2. HISTORICAL BACKGROUND OF THEORY OF UNJUST ENRICHMENT
3. ACTION OF ASSUMSIT
4. REMEDIES AVAILABLE FOR UNJUST ENRICHMENT
5. THE SUPREME COURT OF INDIA AND THE LAW OF UNJUST ENRICHMENT
6. CONCLUSION
. BIBLIOGRAPHY
INTRODUCTION
The concept of unjust enrichment is based upon the Roman legal maxim "no one should be benefited at another's expense" (nemo locupletari potest aliena iactura or nemo locupletari debet cum aliena iactura).
The principle of unjust enrichment is simply stated as: “ person !ho has been unjustly enriched at the expense of another is reuired to ma#e restitution to the other.$% The meaning of this line is that if a person has gained benefit from other person and thereby causing loss to the other person& then the person !ho has gained is reuired to reimburse the plaintiff eual to the amount of benefit receied by the defendant.
The principle of unjust enrichment can be understood in three ways:
%. njust enrichment can be interpreted as a principle of ristotelian euity& proiding correction !hen normally sound rules produce unjust results in particular cases.
.njust enrichment can be characterised as a *legal principle+ incorporating a broad ideal for justice& from !hich courts can deduce solutions to particular restitution problems.
,.njust enrichment can be understood simply as expressing a common % Restatement of Restitution (%-,)& s. %.
theme of restitution cases.
/et us ta#e a hypothetical situation0 o!ns a house and he approaches 1 !ho is a builder to construct a garage for 1. There contract is only for the construction of garage. fter constructing the garage& 1 also constructs drie!ay outside the house of . Then becomes liable to pay the expenses incurred by 1 in the ma#ing of drie!ay.
2n the past fe! decades& this principle of liability has recently become as firmly established in the common la! jurisdictions as it has long been among ciil la! systems. 1eing a relatiely ne! basis of liability& unjust enrichment is no! the most dynamic of all areas of priate la!.
3onetheless& s#eptical oices hae continued to be heard. 4cholars hae contended that unjust enrichment adds little to the traditional arsenal of priate la! categories5 that the idea of unjust enrichment is either hopelessly circular or is a conclusion based on unmentioned normatie alues that do the real !or#5,and that the principle of unjust enrichment submerges !ithin a common frame!or# types of claims that should be goerned by dierse principles. 67espite being recogni8ed as neer before& unjust enrichment remains the most embattled of the bases of liability in priate la!. 4tee 9edley& Restitution: 2ts 7iision and rdering (;;%) , 9anoch 7agan& The /a! and affey& T!o Theories of njust ason ?. 3eyers& @itchell @c2nnes& and 4tephen =. . =itel& nderstanding njust . %B, (%--C).
HISTORICAL BACKGROUND OF THEORY OF UNJUST ENRICHMENT
The historical bac#ground of the theory of unjust enrichment can be diided into three phases. The first phase lasted till the second half of eighteenth century. lthough there are clear traces of remedies being gien in the situations that !ould later coalesce as unjust enrichment& there !as no consciousness of any feature lin#ing them to each other. lthough the medieal
THE ACTION OF ASSUMPSIT
The deelopment of the action of assumpsit did not produce any immediate changes in the substance of these rules& though as a matter of form it came to supersede the older remedies of debt and account. 4o the person !ho had discharged another+s liability might bring assumpsit to obtain an indemnity only in case !hen the payment is made at the reuest of the defendant. The capacity of assumpsit is best seen in the deelopment of uantum meruit !hich means that !hat one has earned. 9ere the plaintiff typically alleged that the defendant in consideration of some serice rendered to the plaintiff at his reuest& promised to pay to the plaintiff the reasonable alue of the serice. 2t may be possible that sometimes there is no such express agreement but then it can be deduced from the circumstances of each case. 2f a person ta#es a cloth to tailor for ma#ing shirt then it !as not difficult to infer that the person has promised to pay for the shirt. 1efore the middle of eighteenth century& uantum meruit claims !ere being allo!ed !here the inference of a genuine agreement to pay a reasonable sum !as far less secure. 2n the second half of the eighteenth century /ord @ansfield introduced the principle that in some cases the action !ould be allo!ed !here both the reuest and promise !ere fictitious. The uantum meruit and indetatitus assumpsit for money laid out essentially too# oer and expanded those situations that in medieal la! had clustered around the central core of contractual liability. longside these& ta#ing oer and expanding those situations clustering around property notions in the middle ages !as the action of indebitatus assumpsit for money had and receied. This action started to emerge at the beginning of seenteenth century but it !as in the eighteenth century that it really came into its o!n. 4ince the early years of eighteenth century the
courts hae moed from the proposition that these are based on implies promises to the !holly inaccurate proposition that they !ere based on implied contracts.
