POST GRADUATE PROGRAM IN MANAGEMENT

(EXECUTIVE)

CONTEMPORARY BUSINESS LAWS

FINAL PROJECT REPORT ON
DOCTRINE OF UNJUST ENRICHMENT AND
CONSUMER PROTECTION LAWS

SUBMITTED BY:

PRABHAT TRIVEDI
180301008
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TABLE OF CONTENTS

1. Executive Summary
2. Introduction
2.1. Insight into the Doctrine of Unjust Enrichment
2.1.1. Definitions
2.1.2. Historical Background
2.1.3. Remedies
2.1.4. Essentials
3. Referral Judgements
3.1 . Product Based Industry
3.1.1. Automobile
3.1.2. FMCG
3.1.3. Drugs/Pharma
3.2. Service Based Industry
3.2.1. Aviation
3.2.2. Healthcare
3.2.3. Telecommunication
4. Conclusion
5. References
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EXECUTIVE SUMMARY

India portrays a robust image for laws and rules regarding consumer protection and standards
of service with a healthy statistic of 91.03% disposal rate with 4447487 cases disposed of out
of 4885877 total number of consumer complaints filed since inception of National Consumer
Disputes Redressal Commission as of 02.08.2018 (ref. ncdrc.nic.in). However the judicial
system is still intimidating for the common man considering slow and inefficient administration
of the legal remedies.

This report aims at a refined understanding of ‘Theory of Unjust Enrichment’ cast within the
Consumer Protection Laws in India. The said doctrine can be interpreted by discrete
understanding of both the words that combine to form this theory, UNJUST & ENRICHMENT

What is unjust?
Unjust can be defined as something which is not in accordance with the accepted standards of
fairness or justice and which is also unfair.
What is enrichment?
When a person gains something from another, then it is said that the person is enriched.
What is unjust enrichment?
Thus, principle of unjust enrichment is simply stated as:
A person who has been unjustly enriched at the expense of another is required to make
restitution to the other.
The principle of unjust enrichment is an underlining principle behind a plethora of daily orders
and judgments of our judiciary. Though the principle may not be tagged specifically by our
Courts in each case, its adaptation has found wide usage in our judiciary to bring justice and
uphold the pillars of equity.

The doctrine of unjust enrichment is evolving through interpretations by the Courts and is
considered to be an independent source of rights and obligations, ranked next to the law of
contract and tort, as part of the law of obligations. It is an independent source of rights and
obligations.

The concept of unjust enrichment has gradually become wider in application and the Courts
have started applying the concept of unjust enrichment to various issues such as erroneously
collected tax.
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INTRODUCTION

2.1 Insight into the Doctrine of Unjust Enrichment

The principle of unjust enrichment can be understood in three ways:

Ø Unjust enrichment can be interpreted as a principle of Aristotelian equity, providing correction when
normally sound rules produce unjust results in particular cases.
Ø Unjust enrichment can be characterised as a ‘legal principle’ incorporating a broad ideal for justice,
from which courts can deduce solutions to particular restitution problems.
Ø Unjust enrichment can be understood simply as expressing a common theme of restitution cases.

2.1.1 Definitions
The concept of Unjust Enrichment has been explained in various terms in different sources. Some can be perused
as:

According to Black Law Dictionary, unjust enrichment is the retention of a benefit conferred by another, without
offering compensation, in circumstances where compensation is reasonably expected; A benefit obtained from
another, not intended as a gift and not legally justifiable for which the beneficiary must make restitution or
recompense; The area of law dealing with unjustifiable benefits of this kind.

According to Encyclopaedic Law Lexicon, the principle of unjust benefit implies that the person having passed
on the burden of tax to another, directly or indirectly, would not be entitled to get the refund, even if such refund
is permissible. Having passed on the burden of tax to another person, directly or indirectly, it would be clearly a
case of unjust enrichment if the importer/seller is then able to get the refund of the duty paid from the government
notwithstanding the incidence of tax having already been passed to the purchaser.

According to Oxford Law Student Dictionary, a cause of action developed at the common law and equity,
whereby, roughly, a person who is unjustly enriched, either by receipt of value from the plaintiff in circumstances
where he or she ought to return it, or by profiting from a wrong done to the plaintiff, is required to pay over the
value of that enrichment to the plaintiff.

According to Capital Legal and Medical Dictionary, person taking advantage of unclear legal position during the
pendency of LEIs, would be subjected to the doctrine of unjust enrichment and will be liable to refund back the
money so received.

According to Encyclopaedic Law Dictionary, where a person unjustly obtains a benefit at the expense of another.
In certain cases where money is obtained by mistake or through fraud or for a consideration which has wholly
failed, the law implies a promise to repay it. The rule against unjust enrichment is embodied in section 70 of
Indian Contract Act, 1872 and founded not upon any contract or tort but upon a third category of law, namely
quasi contract or restitution.

According to Merriam Webster’s Dictionary of Law, the retaining of a benefit (as money) conferred by another
when principles of equity and justice calls for restitution to the other party; also: the retaining of property acquired
especially by fraud from another in circumstances that demand the judicial imposition of a constructive trust on
behalf of those who in equity ought to receive it. It is a doctrine that requires an equitable remedy on the behalf
of one who has been injured by the unjust enrichment of another.
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There is a legal maxim “Nemo Debet Locupletari ex Aliena Jactura” which means that no one should grow rich
out of another person’s loss.

