govern). There is another rule which is an exception to the above
doctrine. That is'non est factum (no such fact exists) i.e there is no such
contract at all. In the above case the above maxim "non est factum‖ is
 259

appllied and the contract relinquishing pro-note debts is set aside.

‗Similarly in Foster Vs Mackinnon (1869)‘, a guarantee/‖83,000 at
the request of one Callow, who had been the secretary of a company, in
order to enable the company to obtain in advance from their bankers. On
6 th Nov 1967 a bill was drawn by one cooper on Callow and was
endorsed successively by cooper, the defendant, and three more persons
to the plaintiff, who became the holder for value before it became due and
without notice of any fraud. The defendant, a gentleman who is advanced
in years, was induced to endorse the bill, Callow telling him that it was a
guarantee of the nature already signed by him. Callow showed the
defendant only the back of the paper which was the shape of a bill of
exchange and for a stamp, the impression of which was visible through
the paper. The dependant put his signature on the back of the bill
immediately after that of Cooper. In an action by the plaintiff (endorsee) to
/"3000 against the defendant (endorser), Byles J held the view that the
defendant never intended to endorse a bill of exchange at all, but it
intends to sign a contract of an entirely different nature. Here also the
principle of ―non est factum‖ applied and the contract held void.
But if person agrees that he entered into a contract but if he
pleads that he did not agree some terms, the principle of Litra
scripta manet applies as held in Houston Vs Webb.

7-3-2B. Mistake as to identity of person:-

The 2nd incident of making a contract by unleteral mistake is
about the identity of person. For example if A wants to enter into a
contract with B but by mistaken identity of B, enters into contract
with C, the contract of A with C becomes void.
Cunday Vs Lindsell :- In this case Cunday & Co have dealings with
a company called Blenkarn & Co. In between these two companies an
imposter Blenkiran has entered. He placed an order with cunday & Co
 260

signing as if suggesting Blenkarn & Co. Thinking it is Blenkarn & Co,

Cunday & Co consigned goods. Somehow Blenkiran received the
consignment and sold it to Lindsay & Co and escaped. When the price is
not received, Cunday wrote to Blenkarn & Co who denied the contract.
Having found the mistake and noticed that the goods are with Lindsay &
Co, they filed the suit for recovery of goods. Their contention is that there
is a mistake of indentity of other party and the contract is void and they
are entitled for the goods. The court accepted the contention and directed
delivery of goods to Cunday & Co as the contract between Cunday & Co
and Blenkiran is void and the Lindsay & Co who purchased goods from a
person who has no title, has no legal title. (Nemo dat quod non habeat)
and they are bound to return the goods,. But in Philips Vs Brookes one
North entered into a Jewellery shop and threw a visiting card which
contains the name of a rich Baronet of London.
Under the mistaken identity, the owner of the shop gave some
ornaments Rings etc and North left some of them there itself, and gave a
cheque for the price, sold them to another and escaped with money.
When the cheque was found to be dishonoured the shop owner filed the
suit aganinst the purchaser contending that there is a mistake regarding
the identity of North and the contract becomes void and prayed for
recovery of Jewels on the same ground raised in the above case ―Nemo
dat Quod non habeat.‖ On the other hand, the purchaser pleaded that it
is not a mistake of identity but fraud played by North and the contract
between shop owner and North is voidable and he purchased the
ornaments without knowing the defect and in good faith and before the
contract is set ande, and he has good title over the goods and he is
protected. Here the court laid two propositions Firstly if a person
purchases the goods personally with name of a noted person it amount
to fraudulent mispresentation and the contract becomes voidable and the
purchaser has good title. Secondly if a person purchases the goods
 261

representing himself to be the wife or brother of a noted person, the

contract becomes void as it amount to mistake as to identity of person.
Here North pruchased goods personally posing himself to be a noted
person and as such it amounts to fraud and purchaser from him gets
good title as he is protected under law.
In Lakes Vs Simmons a lady entered a jewellery shop and
represented to be the wife of a rich person George Bulloush who is a
noted person and selected two ornaments and took them stating that
she wanted to show them to her husband and a set of one ornament to
be selected by him to be gifted to her, on her birthday. She sold them to
another and escaped. Realising the mistake later, the shop owner filed
the suit for recovery of goods from the purchaser. In this case, as the
lady represented that she is the wife of a noted person, It is a mistake of
identity and contract becomes void and the purchaser has no title over
the goods and directed return of the goods.
The next section sec 21 deals with mistake of Law. The section
says "A contract is not voidable because it was caused by a
mistake as to a Law not force in India; but a mistake as to a law
not in force in India has the same effect as a mistake of fact".
Here also the word "Voidable" is used in the grammatical sense of
the Void the meaning of which is "Can be made void". The section says
that mistake of Law will not have any effect on the enforcement of
contract as the principle is based upon the well known maxim" Ignorentia
Juris non excuseth". (Ignorance of law is no excuse). It applies only with
regard to native law. Every citizen of the country is expected to know
what is the law of land and he can not escape any liability on the basis of
Ignorance of law. If it is allowed, everybody would escape his liability
contending that he had no knowledge of law. Further as it is a negative
factor it would be very difficult to prove whether a person has got
knowledge of law. The Bunden of proof would be discharged by simply
 262

denying the knowledge and it would become the headache of the other
party. So the best rule is that Ignorance of law is no excuse. As such
mistake of law is also not an excuse. For that reason only the section
says that the contract cannot be avoided on the ground that any party
had entered into any contract under a mistaken' impression of Law.
Of course the above rule applies to Native Law only and Foerign
Law would be (not in force in India) always be dealt as a matter of fact.
Similarly it was held that though private rights emanate from Law, they
would be dealt as matters of fact vide Cooper Vs Phibbs dealt Under the
topic 'Bilateral mistake' regarding title.
So in all theses case, where contract becomes void under the
circumstance stated, if a person gets any benefit or advantage
under such contract whether he must make good to the otherside
under sec 65 of the Act as per the principle of Restitution is to be
seen. .
So if we strictly apply the principle of restitution in sec 65 it is
doubtful whether a person who has received any benefit under any
contract entered by mistake of fact has to reimburse the same to the
otherside as sec 65 applies only when a contract is discovered to be viod
or subsequently becomming void. The question of a contract entered by
mistake becoming void subsequently does not arise. But we can
conveniently apply the first part of sec 65 "discovered to be void" as the
effect a void contract is to be two fold one which is "Void abinitio" and the
other simply void. Voidab initio in the sense on the face of it is void and
no evidence is required. For example a minor's contract is voidab initio in
India as laid down in Mohri Beebi Vs Dharmados ghosh on the ground
that a minor is not competent to enter into a contract as per sec 11. Of
course here also it requires some probe whether a particular person is a
minor or not at the time of contract and it is negligible as once his date of
birth is proved, the contract becomes void automatically. But in the other
 263

case of simply 'Void nature' same evidence is required to discover

whether a contract is void or not.
In this case in hand about the mistake of fact or mistake of Law
some probe is required to prove the fact of mistake whether it is bilateral
or Unilateral and it may lead to discovery. And in such cases sec 65
applies and restitution is to be ordered if any person has any benefit
received under such void contract.
So far as mistake of Law is concerned it is not a void contract and
if a person receives a benefit under a contract entered into under
mistake of law sec 65 has no application and the other parties has to
necessariley takes recourse to sec 72 (would be dealt in the next
chapters)

7-3-3. Lawful consideration and lawful object:-

The next essential of a valid contract is lawful consideration
and Lawful object. Not only that a contract must be supported by
consideration but the consideration must be Lawful. Further the
object of the contract also must be lawful.
So far as Indian Law is concerned sec 23 enforces this
principle of lawful consideration and object. The section reads it as
follows.
Sec 23 :- The consideration or object of an agreement is lawful, unless
a) It is forbidden by Law : or

b) is of such a nature that if permitted, it would defeat the provisions

of any Law. Or

c) is fraudulent. Or

d) involves or implies injury to the person or property of another or

e) the court regards it as immoral or opposed to public policy. In each of

these cases the consideration and object of an agreement in said to be

 264

unlawful. Every agreement-of which the object or sonsideration unlawful

is void.
As can be seen from the section the agreement of which there is
no lawful consideration can be divided into three categories basing on
their effect and consequence. The unlawful agreement, can be divided as
illegal, immoral and opposed to public policy. Here a distinction is to be
necessarily drawn where certain acts are prohibited or forbidden by any
law and the other acts which are simply declared void under the contract
Act or other enactments. If the act is forbidden it would be illegal. It the act
is simply declared void it is Unlawful. Therefore a contract made for, or
about any matter or thing is illegal, if it be in contravention of statute, or
opposed to its general policy and intent,or is forbidden by law or
legislative enactments. For example A agrees to pay Rs 10,000/-to B, if B
pomises to attack C, B promises to do it. The agreement is void as the
consideration of the promise of A to pay Rs 10,000/- to B is to attack C
which is forbidden by law. Difficulty however arises in a number of cases
where an act is not expressly forbidden but only penalty is imposed for
doing the act. The Law does not always forbid things in express terms but
impose certain conditions and penalties for the breach of them. The fact
whether the imposition of penalty in an act amounts to forbidding or not
depends on the intention of the legislature which can be gathered from
the words used in the Act.
Where the penalty is prescribed for doing of an act on the
ground of public interest, it must be necessarily be regarded as
forbidden by law. That is to say if the prohibition is for the
protection of the public, then it would be an act forbidden by Law.
On the other hand where there are acts which are harmless and they
are not deemed to be forbidden by law simply because a penalty has been
presented for the doing to such acts only for admimistrative convenevience
or for safe gaurding the collection of revenue. Thus if the prohibition is
 265