The doctrine of unjust enrichment !as originally based in
The second half of eighteenth century and in the nineteenth century the la! of torts and the la! of contract !ere structured around each other in theoretical frame!or# in !hich former based on the natural la!yers theory of imputation and the latter on the !ill theory. The merican la!yers at the start of t!entieth century brought the broad principles of >oseph 4tory+s euitable jurisprudence and !ere able to manipulate constructie trusts into remedial deices so as to reerse the unjust enrichment. B @oses @acferlan (%C;) 1urr %;;B at %;% (-
The first& faltering steps a!ay from the implied contract theory !ere ta#en in 2ndia in the %DC;s in the case of Rambux Ahittangeo . @odhoosoodun =aul Aha!dhry& it !as held in this case !ith reference to =othier and ustin jurisprudence that a claim for contribution from a co surety !as not a contractual claim& that the use of the language of implied contracts !as something forced on the common la! by the purely fortuitous fact that the remedy !as framed in the assupsit and the system li#e 2ndian !as not dependent on the forms of action could profitably abandon all the tal#s of implied contracts. The 2ndian Aontract ct& %D follo!ed this line: under the heading of *of certain relations resembling those created by contract+& it included claims for necessaries supplied to those !ithout contractual capacity& claims for indemnity or contribution& claims to be paid for the beneficial serices proided !ithout the intention of ma#ing any gift& claims against the finder of goods and claims for the money paid by the mista#e. 2t !ent certain changes through judicial interactions and came to be based more and more on the doctrine of restitution. 2n 2ndia& the principle !as deeloped under section C- and section ; of 2ndian Aontract ct& %D. ?ithin a decade of the passing of the act it !as held that the co surety claims for contribution !as in fact a contractual term after all and the earlier cases discussing its contractual nature& it !as said& !ere deliered before the passage of the act& “!hen legislation had not stepped in the plain language to gie distinct itality and affect to certain relations bet!een parties out of those moral obligations one to another a legal fiction had gro!n up for implying a contract and !hile as learned (%-,D) 6; 1@/R D6,
expositions of la!& they can be read !ith interest and adantage for practical purposes to the point under consideration they are absolute and irreleant.
The judicial mind is unconsciously moed by the major inarticulate promise& in this breach of the la! that no one should be allo!ed to unjustly enrich himself at the expense of another. The la! so deeloped by judicial conscience appears to discoer obligations to defeat unjust enrichment or unintended acuisition by the restitution. The natural tendency of courts is that !hereer they find unjust enrichment is to order restitution.
REMEDIES AVAILABLE FOR UNJUST ENRICHMENT
ccording to 4ection CD& if a person& incapable of entering into a contract or anyone !hom he is legally bond to support& is supplied by another person !ith necessaries suited to his conditions in life& the person !ho has furnished such supplies is entitled to be reimbursed from the property of such incapable person. Eor example& supplies 1& a lunatic& !ith necessaries !hich are necessary for his surial. is entitled to be reimbursed from the 1+s property.
2n the case of J!" I#$%! B!&!$'% S"#(& ). D"*%!+ K!'% ,& a minor being bound to support his sister& money adanced to a minor for marriage of his sister has been held to be necessaries under this section and also recoerable from the property. D 2R %-% udh %6
2n the case of B-#!%! B!#/ L"0"-$ ). D" C&!#$& it !as said that a creditor can recoer money adanced to the minor for necessaries and can recoer the money out of the minor+s estate.
ccording to 4ection C-%;& a person !ho is interested in the payment of money !hich another is bound by la! to pay& and !ho therefore pays it is entitled to be reimbursed by the other.
