Unjust Enrichment and Restitution

In one line

Unjust enrichment is the principle that a person who has been enriched at another's expense in circumstances the law regards as unjust must restore the enrichment, and Indian law gives it effect through sections 65, 68 to 72, and section 33 of the Specific Relief Act, 1963.

The three questions

Every restitution claim is answered by asking three questions in order, and organising the answer that way is what separates it from a list of sections.

Was the defendant ENRICHED? By the receipt of money, of goods, of services, or by the discharge of a liability he would otherwise have borne.

Was the enrichment AT THE PLAINTIFF'S EXPENSE? There must be a transfer of value from the one to the other, not merely a coincidence of benefit and loss.

Was the enrichment UNJUST? This is where the law does its work, and "unjust" does not mean whatever a judge thinks unfair. It means the case falls within a recognised ground, and sections 68 to 72 are five such grounds, as are section 65 and section 33 of the Specific Relief Act.

And a fourth question is a defence rather than an element: is there a reason why the defendant should be allowed to keep it, such as a valid contract governing the transfer, or a change of position.

The most important of those reasons is a subsisting contract. Where a valid contract governs the transfer, the contract determines the rights and restitution has no place, which is why every restitutionary section in the Act operates where there is no contract, or where the contract is void, becomes void, or is rescinded.

The Indian grounds, section by section

Section 65, an agreement discovered to be void or a contract that becomes void. Any person who has received any advantage under such an agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.

Two limbs and a trap: it covers an agreement discovered to be void and a contract that becomes void, and it does not cover an agreement known to both parties to be void when made.

Section 68: reimbursement from the property of a person incapable of contracting for necessaries supplied to him or to those he is legally bound to support.

Section 69: reimbursement of a person interested in the payment of money another is bound by law to pay.

Section 70: compensation for a lawful, non-gratuitous act whose benefit the defendant has enjoyed.

Section 71: the finder of goods as a bailee.

Section 72: repayment of money paid, or return of anything delivered, by mistake or under coercion.