imposed for departmental purpose then it does not come under the
category of an act forbidden by law. If the consideration is an act prohibited
in the first category the consideration becomes illegal and thereby the
contract becomes illegal. In the 2nd category and other acts which are
declared simply as void, the consideration becomes unlawful and thereby
the contract becomes unlawful. Similarly in the immoral agreements the
consideration would be extra marital, sexual relations and it is against
public decency and moralities and as such the consideration would be
illegal. Prostitution, running brothal houses, adultry, concubinage also
come under this heading and they are not enforceable at Law on the
maxim "Ex dolo malo non oritun actio". Which means the courts will not
help a person who founds his cause of actions on an immoral act. But
according to Allahabad and Madras Highcourts an agreement to give a
woman a sum of money in consideration of past illicit intercourse is a valid
consideration under sec 25(2) as a reward of past services. But according
to Bombay High court a consideration which is immoral at the time does
not become innocent by being past.
In all these cases whether Unlawful or illegal the courts would
not enforce them. But the difference between these two lies in their
effect on collateral transactions. The illegal consideration is so powerful
that it would not only invalidate that contract, but also nullifies all other
contracts which are collateral to it. On the other hand if an agreement is
with unlawful consideration it would not have effect on the collateral
transactions but that contract only becomes unenforceable. The other
types of contracts with unlawful consideration mentioned in sec 23 are
contracts, opposed to public policy. Of course what is immoral and what
is opposed to public policy is nowhere defined. That is why in this section
itself, the legislative power is delegated to courts ―a court regards it as
immoral or opposed to public policy‖.
 266

So in each of these cases the court has to decide whether a

particular contract is immoral or opposed to public policy. So far as the
phrase 'opposed to public policy' is concerned, the Privy Council
remarked that the phrase is like an unruly horse and we don't know
where it would take us.
But since several decades of legal history they are generally
classified into six categories. They are
I. Contracts of public Titles (Awards and public offices)

II. Contracts affecting administration of justice and prosecution

III. Contracts interfering with parental freedom

IV. Marriage Brocage contracts

V. Agreement in restraint of Trade

VI. Contracts by way of wager

The Privy Council observed that the courts should examine a

particular case whether it would come into any of these categories and
decide^but should not invent new classifications.
English common law is also based on these six classifications.
Out of these six categories except the 1st and III categories, the rest are
covered under sec 28, sec 26, sec 27 and sec 30 of the contracts Act.
So far as 1st category is concerned some election cases and exchange
of public offices were considered by Indian courts. So far as public
titles are concerned no cases were reported in India.
So far as parental freedom is concerned, in India Ms
Annebiscent Vs Jiddu Narayana and Secretary of state Vs
Maharaja of Vizianagaram are reported.
But they are not covered under any section in the contract Act
except the general sec 23.
So far as the other four categories are concerned they are
declared void under sec 26 to 28 and under sec 30 of Indian
contract. But these are simply declared void and such contracts
 267

are not prohibited. Therefore they are unlawful agreements only.

Now we have to examine how sec 65 applies to these cases of
unlawful and illegal agreements. If a contract is discovered to be void by
some evidence that they are opposed to public policy under the six
categories stated above, there can not be any doubt that if any person
had any 'benefit or advantage‘ had and received he must make good to
the otherside. So far as illegal and immoral agreements are concerned
the priniciple of "exturpi causa non oritor actio" applies and no action
arises out of an unlawful cause and sec 65 has no application of
restitution also in view of the other maxim "In pari delicto potoir est condi-
tio defendentits" which means that in case of equal guilt the condition of
the defendant is better. For example if A and B conspire to attack X and
A promised to B to pay substantial amount for the attack on X, both the
parties are liable for punishment under law. B suceed, in attacking X in
pursuance of the contract, but still as a plaintiff, he can not sue A as
defendant for the money.
Here A and B both are guilt But A as defendant in a better
position. He could get the desired work done through B but escapes to
pay the amount. Suppose B takes advance for attacking but failed in
attacking X; A would file a suit for repayment of the amount and the
court would not enforce this as it is an illegal cause. Here B took
advance from A and failed to accomplish the task but as defendant he
retains the benefit he received and escape his liability to refund the
same. Here as defendant in each of the cases are having some benefit
but they could not get the same by restitution or otherwise.
Same is the case where the object of the contract is Unlawful. It
may be noted that the term consideration and object do not have the
same meaning. The object refers to some thing aimed at, purpose or
design and sometimes it so happens that both consideration and the
object of the agreement may be unlawful, illegal or immoral.
 268

In Pearce Vs Brookes (1886) L.R.I. Ex 213 a prostitute engaged a

horsecart to make an evening shire in a town to attract her customers.
When she failed to pay the hire, the owner filed the suit. Here as tlpe
purpose of engaging the cab is in an immoral purpose, he would not get
the fare from court. Here also the rule in 'Pari delicto‘ applies and the
prostitute as a defendant is in a better position. Similarly if a person
borrows an amount under a pronote for the purpose of paying dowry of a
proposed marriage; the object here is forbidden (taking dowry) (under
Dowry prohibition Act) and the pronote is not enforceable at law.
So if the consideration or object of an agreement is illegal or
immoral, Restitution cannot be ordered under sec 65 of the contract Act.
Though one person is enriching at the cost of another.
So our codified law of contracts positively declares what types
of contracts are simply void and what are illegal and under English
common Law we have to necessarily take recourse to certain case
law under various heads.
For example Sections 20 to 22 of the Contract Act dealing with all
kinds of mistakes and their effects were considered as Quasi Contarcts
under American and English case laws (Supra Chapter-II) and illegality
of and its effects under Section 23 of the Contract Act under American
and English cases was also considered.
Similarly, the effect of impossibility of contracts and its effect
under Section 56 of Contract Act and the breach of contract under
Section 39 of the Contract and its effect are dealt under American
and English cases was also considered
Same is the case with Anson‘s law of Restitution (Supra
Chapter VI).
Thus in India under Sections 64 & 65 of the Contract, it is the
statutory restitution is allowed through not as a Quasi Contract under
Chapter-V of the Indian Contract Act.
 269

7-4. SECTIONS 69, 70 AND 72 OF THE CONTRACT

ACT
After discussing Sections 68 and 71 of Chapter V of
Indian Contract Act, we have seen that both the sections need
not be continued in that Chapter and appropriate amendment
can be made in other places to give effect to those obligations.
Unfortunately, Section 64 and Section 65 are not included in
Chapter-V though they are of restitutory nature and dealt
directly as quasi contractual obligations under English Common
Law.
Then three Sections, Sections 69, 70 and 72 remained
and their parent principles are exhaustively dealt in this thesis.
Now, we have to take up these 3 applications Section-wise and
discuss the Case Laws under these Sections of the Contract
Act in separate Chapters both by English and Indian Courts. As
already observed in introduction of these cases, these three
Sections are only pick and choose and they are not exhaustive
and the scope is limited.
As such, the Ministry of Law of Union Government
referred the matter to the Law Commission as long back as in
1955 and Law Commission Headed by its Chairman
M.C.Sethalwad forwarded its 13 th Report to the then Minister of
Law A.K.Sen suggesting not only amendments to Sections 69,
70 and 72 to make it more exhaustive, but, also suggested
adding of a restitutory Section Sec. 72(A) by way of
amendment as long back as in September, 1958. But, nothing
was adopted by the Ministry or Indian Parliament. The reasons
and suggestions in the 13 th Report are reproduced in
Chapter-VIII of this thesis. Now, Sections 69, 70 and 72 are
discussed as hereunder.
 270

7-4-1. Section 69 of the Indian Contract Act reads as follows:

Section 69:- "A person who is interested in the payment of

money which another is bound by law to pay, and who therefore
pays it, is entitled to be reimbursed by the other."
In the same Section an illustration is included as follows:-
B holds land in Bengal, on a lease granted by A, the
Zamindar. The revenue payable by A to the Government being in
arrear, his land is advertised for sale by the Government. Under
the revenue law the consequence of such sale will be the
annulment of B's lease. B, to prevent the same and the
consequent annulment of his own lease pays to the Government
the sum due from A, A is bound to make good to B the amount
so paid.
Now, we will take up the Cases under Section 69,
commencing from almost 1922 onwards.
The first case available regarding Section 69 is 24
C.W.N.1068= 68.I.C104 between Kangal Chandra Pal V. Gobi
Nath Pal1. It is a case of contribution. In this case, the plaintiff who
was part owner of a darpatni which had been sold by the patoidar
in execution of a decree for rent obtained by him in a suit in which
the plaintiff had not been made a party had the sale set aside by
depositing the decretal money and the statutory compensation of
five percent of the purchase money due to the auction purchaser
and then sued the other co-shares of contribution.
The Court held that though the decree was not binding on
the plaintiff, as the entire darpatnit had been put up to sale,
the plaintiff had the right to sue under Section 70 of the Contract

1
24 C.W.N.1068= 68.I.C104 between Kangal Chandra Pal V. Gobi Nath Pal
 271

Act, though not under Section 69 and that not merely in respect of
the decretal amount but also of the statutory compensation money
in tended for the auction purchaser.