2n the case of G)"#$%!0 G%$&!#$! S-/!%"! ). S!- G#$!* 11& the party had agreed to purchase certain mills& he !as allo!ed to recoer from the seller the amount of already oerdue municipal taxes paid by him in order to sae the property from being sold at the auction.
2n the case of D!/&"#! M&'# R ). S!%$! M&'# R C&7$&%12& it !as held that money paid by a person !hile in possession
of an estate under the decree of the court for preenting the sale of the estate for recoering the arrears of goernment reenue may be recoered by him under this section.
ccording to 4ection ;%,& !here a person la!fully does something for another person& or deliers anything to him& not intending to do so gratuitously& and such other person enjoys the benefit thereof& the latter is - 2R %-,C ll % %; 4ection C-& 2ndian Aontract ct& %D %% 2R %-B; =A -% (%D-,) % Aal %6 %, 4ection ; & 2ndian Aontract ct& %D
bound to ma#e compensation to the former in respect of& or to restore& the thing so done or deliered. Eor example& if & a tradesman& leaes goods at 1+s house by mista#e. 1 treats the goods as if they are of his o!n and uses that good. Then 1 is reuired to or bound to pay the amount to for the goods.
2n the case of B&!(!)!$! K%"&#!$! ). P.S. S0! I-%14& the purchaser of property allo!ed the defendants to continue their residence in the building until they found other occupation and there !as no indication in the eidence that the plaintiff had done so gratuitously& the plaintiff !as entitled to remuneration for use and occupation.
2n the case of N% M&00!$ ). M&!00!$ J"!+$$"# 15& a @uslim groom after solemnisation of the marriage refused to ta#e his !ife because of her father+s refusal to pay for the nautch girl brought !ith the marriage party& the expenses borne by the girl+s father on the meals for the marriage party and for the band and lights paid to the groom+s father !ere not gratuitous but for consideration of marriage& and could be restituted to the bride+s father.
ccording to 4ection %%C& a person !ho finds goods belonging to another and ta#es them into his custody is subject to the same responsibilities as that of bailee.
2n the case of T"*/8&!#$ M"8&!#$ ). C00""#-% S!*- T!9 1& a firm paid sales tax of more than t!enty six thousand rupees in respect of sales to consumers outside the state of 1ombay and !hich !ere not liable to pay any sales tax. The firm had itself collected the tax money from its customers. The amount !as ordered to be refunded on one condition that it should produce receipts from customers outside 1ombay sho!ing that the refund in uestion had been passed oer to them. The firm !as order to return the tax money and it !ould be recoered as arrears of land reenue. The firm paid it. The firm sought to recoer bac# the money as it is paid under mista#e under coercion. The court held that payment !as made under coercion and !ould hae been recoerable under section .
ccording to 4ection %D& a person to !hom money has been paid& or anything deliered& by mista#e or under coercion& must repay or return it. Eor example& and 1 jointly o!e %;; rupees to A& alone pays the amount to A and 1 not #no!ing of this fact& pays %;; rupees oer again to A. Then A is bound to repay the amount to 1
THE SUPREME COURT OF INDIA AND LAW OF UNJUST ENRICHMENT
These are troubled times for the la! of unjust enrichment in 2ndia& so much so that one is forced to as# !hether such an area of la! at all exists in this country. That is regrettable especially because the 9igh Aourts (especially those in 1ombay& @adras and Aalcutta) gae many po!erful % 2R %-; 4A D-D %D Section 72, Indian Contract Act, 1872
and important judgments on this area of the la!& particularly bet!een %-;; and perhaps the late %-C;s.
Aourt has considered certain principles of the la! of unjust enrichment in some detail.
