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Unjust enrichment, doctrine of


AIR 2005 SC 1897

Para 30: Stated simply, 'unjust enrichment' means retention of a benefit by a person that is unjust or inequitable. 'Unjust enrichment' occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else.

Para 31: The doctrine of 'unjust enrichment', therefore, is that no person can be allowed to enrich inequitably at the expense of another. A right of recovery under the doctrine of 'unjust enrichment' arises where retention of a benefit is considered contrary to justice or against equity.

Para 32: The juristic basis of the obligation is not founded upon any contract or tort but upon a third category of law, namely, quasi-contract or the doctrine of restitution.

Para 33: In the leading case of Fibrosa V/s. Fairbairn., 1942 2 AllER 122 Lord Wright stated the principle thus :
"...Any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from another which it is against conscience that he should keep. Such remedies in English law are generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi-contract or restitution."

Pata 34: Lord Denning also stated in Nelson V/s. Larholt., 1947 2 All ER 751 It is no longer appropriate, however, to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to canvass the niceties of the old forms of action. Remedies now depend on the substance of the right, not on whether they can be fitted into a particular framework. The right here is not peculiar to equity or contract or. tort, but falls naturally within the important category of cases where the court orders restitution if the justice of the case so requires.

Para 35: The above principle has been accepted in India. This Court in several cases has applied the doctrine of unjust enrichment.

Para 36: In Orient Paper Mills Ltd. V/s. State of Orissa., 1962 1 SCR 549 this Court did not grant refund to a dealer since he had already passed on the burden to the purchaser. It was observed that it was open to the Legislature to make a provision that an amount of illegal tax paid by the persons could be claimed only by them and not by the dealer and such restriction on the right of the dealer to obtain refund could lawfully be imposed in the interests of general public.

Para 37: In Mulamchand V/s. State of M.P., AIR 1968 SC 1218 a contract was entered into between the plaintiff and the Government for removal of forest produce. The plaintiff deposited an amount of Rs.10,000.00 and collected forest produce. It was, however, turned out that the provisions of Art. 299 of the Constitution were not complied with and the contract was void. The plaintiff claimed refund of Rs.10,000.00.

Para 43: In Mafatlal Industries Ltd. also, this Court held that refund of tax/duty wrongfully paid can be claimed on the basis of doctrine of equity and a person demanding such restitution must plead and prove that he had paid such tax/duty and had suffered loss/injury. The burden is on the petitioner to prove that the tax/duty paid by him is not passed on to customers or third party and that he is entitled to restitution.


Sandeep Jalan

Advocate

https://vakeelkanumber.com/

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