2. The next case is Beni Madho V. Sanwar Dat (20 Allahabad

Law Journal Page.42 = 641.C. 918) 2. This is case of a
Usufructuary mortgage in possession.
In execution of a money decree against the defendant by
a 3rd person property, usufractuarily mortgaged to plaintiff was
sold. Plaintiff deposited the required amount to set aside the
sale under Order 21 Rule 89 and sued defendant for the same.
It was that in the circumstances the plaintiff was not a mere
volunteer but a person interested and therefore was entitled to
be reimbursed.
3, The next case is Gopala lyendar V. Mummachi
Reddiar ( Law Weekly 254) 3,
In this case Spencer.J stated that the vendee of
properties who had received specific notice, that the sale
deed standing in the name of his vendor was only nominal,
unenforceable and had not been given effect to, is not a bona
fide purchaser without notice. But where after taking the sale
deed, he pays off incumbrances and tries to preserve the
property from the clutches of creditors, his payments are bona
fide and he is a person "interested" within the meaning of
Section 69 of the Contract Act. Though it is well established
that Sections 69 and 70 of the Contract Act were not designed
for the benefit of persons who are mere volunteers a person
who pays off incumbrances on the property purchased after

2
Beni Madho V. Sanwar Dat (20 Allahabad Law Journal Page.42 = 641.C. 918)
3
Gopala lyendar V. Mummachi Reddiar ( Law Weekly 254)
 272

his title is decreed in one court and before his title is declared
by the court of appeal is entitled to claim the suit inspite of the
notice he had. In such a case, as the ordinary relief he is
entitled to a personal decree and not a charge on the
property.
In the same Judgment, Devadoos J. stated that in order
to claim payments made to discharge incumbrances on
property, plaintiff must show he was a volunteer and did not
make the payments officiously. The onus is heavily on him to
show he paid the amounts bonafide. The equitable doctrine of
subrogation cannot have any application to volunteers or
persons whose conduct in officious. The distinction should
always be kept in view of sale which are void, viodable and
merely sham. The fact that the incumbrances were discharged
after the vendee's title was declared to be good in the court of
first instance but before the same was upset in appeal, will not
make any difference as courts do not confer rights to property
where the person had admittedly none.
4. In an English case British American Continental Bank Vs.
British Bank of Foreign Trade ( 1926v (1) K.B.328)4 the facts
are as follows:-
A entered into a contract with B to sell a quantity of francs
and under the contract A was to deliver the same to C, the
agent of B.0 was to pay over; the same to the bankers of B at
Antwerp. On the morning of the day on which the contract was
to be performed, B cabled to A that the contract need not be
performed as he would be unable to pay for the francs on
account of insolvency proceedings. By the time this cable was

4
British American Continental Bank Vs. British Bank of Foreign Trade ( 1926v (1)
K.B.328)
 273

received. A's agent had handed over the francs to C, who had
passed it on to the bankers B. A there upon requested the
Bankers of B to return the francs, and they returned it to C, who
under instructions from the Receiver in bankruptcy refused to
return them to A. In an action for the return of the money against
C on the ground that it had originally been for the return of the
money against C on the ground that it had originally been paid
under a mistake of fact, held, as A was unaware at the time of
payment of the bankruptcy of B he has entitled to the return, and
as the bankers of B had returned it to C, he was bound to repay it
to A. It is indisputable that if money paid under a mistake of fact
is re-demanded from the person who received if before his position
has been altered to his disadvantage the money must be repaid in
whatever character it was received.
5. The next case is Secretary of State Vs. Rangaswami &
5
Co., (1927 M.W.N.872
A person who entered into a contract with the
Government for the supply of a certain quantity of coal and the
coal was consigned from a certain colliery in Bengal and the
contract was that the coal should be supplied free on rails at a
specified station. The consignments were received under
freight system under which the consignee was to pay the
freight. The Government having paid the freight brought a suit
to recover the same from the person who entered into the
contract. It was held that the right of the Government extended
only to rejecting the coal and not to claim any charges they
choose to pay a third person voluntarily and that Sections 69
and 70 of the Contract Act did not apply to such a case.

5
Secretary of State Vs. Rangaswami & Co., (1927 M.W.N.872
 274

6. The next case is Durga Charan Chandra vs. Ambica

Charan Chandra (AIR 1927 Calcutta Page. 393) 6

In this case, the puisne mortgage paid off the amount

due under the prior mortgage to avoid a sale and
subsequently sued for recovering the sum thus paid. It was
held that apart from Section 74 of the Transfer of Property
Act, the subsequent mortgage has a right to be reimbursed
under Section 69 of the Contract Act. It was also held that
the rule as to compensation under Section 69 of the Contract
Act was not intended to be taken away by Section 74 of the
Transfer of Property Act.
Thus, in this case there are two versions one under Section
74 of the Transfer of Property Act and another under Section 69
of the Contract Act and Section 74 can be utilized for the claim.
7. The next case is Sinthamani Chetti Vs. Arun Achalam
Chettiar (AIR 1927 Madras 1060 (2) 7
In this case, it was held in the absence of a contract to the
contrary the liability of a vendee of property or the transferee of
a lease to pay rents and charges arises only on the date of sale
or transfer of the lease and not the date of contract of transfer.
There is no distinction between the sale of immovable property
and the transfer of a lease in this respect, but, where the
transferee enters into possession on the date of contract, he is
bound to pay the charges of such property in his possession,
and if the transferor pays the same, he can recover them from
the transferee, Section 69 of Contract Act applies to such a
case.
Thus, in this case also the rights to a purchaser or an
agreement holder in possession of property can claim --
6
Durga Charan Chandra vs. Ambica Charan Chandra (AIR 1927 Calcutta Page. 393)
7
Sinthamani Chetti Vs. Arun Achalam Chettiar (AIR 1927 Madras 1060 (2)
 275

reimbursement under Transfer of Property Act Section 55

and also under Section 69 of the Contract Act. Similarly, in
another Madras Case n Natesa Vanniyan Vs. Gopalasami
Muclaliar ( 28 L.W. Pape. 346 = AIR 1928 Madras Page.
894) 7A Section 55 (2) of Transfer of Property Act was
considered.

8. The next case is 11957 K.L.T. 815 = I.L.R. 1957 Kerala 770
in between K.Appu Vs. Sevyar8.

In this case, it was held that all that the Courts have to
consider in arriving at a decision whether the payment was done
lawfully or not is to see whether the person making the payment
had any lawful interest in making it at the time when the payment
was made.

In this case, there was a contract of sale of property by

"J" in favour of "P" through P's agent 'A'. The property was
being put to sale in execution of decree against 'J'. To save
the property `P' and the decretal amount to the decree holder
and filed a suit against 'J' for the amount.

It was held that "P' who had a contract of sale in his favour
through his agent 'A' was a person interested within the meaning
of Section 6 of the Contract Act in the payment of money with 'J'
was bound by law to pay; and as ouch `P' was entitled to be
reimbursed by the defendant.

7A
Natesa Vanniyan Vs. Gopalasami Muclaliar ( 28 L.W. Pape. 346 = AIR
1928 Madras Page. 894)
8
1957 K.L.T. 815 = I.L.R. 1957 Kerala 770 in between K.Appu Vs. Sevyar.
 276

9. Similarly, in Muppudathi Pillai Vs. Krishnaswami Pillai

( 72 Madras Law Weekly Page 543 = AIR 1960 Madras
Page.1) 9
Ramaswami J. in the final judgment held that: - it is not
correct to say that a person could not be interested in
payment of money within the meaning of Section 69 of the
Contract Act unless he was at the same time entitled to some
legal interest in the property in respect of which such payment
might be made. The words themselves do not require that a
person to be interested in a legal payment should at the same
time has a legal proprietary interest in respect of the payment
he made.
The question was raised in this case because there was
conflict of opinion that there must be some proprietary interest for
payment of the money.
10. The next case is Shankerlal Vs. Motila! ( AIR 1957
Rajasthan 267) 10.
In that case, it was held that the word reimbursement
used in Section 69 has to be contracted with the words
"Contribute" or "Contribution" used in Sections 43 and 44 of
the Contract Act. Properly speaking, there can not be any
claim for reimbursement among joint promisors, and there
would be contribution between them as persons who are
equally bound to perform the promise. A case of
reimbursement within the meaning of Section 69 arises where
another person makes it has an interest in the mater, and
therefore, makes the payment. The illustration to the section

9
Muppudathi Pillai Vs. Krishnaswami Pillai ( 72 Madras Law Weekly Page 543 = AIR
1960 Madras Page.1)
10
The next case is Shankerlal Vs. Motila! ( AIR 1957 Rajasthan 267)
 277

makes the matter quite clear, and so claim for reimbursement

in the sense in which the word is used in Section 69 can not
be said properly to arise where a person who makes the
payment is himself bound by law to make it and is not merely
interested in the payment of the money required.
Even assuming that reimbursement or contribution
mean one and the same thing it does not follow that a claim
for reimbursement or contribution can not arise under any
other circumstances than those mentioned in Section 69. A
case may not be covered by Section 69 but on that score it
can not be said that the claim for contribution can be
negatived if it otherwise arises under Sections 43 and 44 of
the Act.
So, from this judgment, it is clear that the main claim of
reimbursement or contribution is made under Sections 43 and 44
of the Contract Act and Section 69 has become secondary.

11. The next important case under Section 69 is from the

Allahabad High Court in between Metropolitan Police District Vs.
Craydon Corporation ( 1956 (2) Allahabad E.R. 785)11
In this case it was held that when the plaintiff has been
compelled by law to pay, or being compellable by law; has
paid money which the defendant was ultimately liable to pay,
so that the latter obtains the benefit of the payment by the
discharge of his liability, under such circumstances the
defendant is held indebted to the plaintiff in the amount.
There are five requirement for the application of this principle.

11
Metropolitan Police District Vs. Craydon Corporation ( 1956 (2) Allahabad E.R.
785)
 278

First there must be the some debt; secondly, both plaintif f and
defendant must be liable to the same person for the debt;
thirdly, the defendant must be primarily liable for the debt;
that is to say, as between himself and the plaintiff, fourthly, the
plaintiff must have been compelled to pay the debt and fifthly, the
plaintiffs payment must have operated to relieve the defendant of
his primary liability. By the same debt it is meant that it must
necessarily be the same liquidated sum of money and primarily
liable means liable in the sense that, as between a principal debtor
and a surety; both of whom are equally liable to the creditor, the
principal debtor is as between themselves primarily and the surety
only secondarily liable.