2n ICELA& as the name suggest& the Aourt !as concerned !ith issues of enironmental la!. Eor the purposes of our discussion& it suffices to note that the 4upreme Aourt passed an order in %--C giing certain directions to industries to the Goernment to ta#e remedial action to clean a illage badly affected by pollution caused by chemical industries. 2n this order& the Aourt found that the industries in uestion !ere liable to pay the costs& !hich !ere later uantified as Rs. ,.,DB crores. This amount !as not paid by the industries for more than fifteen years& and the litigation& the Aourt records& !as #ept alie by filing a number of interlocutory applications. 2n these circumstances& the uestion arose !hether the 4upreme Aourt could direct the industries to not only pay Rs. ,.,DB crores& but also to pay compound interest on it for the period of non0payment (%6 years). 2t may be that the Aourt could hae made this order as a punitie measure& but it chose to analyse the la! of unjust enrichment for an ans!er.
?hat is of more interest than the eentual conclusion of the Aourt that the industries !ere liable to pay compound interest is a number of obserations that it ma#es on the meaning of “enrichment$ and the nature %- (;%%) D 4AA %C%
of the la! of unjust enrichment.
The court made follo!ing obserations5
“njust enrichment$ has been defined by the court as the unjust retention of a benefit to the loss of another& or the retention of money or property of another against the fundamental principles of justice or euity and good conscience. person is enriched if he has receied a benefit& and he is unjustly enriched if retention of the benefit !ould be unjust.
person is enriched if he has receied a benefit& and he is unjustly enriched if retention of the benefit !ould be unjust
njust enrichment occurs !hen the defendant !rongfully secures a benefit or passiely receies a benefit !hich !ould be unconscionable to retain.
The court also obsered the relationship bet!een restitution and unjust enrichment5
njust enrichment is basic to the subject of restitution& and is indeed approached as a fundamental principle thereof. They are usually lin#ed together& and restitution is freuently based upon the theory of unjust enrichment. 9o!eer& although unjust enrichment is often referred to or regarded as a ground for restitution& it is perhaps more accurate to regard it as a prereuisite& for usually there can be no restitution !ithout unjust enrichment.
Though court obseration is correct to the extent it notes that restitution is “freuently based upon the theory of unjust enrichment$& but it may not be accurate to suggest that there “can be no restitution without unjust enrichment $ for the la! does recognise restitution for !rongs ( Attorney General v Blae). This obseration also obscures the distinction bet!een a cause of action founded on !rongdoing and a cause of action founded on unjust enrichment.
nfortunately& these deelopments mean that the la! of unjust enrichment in 2ndia is close to being reduced to one sentence: the receipt of enrichment that the court finds is unjust in the circumstances of the case. 2t is hoped that the 4upreme Aourt !ill reisit these issues.
CONCLUSION
The theory of unjust enrichment means that no one should be unjustly enriched at the expense of another. 2t also means that no person should ta#e adantage of position of another person !hich causes some loss to one party and gain to another party. The theory of unjust enrichment came through
The researcher has assumed that the person is reuired to pay if he is
liable. The hypothesis of the researcher is true that if a person has ta#en benefit from another person and has not gien anything in return& then he is liable to pay bac#. 2n all the cases of unjust enrichment !hereer the court feels that one person has ta#en benefit out of another person and has not gien anything in return& the court ma#es the person liable and directs the person to compensate or return the benefit.
The main objectie of conducting the project !as to understand the decision of courts in 2ndian 4cenario on the topic of unjust enrichment. Harious remedies are aailable for unjust enrichment in 2ndian Aontract ct& %D. 4ection CD0 deals !ith remedies aailable in the case of unjust enrichment in arious cases li#e !hen necessary goods are proided to one person& obligation of a person enjoying benefit of a non gratuitous act& responsibility of the finder of goods& thing deliered to another person by mista#e or coercion. The courts also in most of the cases hae al!ays tried to gie decision in faour of plaintiff in the case of unjust enrichment. ?heneer the court feels that the defendant has ta#en benefit from the plaintiff and has not compensated him& then court directs the defendants to either compensate the benefit receied by the defendant.
2n section of 2ndian Aontract ct& only thing deliered by mista#e or coercion is ta#en into consideration. /i#e coercion and mista#e there are other !ays also li#e undue influence& misrepresentation & fraud !hich can be used by a person to ta#e benefit out of another person. 4o proision related to misrepresentation& fraud and undue influence should also be made under 2ndian Aontract ct& %D.
BIBLIOGRAPHY
BOOKS;
Unjust Enrichment: A Study of Private Law and Public Values By Hanoch a!an
