From: Enrichment - Restitution & Unjust Enrichment Legal Issues <ENRICHMENT@LISTS.MCGILL.CA>
To: ENRICHMENT@LISTS.MCGILL.CA
Date: 29/03/2012 12:56:40 UTC
Subject: Re: [RDG] Supreme Court of India: The Indian law of unjust enrichment
Hello,

Unfortunately the answer to that question appears to be that that there is no principled basis as yet for this area of law in India. I had posted a short note on this Supreme Court judgment a few months ago at  http://indiacorplaw.blogspot.in/2012/01/unfortunate-judgment-india-and-law-of.html. 

The law of restitution in India is in general codified in five sections of a legislation enacted in 1872 (the Contract Act). Between 1900 and the 1960s, the High Courts considered the common law in some detail in various contexts and some held tentatively that Indian law is not based on implied contract (for example the Madras High Court's judgment in Nallaya Goundar, at http://www.indiankanoon.org/doc/810634/). But these restitution cases decided by the High Courts are not well-known and do not appear to have influenced the development of the law subsequently. The Supreme Court has not examined these issues closely in any of its decisions and as a result no principled basis for the law appears to have been formulated in India.    

Perhaps the most (in)famous instance of this is Mafatlal Industries, India's own Kleinwort Benson. In that case, a nine-judge Bench of the Supreme Court (the third largest Bench constituted in its entire history) sat in 1996 to decide whether a claimant in India can obtain restitution for taxes paid under a mistake of law. In a judgment that runs to more than 200 pages (including a dissent), the majority held that he cannot, unless he demonstrates that he has not passed on the levy, and that he "discovered" the mistake through litigation in his own case.  Surprisingly, the Court observed inter alia that the ground of recovery in Woolwich was in fact mistake of law. In paragraph 53, it said this:

53. Strictly speaking, this decision [ie Woolwich] is of little relevance to us. Firstly, it deals with a direct tax. In the case of a direct tax, there can be no question of passing on the burden of the tax to others as in the case of an indirect tax. All that the decision says, reversing the hitherto prevailing theory, that taxes paid under a mistake of law ought to be refunded. 

Regards,

Niranjan

On Thu, Mar 29, 2012 at 11:36 AM, John Kalan <jkalan@rediffmail.com> wrote:


Hello all,

 


This is slightly belated, perhaps; but I only recently came across a rather interesting Indian judgment M/s Nagpur Golden Transport Co. v. M/s Nath Traders, Civil Appeal 3546/2006 - judgment dated 7December 2011.

 


This facts were that a consignor entered into a contract with a carrier (Nagpur Golden Transport).Under the arrangement between the parties, the consignee paid to the consignor the price of the goods (Rs. 3,61,000). As a result of an accident involving the vehicle in which the carrier was carrying these goods, the goods were damaged. Consignees refused to take delivery. The carrier hence returned the goods to the consignor. 

 


The local Consumer Court (which I understand is a special forum created by statute in India) directed the carrier (the claim in the consumer court was against the carrier for negligence and not the consignor) to pay a sum of Rs. 3,61,000 to the consignee. The carrier appealed to the Supreme Court. The carrier claimed that the consignor was unjustly enriched as it had received both, the returned goods, as well as the consideration of Rs. 3,61,000/- from the consignee. The Supreme Court held that the consignee was liable to hand over the goods to the (negligent) carrier, or to pay the realisable value of those goods to the carrier.

 


The Supreme Court quoted Fibrosa, and then held, "If the damaged monoblock pumps are not returned by respondent No.3 to the appellant or if the value of the damaged monoblock pumps realized by respondent No.3 are not paid to the appellant, respondent No.3 would stand unjustly enriched."

 


What is the unjust factor here? Surely the goods were not returned by the carrier to the consignee on the understanding that if it were subsequently found liable in negligence, it would not have had to pay damages/it would be entitled to return of the goods? (At least, there is no finding to that effect whatsoever). The Court does not even purport to go into failure of consideration, mistake etc. 

 


It is singularly striking how little discussion the Supreme Court judgment contains: the text of the judgment is available here: http://www.indiankanoon.org/doc/1836550279/


Interestingly, my attention was drawn by a colleague to the decision of the Indian Supreme Court in Mahabir Kishore v. State of Madhya Pradesh (1989), where the Sup Ct.  took the view:


"The doctrine of 'unjust enrichment' is that in certain situation it would be 'unjust' to allow the defendant to retain a benefit at the plaintiff's expense. The relatively modern principle of Restitution is of the nature of quasi contract. But the English law has not yet recognised any generalised right to restitution in every case of unjust enrichment. As Lord Diplock has said, 'there is no general doctrine of "unjust enrichment" recognised in English law. What it does is to provide specific remedies in particular cases of what might be classed as unjust enrichment in a legal system i.e. based upon the civil law'..." 


Subsequently, in Sahakari Khand Udyog v. Commissioner of Central Excise, (2005) 181 ELT 328 (SC), the Supreme Court again took the view:


"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. 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. 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..."


I was hence curious as to whether Indian law still is premised on a "quasi-contract" theory, what Courts mean when they say "contrary to justice", whether there is any principled basis at all for this area of law in India yet?


Thanks,


Kalan J. R. 


 

Thank you,


Kalan Jon R.

 



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--
V. Niranjan
Advocate, Madras High Court
+91 97909 25765


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This message was delivered through the Restitution Discussion Group, an international internet LISTSERV devoted to all aspects of the law of unjust enrichment. To subscribe, send "subscribe enrichment" in the body of a message to <listserv@lists.mcgill.ca>. To unsubscribe, send "signoff enrichment" to the same address. To make a posting to all group members, send to <enrichment@lists.mcgill.ca>. The list is run by Lionel Smith of McGill University, <lionel.smith@mcgill.ca>.