In this case, it was held that on facts that the plaintiff;

being compellable by law, paid to the police constable the
money which he sought to recover, that the payment was a
sum which the defendants were ultimately liable to pay, for if
the police constable had not received his wages from the
plaintiff, he could and would have recovered them from the
defendants, that the defendants were primarily liable because
it was their negligence which deprived the plaintiff of the whole
of the consideration for the payment and that, therefore; the
defendants were indebted to the plaintiff in the amount
claimed.
In another English case reported in the same Journal Page
No.800 in between Monmouthshire Country Counsel Vs. Smith.
The Court considered the question of reimbursement.
 279

In this case, a police constable was injured by defendant's

negligence. The Council paid damages to the police constable as
required by statute.
The question was whether the defendant was liable for
reimbursement?
It was held that so far as the claim for reimbursement for full
pay and allowances paid to the police constable for the period
during which he was sick and the rent for his house for the same
period, the constable not having on the defendant to pay to the
constable any sum for loss of wages and therefore the essential
element which was necessary to constitute the cause of action
was missing.
Though it is not under Section 69 of the Contract Act, the
question of reimbursement was considered in this case and the
claim disallowed.
12. The next cases that would arise under Section 69 are
mostly on matters where there are other provisions in the
enactments.
For example, in Y.rajamma Vs. P.Buthiramayya ( 1967 (2)
ALT 283 = 1967 (2) Andha Weekly Reporter Paqe.349) 12
This case arises from a synonymous provision in the
Negotiable Instrument Act.
The question arose in this case was whether the
holder due in course is entitled to reimbursement from the
maker or the endorser of the promissory note? Discussing
the first question about whether the first defendant was
bound to pay the amount of the promissory note executed
by him.

12
Y.rajamma Vs. P.Buthiramayya ( 1967 (2) ALT 283 = 1967 (2) Andha Weekly
Reporter Paqe.349)
 280

The court considered Section 37 of the Negotiable

Instrument Act. It was an answer for that question. According to
that Section, the maker of a promissory note until acceptance,
and the acceptor are, in the absence of a contract to the
contrary, respectively liable thereon as principal debtors and the
other parties thereto are liable thereon as sureties for the maker.
The same position of law is brought out in the explanation to
Section 43 of the Contract Act which states that nothing in this
section shall prevent agent from recovering from his principal,
payment made by the surety on behalf of the principal or entitle
the principal to recover any thing from the surety on account of
payments by the principal. Thus, the claim that the maker of the
promissory note in this case, the first defendant is treated by
Section 37 of the Negotiable Instrument as the principal debtor
and the endorser. In this case, the plaintiff has treated as surety.

Section 227 ( c) of the Negotiable Instruments Act enjoins that

indorser who, being liable, has paid the amount due on the
same is entitled to the amount so paid with interest at 6% per
annum together with all expenses caused by the dishonour and
payment. It will thus be clear that by virtue of these provisions,
the holder-in-due course, that is to say, the 2 nd defendant, was
entitled to recover the amount either from the maker of the
promissory note, the 1 st defendant or from the plaintiff, who
was the endorser, and between the endorser and the maker of
the promissory note the relationships surety and the principal
debtor exist by virtue of Section 37 of the Negotiable
Instruments Act. That being the position of law as I
comprehend it, the person who was bound to pay the amount
 281

was the executor of the promissory note being the principal

debtor and the surety indorser being interested in making the
payment, if he pays the amount, he can recover the amount
because of Section 117 (c ) of the Negotiable Instruments Act
and Section 79 of the Contract Act. The principal debtor, in
such a case, is bound to reimburse the surety if the surety has
paid the amount.
The entire facts constitute the cause of action for the
plaintiff. In that view of the matter, if it is found that both the
promissory note as well as the endorsement were supported by
consideration and since the 1 st defendant is sole executor of
the promissory note, he is the principal debtor and since it is
further found that the endorser made the payment to the holder
in due course he would naturally be entitled to get the amount
reimbursed from the principal debtor as stated above.
So, from this case, it is clear that the Court applied
synonymous provision of the Negotiable Instruments Act for
reimbursement.
13. Another recent case of the Andhra Pradesh High Court is
Abdul Samad and another Vs. V.K.Abdullah Basha ( 1988) (1)
ALT Page No.132)13
In this case while discussing Section 69 of the Contract Act
considered the scope of view of Sections 140 and 145 of the same
Act, which are synonymous provisions.
This is a case where the plaintiff claimed reimbursement
of the amount paid by him as a surety for the defendants. The
defendants pleaded that they are not liable to pay amount paid

13
Abdul Samad and another Vs. V.K.Abdullah Basha ( 1988) (1) ALT Page No.132)
 282

by the surety to the creditors as the debt is scaled down under

the provisions of the Act IV of 1938 and the liability of the surety
is co-existensive with that of the debtor and as such under law
the surety is not liable to pay the amount and therefore the
claim against the defendants is untenable. The Trial Court held
that the liability of the surety is co-existensive and if this is not
given effect to it, may lead to collusion between the surety and
the creditor and further attempt to enforce the liability despite
scaling down of the debt under Act IV of 1938 is opposed to
public policy. The Lower Appellate Court reserved the judgment
of the Trial Court holding that the liability has to be considered
with reference to the relation between the surety and the debtor
and when the surety paid the amount which is legally bound to
pay he is entitled to reimburse the same.
In this revision petition, the Court held that Section 145
of the Contract Act is designed to rescue the surety by
providing the remedy of reimbursement from the principal
debtor for the amount paid by him. Section 145 is concerned
with any payment made by the surety with reference to the
guarantee. The only safe guard visualized under Section 145
is that wrongful payment does not clothe the surety with the
right to reimburse. The surety is obliged to pay the decretal
amount under the threat of coercive process in execution of
the decree and such payment can not be labeled as wrongful
payment. The concept of co-extensive liability does not lend
colour to the right of the surety for reimbursement provided
under Section 145 and the surety is entitled to recover any
amount paid by him provided it is not wrongful payment.
 283

Section 140 is merely concerned with the right of

surety to recover the amount from the debtor when he is
obliged to pay the amount. Section 69 is a General
Provision relating to the right of a person, who is obliged to
pay on behalf of another and the general provision cannot be
pressed into service in the situation of guarantee under
Section 145 which is a specific provision pertaining to the
rights of surety and Section 69 being general has to
necessarily yield to the special provision i.e, Section 145.
So, in this case, the court applied the Sections 145 and
140 for reimbursement and negatived the Section 69 as a
General provision and that it cannot be invoked.

14. In an earlier case in Narasimharao Vs. Veeraraghavayya,

Division Bench of Andhra Pradesh High Court in 1959 ( 2) Andhra
Weekly Reporter NRC Page No.2014.
While discussing Section 69 of Contract Act, again took it as
synonymous provision i.e., Section 55 of the Transfer of Property
Act, wherein it held that:-
Section 55 (1)(g) of the Transfer of Property Act, the
seller is bound to pay all public charges and rent accrued
due in respect of the property up to the date of the sale, the
interest on all incumbrances on such property due on such
date and except where the property is sold subject to
incumbrances on the property to discharge all incumbrances on
the property then existing. This principle is applicable even to
Court Sales.

14
Narasimharao Vs. Veeraraghavayya, Division Bench of Andhra Pradesh High
Court in 1959 ( 2) Andhra Weekly Reporter NRC Page No.20
 284

Section 69 of the Contract Act is applicable to a case

where persons who were interested in the payment of the
money had deposited the amount in Court under Order 21 Rule
89 of Civil Procedure Code to set aside the sale. The other
auction purchasers who are bound by law to pay have to
contribute to that person.
So, the question of contribution arose under Section 69 of
Contract Act as well as under Section 55 of the Transfer of
Property Act.
15. Another earlier Bombay High Court case is also to be
discussed here in this connection.
This is very important and leading case under Section 69 of
the Contract Act and also under Section 55 of the Transfer of
Property Act.

The case is State of Gonda! Vs. Govindram Seksaria (AIR

(32) 1945 Bombay 187) 15
This is a case where Defendants 2 and 3 trustees of
debenture trust executed by owner of Mills. Defendant No.1
holding all, issued debentures. On default payment of
debentures on due date trustees coming into possession of
Mills and the Plaintiff No.1 purchased the Mills from the
Defendant No.1, paying purchase price on 7 th September,
1937 and taking possession from trustees on 9 th September,
1937. On 7 th October, 1937 Municipality demanded Plaintiff
No.1 for arrears of municipal taxes. On 23 rd February, 1937

15
State of Gonda! Vs. Govindram Seksaria (AIR (32) 1945 Bombay 187)

f
 285

Plaintiff No.2 paid off municipal taxes and on 25 th March,

1939 the Defendant No.1 executed registered conveyance in
favour of Plaintiff No.2 direct, Plaintiff No.1 joining as
confirming party. The plaintiffs 1 and 2 made claim to recover
the amount of municipal taxes from the defendants 1 and 2.
They claimed not only under Section 69 of the Contract Act,
but, also under Section 55 (1) of Transfer of Property Act .
There was of conflict of opinion among judges Stone and
Kania on several aspects and they gave different opinions.
It was held that plaintiff could not recover amounts under
Section 69 of the Contract Act or Section 55 (1) of Transfer of
Property Act.
Thus, from these cases, it is clear that in all Reported cases,
the plaintiff for claiming reimbursement was chosen alternative
claims under Section 69 of the Contract Act, like Sections 140,
145, Sections 40 and 43, Section 55 of the Transfer of Property
Act and finally under Negotiable Instrument Act.
The Courts were reluctant to give a claim for
reimbursement under Section 69 when there is a synonymous
provision in other enactments viewing that Section 69 is a
general provision. The Courts were making tough to take into
consideration the necessary ingredients of 1) Interested in
Payment, 2) Money due by another bound by Law to pay. Even
the illustration under Section 69 is not useful even in cases
where facts are similar So, almost the necessity of Section 69
is reduced. That is why the 13 th Report of Law Commission
suggested amendment to Section 69 to make it more
exhaustive and extensive which could be discussed in the next
Chapter.
 286

7-4-2. The next Section under Chapter V of the

Contract Act is Section 70

Section 70 of the Indian Contract Act reads as follows:-

Section 70:- Where a person lawfully does anything for

another person, or delivers anything to him not intending to
do so gratuitously and such other person enjoys the benefit
thereof, the latter is bound to make compensation to the
former in respect of or to restore the things so done or
delivered."
In this Section two illustrations are also added. They are
as follows:-
(a) A, a tradesman, leaves goods at B's house by
mistake. B treats the goods as his own. He is
bound to pay A for them.
(b) A saves B's property from fire. He is not entitled to
compensation from B, if the circumstances show
that he intended to act gratuitously.

So, from this Section 3 ingredients are necessary.

The First is a person who lawfully does something for the
another person, or delivers anything to him.
The Second is that ― not intending to do so gratuitously ―, that
means he should anticipate some consideration for the same.
The Third is that the other person should have enjoyed
the benefit thereof. Unless these three ingredients are found,
Section 70 has no application. From the earliest cases in
India, the three ingredients were made compulsory to apply
Section 70 under the theory of Unjust Enrichment.
 287

1. In 8 Patna Law Times Pacje.176 1 , it was held that:- " The

Legal Practitioner is not entitled to claim reasonable
compensation under this Section because the suit was barred
by Section 28 of the Legal Practitioners Act, 1879."
2. In another case, Bemasena Rao Vs. Narayanarao 2,
Ramesam J. held that:-where a person has made a payment to
pay a debt of another to save certain properties from sale
thinking that the properties belonged to him, even if it turns out
that it does not so belong, he is entitled to a decree against the
owner of the property for the recovery of the money paid by him
to save the property from sale" of the property for the recovery of
the money paid by him to save the property from sale."

3 The next important case is Full Bench case of Madras High

Court.
In Sri Rama Raja Vs. Secretary of State f 1942 ( 2) M.,L.J.,
800 (F.B)3.
Leach J. held that:- "Where the Government effects
repairs to an irrigation tank owned by the Government jointly
with a shrotriemdar and sues the latter for contribution in
respect of the expenses incurred for the repairs, it must be held
that the Government in carrying out the repairs has acted
lawfully and has not intended to carry them out gratuitously and
that the defendant co-owner, who has enjoyed the benefit of the
repairs which were necessary and but for which his lands would
have suffered is liable to pay contribution to the Government.

1
8 Patna Law Times Pacje.176 , 2 Bemasena Rao Vs. Narayanarao
3
Sri Rama Raja Vs. Secretary of State f 1942 ( 2) M.,L.J., 800 (F.B).
 288

All the conditions of Section 70 of the Contract Act having been

fulfilled, the Government would be entitled to recover
contribution. Though under the English Law, the defendant
would not be liable, the provisions of section 70 of the Indian
Contract Act are wider than the English Law, and therefore the
defendant is liable under Section 70.
4. The next Important case on Section 70 of Contract is
State of West Bengal Vs. Ws.B.K.Mandal and Sons (AIR
1962 SC. P.779 4 ) a Bench of Supreme Court consisting of
5 judges P.B.Gajendra Gajakar, A.K.Sarkar, K.N.
Wanchoo, K.C.Das Gupta and N.Rajagopal Ayengar. In
this case, it was held that:-
Where a claim for compensation made by one person
against another under Section 70 does not on basis of any
subsisting contract between the parties, it is of the fact of the
facts that something was done by the Party for the another
and said work was done has been voluntarily executed by
the other party.
In regard to claim made against the Government of State
under Section 70, it may be that in many cases, the work done
or goods delivered, the resulting request made by some officer
or the other on behalf of the said Government. In such a case,
the request may be ineffective or invalid for the reasons that
the officer making request was not authorized him to make the
said request, the request becomes inoperative because it was
not followed up by a contact executed in the manner prescribed
by Section 175 (3) of Government of India Act. In other case, a

4
State of West Bengal Vs. Ws.B.K.Mandal and Sons (AIR 1962 SC.
P.779)
 289

thing has been delivered or work has been done when a

contract and that brings it Section 70. It may not be reasonable
to suggest that in recognizing the claim of compensation under
Section 70, the court is either directly or indirectly nullify the
effect of Section 175 (3) of Government of India Act or treated
as a valid contract which is not valid. The Government by two
proposers are support or justifying there is no conflict between
3 provisions. The functioning of the vast version representing by
a learned State Government Officers in vain and they entered a
valid contract within of paid nature. Some time there should be
have act magnifcious act and on many occasions perused
welfare policy of the State Government, officer may have to
enter into contract orally or through correspondence directly
applying the provision of Section 175 (3) of the Act. If in all these
cases that what is done is not for policies of the Government or
for the benefit of the Government and use and enjoyment, and it
is otherwise, legitimate and proper Section 70 would set up and
support claim for compensation made by the contracting parties
notwithstanding that the fact that the contract made as required
by Section 175 (3).
The Court also held in Para 17 that between the person
claiming compensation and person against whom it is claimed
some level resulted most satisfaction. For that is, the
implication of use of the word level in Section 70. But, said level
realized arise not because the party claiming compensation has
done something for the party against whom the compensation
claiming it because what has been formed has been a fact and
enjoined by the Law.
 290

So, from this decision, it is clear that Section 70 applies not

only to private parties, but, also to Government. This section is
applied in a restitutory manner, giving free interpretation for
Section 70. So even though there is no valid contract, a person
benefited is bound to pay compensation under the contract is
clear from this decision. But, unfortunately, the court held that
the some relationship must exist and relation means not any
other type of relationship, but, the relationship can be inferred if
the person to whom the work done or thing delivered has
accepted it. Of course, the word acceptance is not included in
Section 70. Section 70 does not say that the thing offered or the
work done is to be accepted by the person benefited. It is only
under the judgment of the Supreme Court that the question of
acceptance will come into effect.
Thus, in this case, the Supreme Court consisting of 5 judges
gave a wider interpretation to Section 70 of the Contract Act. It is to
some extent better.
5. In another judgment reported Thaas Abraham and
others Vs. National TYres and River Company of India
Limited 5, 3. Judges of the Supree Court S.M.Sikri, C.J., A.N.
Ray and M.H. Baig, Judges have found in AIR 1974(S.C.)
Page No.602) that where accounts are shown erroneous or
are drawn up and assented to by parties under a common
mistake as their rights and obligation, the accounts may be
directed to be reopened. The Law implies an obligation to
repay the money which is an unjust enrichment. So whether in
a suit for recovery of money due on the basis of

5
Thaas Abraham and others Vs. National TYres and River Company of India
Limited
 291

acknowledgment, when the High Court found that an appeal on

the basis of evidence and documents that the amounts
satisfied by way of interest n the acknowledgment was wrong,
it was held that the High Court had correctly recollected the
amount of interest due on the principal amount from 30-08-
1954 to 13-02-1955. As per only agreement to pay interest
arrived on 17-03-1955 and it rightly granted a decree for
amount of interest. So, in this case, Supreme Court went to the
extent of giving relief under Sections 69 and 70 even though
there is an erroneous calculation.
6. The next decision of the Supreme Court in this regard is
AIR 1976 S.C. P.1152, in the Nawabjang Sugi Mills Limited Vs.
Union of India, Justice A.R.Krishnaiah and S.Murtaza Fazal All
held under Section 70 that excess amount has to be paid by the
Government. In this case, the price of levy sugar was fixed by
the State. The appellants in this case, who are sugar mill
owners questioned the validity of the contract and obtained stay
of application of orders. Under cover of the courts, stay order
which was granted on bank guarantee for the excess price
being furnished to the court, the appellants sold sugar at free
market rates. Unfortunately with judicial sanction crores of
rupees were admittedly funneled in to the millers tills. But High
Court upheld the control of price and unhappy obligation to
restore the unjust enrichment arose. The High Court directed
the Registrar to encash security and recover the amount to be
paid ultimately to the consumers who had paid in excess. The
Court held that the money charged in excess should go to the
numerous buyers through the Court process. ( In this, Supreme
Court issued complex of directions. The difficulty arose to identify
small consumers who are numerous. The Supreme Court for the
 292

first time in its processional powers directed to prepare a scheme

to pay the amounts paid in excess to the consumers.

Of course, it was held in Para 5 of the Judgment that the

handling of small claims is probable, the most deplorable future
of the administration of civil justice and yet small claims are in
many respects more significant than large ones, involving large
numbers and inter class disputes. If the confidence of community
in the justice system, specifically consumer protection.

Of course, this judgment of justice Kirloskar ultimately led

to the Consumers Protection Act. Using its special powers in its
judicial discretion the Supreme Court framed a complex of
directions to meet the needs of both appellats and buyers from
whom higher price were charged. There are altogether 8
directions from (a) to (h) given by the Supreme Court for
repayment of excess price. That business was entrusted to the
High Court after giving a wider publicity for the awareness of the
consumers.

So it is clear from these three cases, the Supreme Court

in exercise of its constitutory power have interpreted Section
70 extensively and also added several riders to Section 70. In
Common Law of England, it is not possible to follow any
precedent in this regard which they are none. From these it is
clear that Section 70 is not exhaustive and courts by way equity
did justice to persons by getting compensation from the persons
who are unjustly enriched themselves.
 293

7. Now, we will take up important Andhra Pradesh cases under

Section 70.
The worth seeing case is reported in 1968 (1) Andhra
Weekly Reporter between Daqumarthi Swamyqupta
Siddanthi Vas. Venkateswara Publisher house, Eduru 6. In
this case, Justice Narasimhan, while dealing with the Copy
Rights Act and the Joint Promissors under Section 43 of the
Contract Act held that:-
"In order to attract Section 70 of the Contract Act, three
conditions have to be satisfied.
The first is that the person must lawfully do something for
another person or delivers something to him.
The Second condition is that in doing the said thing or
delivering the said thing, he must not intend to act gratuitously;
and the
The Third is that the other person for whom something is
done or to whom something is delivered must enjoy benefit
thereof."
In this case the court followed the Supreme court Judgment
in AIR 1962 S.C.P.779.
The court held that when the plaintiff succeeded under
Section 70 of the Contract Act, it should not be open to enforce
claim on the footing of a contract. So in English Common Law
one of the principles of Quasi Contract is waiver of contract.
We have dealt to the same in Chapter-V. This case arose under
right of publication of a Telugu Almanac and the Violation of the
Copy Right. The question of enforcement of the whole promise

6
1968 (1) Andhra Weekly Reporter between Daqumarthi Swamyqupta
Siddanthi Vas. Venkateswara Publisher house, Eduru
 294

against one of the joint promissors and then claiming

contribution also was discussed in this case.
The next important case is Raja Bommadevara Naqanna
Naidu Bahadur Jamindar Garu Vs. Rao Janardhana Maharashi
Rarmaraya Bahadur and others reported in 1959 (2)
A.W.R.P.105(Full Bench) 7. In this case, Section 100 of the
Transfer of Property Act was considered, which deals with the
change over the immovable properties. The Full Bench held
that Section 100 does not apply to a court decree. Section 82 of
the Transfer of Property Act deals with the contribution for
maintenance. In this case, the plaintiff and first defendant are
brothers and second defendant is their step mother. A suit for
partition of joint family properties was filed by the first defendant
and his sons in O.S.No.38/19 in Sub Court, Eluru. To the said
suit, the step mother impleaded as a party as she was entitled
for maintenance. Unfortunately, when the suit was decreed for
partition, the Lower Court directed provision of maintenance of
the step mother at Rs.600/- for every month and created a
charge on the estate of the plaintiff and first defendant. When
the maintenance was not duly paid, the maintenance holder
filled several petitions for execution. Then the question of
contribution arose. When the plaintiff filed a suit for contribution,
from which this decision arose, the court discussing entire case
Law held that the charges mentioned in Section 100 of the
Transfer of Property Act have no application to a court decree
and the plaintiff/appellant who claimed contribution is not
entitled to the benefit of Section 82 r/w Section 100 of Transfer

7
Raja Bommadevara Naqanna Naidu Bahadur Jamindar Garu Vs. Rao
Janardhana Maharashi Rarmaraya Bahadur and others reported in 1959 (2)
A.W.R.P.105(Full Bench).
 295

of Property Act and as such, would not claim any compensation

from the defendants. It was also held that Section 70 of the
Contract Act also has no application and the plaintiff cannot
claim contribution under Section 70..
9. The next case between Null Kanakarao Vs. Tenali Sri
Ranqa Venkata Ramalinqa Reddy (A.P.H.C.) reported in
1966 (1) Andhra Weekly Reporter P.2758 held that, when the
rights of the parties are covered by express contract, the principle
of Quantum Meruit is not' applicable and no relief can be granted
under Section 70. In this case, the plaintiff granted a lease of
his rice mill to the defendant. One of he terms of the agreement
was that in case of any repairs are to be done whose value
exceeds Rs.150/- then the defendant has to obtain prior
approval of the co-owner of the mill. Inspite of that specific
clause in the lease deed, the defendant made certain repairs
without prior approval of the co-owners. When the plaintiff filed
this suit for accounting and amounts due to them, the defendant
claimed reimbursement of the amounts spent for repairs and
relied on Section 70 of the Contract Act. The Trial Court held
that the defendant effected repairs after obtaining consent of all
the owners. On appeal, the Lower Appellant Court, found that
the defendant effected the repairs contrary to the terms of the
agreement, but, it was held that the defendant entitled to claim
reimbursement under Section 70 of the Contract Act. On appeal
by the Plaintiff by the defendants to the High Court, it was held
that in place of express contract, governing relationship of
lessor and lessee, and Section 70 can not be pressed into

8
Null Kanakarao Vs. Tenali Sri Ranqa Venkata Ramalinqa Reddy
(A.P.H.C.) reported in 1966 (1) Andhra Weekly Reporter P.275
 296

service and no relief can be granted to the defendant on the

foot of Quantum Meruit merely because the plaintiff also will be
enjoying the benefits of the repairs held out by the defendant, In
this case, the court referred the earlier Madras case of AIR
1941 Madras P.887 While discussing Section 70, the court held
at Page No.277 that in order to appreciate the implications of
the contentions of either side the court reproduced Section 70
of the Act and held that on careful reading to this Section would
indicate that the Section is couched in very wide terms and it is
because of this sometimes difficulties are felt in application of
provision of that section to specific cases. These things must
necessarily be established in order to attract Section 70.
Firstly, some benefit must have been legally conferred by
the Act.
Secondly, the Act must have been done by the doer
without intending to be gratuitous and
Thirdly, that the person for whom it has been done must
have enjoyed the benefit arising out of such Act.
It can thus be broadly stated that the section applies
where a lawful doing something for another, not intending to do
so gratuitously is entitled to reimbursement. One caution must
however be sounded. The section, merely because it is
couched in wide language can not be read so as to justify
officious interference of the man with the affairs of property of
another man or to impose obligation in respect of service which
the person to be charged did not wish to have been rendered.
The expression Lawfully employed in the section
postulates cases in which a person holds a relation as either
directly to create or by implication reasonably to justify an
inference that by some act done for another person the party
 297

doing the act is entitled to look for compensation for it is to the

person for whom it is done:
It is however beyond doubt that according to that section it
is not essential that the act shall have been necessary in the
sense that it has been done under circumstances of pressing
emergency or even tha it shall have been an act necessary to
be done at some time for the preservation of property. The
benefit of this section therefore can be extended to cases in
which no question of salvage enters. It is patent that its
application can not be limited (to persons) standing in particular
relationships to another. It is also manifest that in order to
constitute an act lawful for the purposes of this section, it does
not impose any condition in regard to circumstances under
which the act must have been done.
In spite of the wide important of the section the essence
of it undoubtedly is the word "lawfully" appearing in that
section. It becomes therefore necessary in every case where
section 70 is sought to be applied to find out whether the
person who performed the act had any lawful interest in doing act.
The meaning of the word 'lawfully' in this section is merely
bonafide. In ascertaining whether an act is lawfully done for
another the test mentioned by me just before shall have to be
applied. If that test was not to be applied, then it would almost
amount to permit a person to meddle officiously with the affairs of
another and make him liable for the work done which though
advantageous in some measure may either not have been
undertaken by him at all, or he might have put some restrictions in
doing such an act. It is in this context that the existence of some
kind of lawful interest with the person doing an act becomes
generally necessary.
 298

It must also in this connection be remembered that the act

done must have resulted in the enjoyment of its benefits by other
persons sought to be held liable. If the act is done for the doer's
benefit or the person sought to be held liable does not derive any
benefit, or that the benefit is both to the person who does the act
and incidentally it also benefits some other person, it is obvious
that no liability can be fastened under section 70 of the Act.
That seems to be the import of Section 70, What is therefore
to be seem in this case in the back-ground of above mentioned
discussion is whether the repairs carried on by the defendant are
of such a character that the plaintiffs can be held liable for the
amount in spite of the lease deed expressly providing for the
manner in that section 70 falls in Chapter V of the Act, the heading
of which is Of certain relations resembling those created by
Contract" A reading of that Chapter would disclose that it deals
with certain obligations imposed by law on the parties concerned
and not resulting from any express agreement, or from any
agreement which can as a matter of fact be implied. Such
relations are commonly known as quasi-contracts. This term
however is technically incorrect and is an unfortunate misnomer
because the basic element in contract viz., agreement is entirely
lacking in most of the instances falling within the meaning of
that term. It is however clear that in obligations imposed by law
under Chapter V of the Act there can be nothing contractual.
The promise or the obligation which section 70 creates is
entirely fictitious and is the creation of law. Any action to
enforce this obligation is not an action based on any contract.
In the words of Mansfield, C.J.: ―he gist of this kind of action is
that the defendant upon the circumstances of the case is
obliged by the ties of natural justice and equity to refund the
 299

money." Judge stated as follows:- This section therefore

unquestionably imposes an obligation without any reference to
mutual assent of the parties and that obligation is enforceable
only in special assumpsit, as if it was the result of an actual
contract. Keeping in view the difference between implied
contract in fact and the quasi or constructive contract created
by law, it can be stated that section 70 creates a right not
because of any promise or mutual assent of the parties, but is
the creation of law and is imposed by a provision of law on the
defendant irrespective of and sometimes in violation of his
intention and that is why I have called that class of relationship
as quasi-contractual relationship. It creates a contractual duty
implied from the acts done under the law. When once it is
found that the obligation created under section 70 of the Act is
not based on any mutual consent of the parties, then it has to
be found out whether that obligation can arise even where
there is an express contract between the parties governing the
relationships in regard to a particular transaction. It is clear
from some of the cases cited before me which hold that where
there is an express agreement Section 70 does not apply. It
cannot however be stated that there are no exceptions to this
broad rule. It must be remembered that section 70 is not
inapplicable merely because the plaintiffs have another right of
action arising out of another cause such as one founded upon
contract, express or implied or where for some reason the
contract is unenforceable. Nor the application of this section
can be said to be excluded conformity with certain statutory
provisions. In such and other cases of this nature it is plain
that the provisions of section 70 can be applied, and relief on
quantum merit can be granted. From the discussion of the
 300

cases on this question which I express or implied in fact, will

have to be normally dealt within accordance with the terms of
the contract express or implied in fact, case arising out of
obligation undertaken prior to the contract in order to
effectuate the contract and also cases arising subsequent to
the breach of the contract and its termination or recession
must be distinctly and separately considered. In such cases
obligation can arise under section 70 of the Act. No case was
cited before me which states that in spite of the existence of
an express contract containing an exclusive term governing
the relationship in regard to the matter which is the subject of
a litigation section 70 can be pressed into service ignoring the
term of the contract. The learned Advocate for the respondent
could not suggest to me a case where quasi-contractual
obligation may be said to arise in case where the entire
relationship of the parties is governed by express terms of the
contract. I am also unable to visualize at the moment any such
eventuality. I do not therefore find any difficulty in holding that
to grant quantum meruit under section 70 of the Act to the
defendant in this case would be tantamount to violating an
express term of the contract under which defendant could not
have carried out the repairs involving an amount exceeding
Rs.150/- without the prior approval of all the co-owners of the
Mill. I have therefore no hesitation in holding that in the face of
express contract and clause 5 therein governing the
relationship of the lessor and the lessees in this case section
70 can not be pressed into service and no relief can be
granted to the defendant on the foot of quantum meruit merely
because the plaintiffs also will be enjoying the benefits of the
repairs carried out by the defendant‖.
 301

10. The next case is 1965 (1) Andhra Weekly Reporter

Page.241 reported in Chinni Veeraiah Chetty Vs.Morisetti
Llakshmikantamma and others,9 while referring three
conditions under Section 70, the court held that:-

"The repairs effected by the defendant to the house can

not but be held to be necessary repairs. What the defendant
had done was by her lawfully, and the notices given by her
establish that she did not intend to effect the repairs for the
benefit of the plaintiff gratuitously. It is also clear from the
plaint that that the first plaintiff was claiming to enjoy the
benefit of the repairs effected by the defendant to the joint
house. Thus all the conditions of Section 70 of the Contract
Act are satisfied and the defendant is entitled to be reimbursed
by the plaintiffs to the extent of a half share of the amount
spent".

After discussing the case Law including, Full Bench of

Madras High Court the court held that:- The defendant against
whom rent is claimed can claim reimbursement for the repairs
effected by him as they are necessary. He also gave a prior
notice in this regard also. So, the court held that all the
conditions of Section 70 are satisfied and the defendant is
entitled to be reimbursed by the plaintiffs to the extent of half
share of the amount spent by her for the repairs.

9
1965 (1) Andhra Weekly Reporter Page.241 reported in Chinni Veeraiah Chetty
Vs.Morisetti Llakshmikantamma and others,
 302

11. in Nallangulagari Krishna Reddy Vs. Nallanaqulagari

Nariyana Reddy & another reported in 1973 (2) A.P.L.J.P.282
while referring Full Bench in Srirama Raju Vs. Secretary of
State reported in AIR 1943 Madras P.8510 held that:-
"Expenses incurred by one co-owner without prior consent
of the other co-owners for effecting necessary repairs to the
joint property held that, there is no justification for incorporating
into the Section 70 of the Indian Contract Act that the person
who enjoys the benefit of what is lawfully done by one for him
not intending to do so gratuitously should give his prior consent.
The very fact that the person enjoys the benefit itself implies an
acceptance. The Law does not require in the case of necessary
repairs to the joint property express consent of the owner
sought to be made liable for contribution before the repair
work is commenced when he enjoys the benefit thereof the
repair work is commenced when he enjoys the benefit after
completion of the necessary repair work. There is no warrant
of introducing the necessity for an option of declining or
accepting the benefit Though it was argued in this case that
the Full Bench of Madras High Court has to be justified facts,
the court held as above that mere acceptance of the benefit is
enough to claim the contribution under Section 70 of the
Contract Act. Further held that there is no warrant for
introducing into Section 70 words which are not contained
therein. There is no justification for incorporating into the
Section that the person who enjoys the benefit of what is
lawfully done by one for him not intending to do so

10
Nallangulagari Krishna Reddy Vs. Nallanaqulagari Nariyana Reddy & another
reported in 1973 (2) A.P.L.J.P.282
 303

gratuitously should give his prior consent. The very fact that
the person enjoys the benefit itself implies an acceptance as
stated above. Hence, in this case the court issued contribution
by applying principles laid down in the Full Bench of Madras
High Court".
This case is also reported earlier as Short Notes in 1973
A.P.H.C. Notes P.238 and item 21311.
12. The next case reported on this subject is D.Gopala Krishna
Vs. Devi Films (P) Ltd., reported in 1985 (2) A.L.T. Notes on
Recent Cases P.912
In this case, a cinema projector and other equipment was
supplied by the plaintiff to the defendant for running a theatre.
The defendant committed default in payment of rent to the
plaintiff. Hence, the suit is filed under Section 70 for the
recovery of amount.
It was held that: Section 70 of the Contract Act applies to
the facts of the case. The cause of action is based on the
delivery of goods and enjoyment thereof. The word lawfully
implies existence of some legal relation with one another
earlier directly or by implication. Doing some act or delivering
something and accepting the same and deriving benefit or
advantage from the transaction are crucial factors for
application of Section 70, Section 70 is enacted to prevent
unjust enrichment. It is not founded on contract but embodies
the principles of equitable doctrine of restitution and avoidance
of unjust enrichment. The terms of Section 70 are undoubtedly
wide and there is discretion given to the court enabling it to

11
Short Notes in 1973 A.P.H.C. Notes P.238 and item 213
12
D.Gopala Krishna Vs. Devi Films (P) Ltd., reported in 1985 (2) A.L.T. Notes on
Recent Cases P.9
 304

render substantial justice in a case where it is difficult to impute

to the persons concerned legal relations actually created by
contract. The Section is in the nature of awarding compensation
for the loss suffered or the injury sustained by the party for an
act lawfully done pursuant to an agreement between the parties
and the latter had benefit or enjoyment of the property delivered
or the thing done. It is not the terms of the contract but the
quantum of benefit actually delivered is the criteria.
So, in this case Judge K.Ramaswamy gave a wider
interpretation to Section 70 and held that no legal relationship is
required. This is only case under Section 70 which is easily
applied under principles of equity.
13. In another earlier case in 1955 ALT at Page No.560 in
Valluri Suryanarayana Murty Vs. Goli Veerraju and
others 13, the Andhra High Court at Guntur held that:
― In an auction sale of the lease hold right to lands which
were subject matter of a partition suit, the respondent who was
the highest bidder was placed in possession of the lands by the
Commissioner, who conducted the auction. Subsequently at the
instance of the appellants the auction was set aside by court
and a fresh auction conducted and the bid amount was also
deposited. On a question arising as the whether the respondent
could recover the monies spent by him for agricultural
operations".
It was held that:- The 1st respondent was put in possession
of the lands and carried on the agricultural operations as it was the
cultivation season and his action cannot be treated as unlawful.

13
1955 ALT at Page No.560 in Valluri Suryanarayana Murty Vs. Goli Veerraju
and others
 305

When he raised the crop he did not intend to do so gratuitously for

the owners of the land. The parties to the partition suit, who were
the owners of the land have enjoyed the benefit of his labour. The
amount that was deposited in court partly represents the amount
due to him for having made the land fit for cultivation and for
raising the crops. So it was held that all the 3 requisites laid down
in Section 70 of the Contract Act are satisfied and is entitled for the
amounts spent by him.

In this case, the earlier case of the Madras High Court in

Governor General in Council Vs.Municipal Council, Madura
(1948 (2) M.L.J. 546 14 is referred. But, held it was no
application. In this case, there was a need to widen culvert
running through Madura Municapality. On the culvert, railway
line is passing. The Madura Municipality requested the
Government to direct the railway company to effect repairs to the
culvert by widening it. The Governor General forwarded the
sapid application to the railway company who executed the work
under protest and claimed amount from the Madura Municipality.
In this judgment though the court found that the railway company
has done the work lawfully ad not intending to do so gratuitously,
but, only to the people who are residents around the culvert for
discharging their drainage. That decision unfortunately missed
note of the fact that the benefit of people is benefit of the
municipality. Therefore, the Andhra High Court did not follow the
decision saying that it has no application as there is no necessity
for direct benefit.

14
Governor General in Council Vs.Municipal Council, Madura (1948 (2) M.L.J. 546
 306

7-4-2A 14. DOCTRINE OF QUANTUM MERUIT:-

The doctrine of quantum meruit is to be discussed in this

chapter. Exact meaning of phrase Quantum Meruit is "According to
work done". Suppose a person agrees to perform a particular act
under Contract and would ultimately perform only a part of it,
whether he is entitled for the amount proportionately is a
question dealt under English cases. Of course in English
common law, the Doctrine of Quantum Meruit is not directly
applied as there is no any statutory provision in common law
very rarely this doctrine is applied. In Cutter Vs.Powell in an
English case, a person agreed to be a 2 nd mate for a ship
carrying consignment. It is a marine contract whereunder 2 nd
mate was promised by the owner of the ship for payment of
satisfied amount for the entire journey by way of contract. But,
when the voyage is in the middle of the sea, the 2 nd mate died
and his legal representatives subsequently filed a suit for
recovery of proportionate amount for the services rendered by
him. But, the court refused to entertain claim because the
Captain was deprived of any services by way of 2 nd mate for the
remaining part of the journey. The court refused to apply the
principle of quantum meruit. But, in India, this principle is applied
under Section 70 if the three ingredients are satisfied i.e., work
should have done lawfully, it should have been done not
intending to do so gratuitously and finally, the other party has
benefited by the part of contract.
 307

By simple illustration, we can apply this doctrine in India

as follows:-
Suppose 'A' has undertaken to level up one acre of land
belonging to 'B' for a certain amount and could complete only
half of the work, he is entitled for the half amount as he has
done work lawfully, he never intended to do so gratuitously, and
there is benefit by the part work to the other side. So, when the
three ingredients of Section 70 are satisfied, the claim can be
granted under this Section, But, another illustration would justify
the method of benefit to other side. This example is very
frequently noted and considered by all the Authors in the
Contract Acts.
The example is, suppose a writer has contracted to write a
serial novel for a magazine to appear regularly for a period of two
years and the writer could send only one year, he is not entitled to
proportionate consideration as the 31'd ingredient i.e., benefit is not
present. By discontinuance of serial novel there is no benefit to
the publisher of the magazine or the reader in general. But,
suppose instead of serial novel, an essayist agreed to write
independent articles to a weekly magazine for a period of two
years and discontinued after one year, then because each essay
is independent by itself, there is benefit for the readers so far as
those essays are concerned and is entitled to proportionate
amount under Section 70.
Another best illustration we can come across is when we are
standing on a pavement, if a boot polish boy has in our presence
polishes our shoes and claimed reimbursement, we are bound to
pay, because work has been done to our knowledge and we did not
 308

stop the boy from doing the work and in so doing we enjoyed the
benefit. Therefore we have to pay for it. On the other hand, if we
leave our shoes outside of a temple and by the time of our return
from the temple, the boot polish boy polishes our shoes and claimed
reimbursement we need not pay. Because though the work is done
not intending to do so gratuitously and though we had benefited, it
can not be said that the work has been done lawfully because we
have no chance to stop the boy from the work. This is the principle of
quantum meruit as recognized in India.

15. In AIR 1960 Patna 15, It was held that:-

"A Relief on quantum meruit can not be granted if the claim has
not been based on that ground. Thus in that case it was held that
where the plaintiff bases his claim on agreement of service, he is not
entitled to payment of a quantum meruit."
16. In another case reported in 1957 (2) Allahabad
E.R.712,16 it was held that"- "Though the claim of quantum meruit
was based on a real promise, subsequent developments have
considerably widened the scope of this form of action and in many
cases the action is now founded on what is known as quasi
contract. So far as this decision is concerned Section 70 being a
quasi contract, Quantum of Meruit also can be applied.
17
17. In another case in AIR 1960 Punjab 585 , it was
held that:-
"The Provision of Section 70 Contract Act is based on the
doctrine of quantum meruit of English Common Law, but, the

15 16 17
IAIR 1960 Patna, 1957 (2) Allahabad E.R.712, AIR 1960 Punjab 585
 309

rule is embodied in the Indian Contract Act admits of liberal

interpretation. The language of the provisions of Indian
Contract Act cannot be enlarged or construed narrowly, in order
to bring the construction. It was held that if a person, who does
work or supplies goods under a contract, if no price is fixed, is
entitled to be paid a reasonable sum for his labour and the
goods supplied. If the work is outside the contract, the terms of
the contract can have no application; and the contractor is
entitled to be paid a reasonable price for such work as was
done by him.
18. In a latest Supreme Court judgment in 1999 (5( ALD 7
(SC)18, while considering the doctrine of undue enrichment, the
Supreme Court held that when a person paid certain amount to
another person in pursuant of a sale agreement, but, the
agreement was entered into with another person and
subsequently when the sale agreement fell through, the person
who paid the amount is entitled to get back the amount under
this Section.
In another case reported recently in 2003 (6)ALD 307
(DB)19, the scope of sections 65 and 70 of the Contract were
considered. In that case, the plaintiff's society deposited certain
amounts in the defendant's bank. The bank opened a S.B.
Account and kept the said amount in the said account. Under
the contract between the plaintiff and defendant bank, they have
to be kept in deposit till the block capital was released by the
financial institutions. The bank refusing to pay interest on the
deposits in view of the circular issued by the Reserve Bank of

18 19
1999 (5( ALD 7 (SC), , 2003 (6)ALD 307 (DB)
 310

India that interest can not be paid on S.B.Accounts. The court

held that the account can not be treated as an S.B.Account since
it is a only a share deposit account which is governed by the
Plaintiff's society and defendant's bank and in the circumstances,
the suit of the plaintiff for recovery of interest has necessarily to be
decreed and bank is solely responsible for suppression of the fact
and enter into a contract and bank s liable to refund the suit
amount with interest by way of equity by virtue of Sections 65 and
70 of the Contract Act.

20
207- In 2006 (4) ALD P.368, at Division Bench of Andhra
Pradesh High Court held that :- A person whose contract is void
would be entitled to compensation, if he established that other
person had enjoyed the benefit of thing delivered and said thing
was never delivered with gratuitous intention and Section 70 can
be invoked to grant compensation even after concluding that
contract was void.

Thus in conclusion from all these decisions we can see that

Section 70 is widely interpreted by some courts and strictly
followed the ingredients by some courts. We have also seen the
principles of equity were also considered by some courts. Thus,
the courts were strict in interpreting Section 70 in giving relief to
the deprived parties in spite of clear section, in view of the fact
that the scope is restricted.

20
2006 (4) ALD P.368,
 311

7-4-3: THE NEXT SECTION UNDER CHAPTER V OF THE

CONTRACT ACT IS SECTION-72.
Section 72 of the Indian Contract Act reads as follows:-
Section 72:- "A person to whom money has been paid or
anything delivered by mistake or under coercion, must repay or
return it."
In this Section two illustrations are also added. They are as
follows:-
(a) A and B Jointly ow 100 rupees to C. A alone pays the
amount to C and B not knowing this fact, pays 100
rupees over again to C. C is bound to repay the
amount to B
(b) A railway company refused to deliver up certain goods
to the consignee, except upon he payment of an
illegal charge for carriage. The consignee pays the
sum charged in order to obtain the goods. He is
entitled to recover so much of the charge as was
illegally excessive.

1.As we have already discussed the earlier chapters, the

word mistake and coercion used in this Section are already
earlier used in Section 15 and Sections 20, 21 and 22 of the
Contract Act, for which remedy is provided in Section 64 of the
Contract Act.
We did not know when there are others incidents like undue
influence, fraud, misrepresentation included as flaw in sonsent, we
do not know why only the word coercion is used in Section 72.
 312

Nextly, the word mistake was also used in Sections 20, 21

and 22 which deal with bilateral mistake, mistake of law and
unilateral mistake respectively. The Courts have interpreted the
mistake in this Section 72 in a wider sense and it includes mistake
of law also.

The leading case on this subject is Sales Tax Officer,

Benaras Vs.Kanhaiya Lal (AIR 1959 S.C.P.135) 21 Under this
section, considered by the Supreme Court, certain amount of
sales tax was paid by a firm under the U.P Sales Tax Law on
its forward transactions and subsequently to the payment, the
Allahabad High Court ruled that the levy of sales tax on said
transaction to be ultra vires. The firm sought recovery back tax
money. Rejecting the contention of sales tax officer, Supreme
Court allowed recovery. The Supreme Court held that this
Section in terms does not make any justification between
mistake of Law of mistake of fact. The term mistake has been
used without any qualification or limitation whatever.

Thus, scope of word mistake is given a wider interpretation

and in such a case there is no necessity of this Section because
Section 64 and 65 already gives a right for reimbursement.

Under this section number of cases deal with only matters

of payment of taxes under mistake of law.

Sales Tax Officer, Benaras Vs.Kanhaiya Lal (AIR 1959 S.C.P.135) 21

 313

2. Of course, in this respect we can consider a judgment

of Andhra Pradesh High Court in 1974 (2) APLJ P.273 in a
case between Linqa Venkanna Pantulu Vs. Sri
Konaseema Co-operative Central Bank Ltd.,
Amalapuram 22, wherein the court held that:- when an
employee retained in service even after superannuation due
to an injunction order issued by a court and when that
injunction order was subsequently vacated, the employees
should not be deprived of the remuneration when he has
actually rendered services. Because under Section 70 it was
held that Section 72 would not cover an order of court The
court held that it can not be said that the amount paid by the
bank by an injunction order can not be said to be under
coercion under Section 72 of the Contract Act and they are
entitled to claim the amounts from the employee.
3. In 1987 (1) A.P.L.J. P.67 (D.B( in between
N.V.Ramanaiah Vs. The State of Andhra Pradesh 23,
represented by its Secretary, Revenue Department,
Hyderabad and others, wherein Division Bench held that in a
suit filed for refund of fee illegally collected, burden is in the
plaintiff to plead and satisfy the court that by grant of relief to
him he would not be unjustly enriched. The court held that the
rule of equity is laid down in Section 70 and 72. This is also a
case arising under recovery of a tax under is take or under
coercion.

22
1974 (2) APLJ P.273 in a case between Linqa Venkanna Pantulu Vs.
Sri Konaseema Co-operative Central Bank Ltd., Amalapuram,
23
N.V.Ramanaiah Vs. The State of Andhra Pradesh
 314

4. In earlier case in AIR 1942 Madras P. 590 LEACH C.J. 24

held that:
"Where money is paid to another under mistaken impression
and if that fact is known to him, he would have to pay. Section 72
will apply and he is entitled to recover and it was held that there is
nothing in Section 72 and to suggest that it should only be when
there is privity between the payer and other. Section 72 applies. In
this judgment a number of English Cases were also considered
5. So, as can be seen from the decisions reported under Section
72 the words mistake, coercion are given wider interpretations
and this section is redundant in view of Section 65 and 64 of the
contract the Act.

23
N.V.Ramanaiah Vs. The State of Andhra Pradesh