2.1.2 Historical Background

The history of the theory of unjust enrichment is broadly divided in three phases. The first phase was till the
second half of the eighteenth century. There are no clear traces of remedies being provided during that period,
which would later be grouped under the heading of Unjust Enrichment. The lawyers during that time knew nothing
about the theory of Unjust Enrichment, however, the remedies were provided which were later grouped under
Undue Enrichment. Apart from this a number of statutory writs were present to deal with such specific cases and
majority of these claims were taken into consideration in the common writs of debt and account. It is a basic
concept of contractual liability that the parties had legal capacity.

The person who had discharged another’s liability might bring assumpsit to obtain an indemnity only in case when
the payment is made at the request of the defendant. The capacity of assumpsit is best seen in the development of
quantum meruit which means that what one has earned. Here the plaintiff typically alleged that the defendant in
consideration of some service rendered to the plaintiff at his request, promised to pay to the plaintiff the reasonable
value of the service. It may be possible that sometimes there is no such express agreement but then it can be
deduced from the circumstances of each case. Since the early eighteenth century, the courts have moved from the
proposition that these are based on implied promises to the wholly inaccurate proposition that they were based on
implied contracts.

The doctrine of unjust enrichment was originally based in English law upon the principle of assumpit or ‘had and
received’, and was declared by Lord Mansfield in Moses v. Mcfarlon, that the 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
money.

The second half of eighteenth century and in the nineteenth century the law of torts and the law of contract were
built around each other. The American lawyers at the start of twentieth century brought the broad principles of
Joseph Story’s equitable jurisprudence and were able to manipulate constructive trusts into remedial devices so
as to reverse the unjust enrichment.

The Indian Contract Act, 1872 followed the line: under the heading of ‘of certain relations resembling those
created by contract’, it included claims for necessaries supplied to those without contractual capacity, claims for
indemnity or contribution, claims to be paid for the beneficial services provided without the intention of making
any gift, claims against the finder of goods and claims for the money paid by the mistake. It went certain changes
through judicial interactions and came to be based more and more on the doctrine of restitution. In India, the
principle was developed under section 69 and section 70 of Indian Contract Act, 1872. Within a decade of the
passing of the act it was held that the co-surety claims for contribution was in fact a contractual term after all and
the earlier cases discussing its contractual nature, it was said, were delivered before the passage of the act, when
legislation had not stepped in the plain language to give distinct vitality and affect to certain relations between
parties out of those moral obligations one to another a legal fiction had grown up for implying a contract and
while as learned expositions of law, they can be read with interest and advantage for practical purposes to the
point under consideration they are absolute and irrelevant.

2.1.3 Remedies available

ü According to Section 68, Indian Contract Act 1872, 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 be reimbursed from the
property of such incapable person.
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Few real remedial citations for the same can be read as:

In the case of Jai Indra Bahadur Singh v. Dilraj Kaur, a minor was bound to support his sister, the money that was
given to the this minor for his sister’s marriage was legally recoverable from his property

In the case of Govindram Gordhandas Seksaria v. State of Gondal, the party was allowed to recover the money
for already overdue municipal taxes, when the party agreed to buy the mills from him

In the case of Dakshina Mohun Roy v. Saroda Mohun Roy Chowdhry, it was held that money paid by a person
while in possession of an estate under the decree of the court for preventing the sale of the estate for recovering
the arrears of government revenue may be recovered by him under this section.

ü According to Section 70, where a person lawfully does something 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 thing so done or delivered.

Few real remedial citations for the same can be read as:

In the case of Great Eastern Shipping Company Limited v. Union of India, The shipping company carried a cargo
of coal and delivered it to Union. It was shown that this was done non gratuitously, hence the union was liable to
pay the shipping company under Section 70

In the case of Bhagavadas Krishnadas v. P.S. Soma Iyer, the purchaser of the property allowed the other party to
stay in the property till the time they found other occupation. It was shown that the same was not done gratuitously
and hence the purchaser was liable to claim the rent from the other party

In the case of Modi Sugar Mills Limited v. Union of India, a person entered into the contract with Sugar Mills for
producing a type of biscuits, for which the raw material was supplied by the Union, which was supplied in
containers. The person never returned the containers, despite union reminding about it. Union later deducted the
money from the security deposit. When that person brought a suit to claim the return of the amount deducted, it
was held that the ownership of the containers was not transferred to that person, hence Union was liable to claim
compensation for those containers under Section 70.

ü According to Section 71, a person who finds goods belonging to another and takes them into his custody
is subject to the same responsibilities as that of bailee.

Few real remedial citations for the same can be read as:

In the case of Union of India v. Amar Singh, goods booked for Quetta before the partition of the country were
found to be missing when the wagon containing the goods was received at New Delhi. The owner sued East
Punjab railway which was handling the wagon from Indo- Pakistan border into India. It was held that when the
railway administration in Pakistan left the wagon containing goods within the borders of India and the forwarding
railway administration took them into their custody, it could not deny liability under section 71.

In the case of Newman v. Bourne and Hollingsworth, P, a customer in D’s shop, put down a brooch with her coat
and forget to pick it up. One of the D’s assistant found it and placed it in a drawer over the weekend. It was found
missing on Monday, D was held liable to P in view of the absence of that ordinary care which in the circumstances
a prudent man would have taken.

ü According to Section 72, a person to whom money has been paid, or anything delivered, by mistake or
under coercion, must repay or return it. For example, A and B jointly owe 100 rupees to C, A alone pays
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the amount to C and B not knowing of this fact, pays 100 rupees over again to C. Then C is bound to
repay the amount to B

Few real remedial citations for the same can be read as:

In the case of Associated Cement Company limited v. Union of India, the railways charged more fare from the
ACC being under the assumption that the goods will be taken from a longer route, but shorter route was taken,
hence the extra fair was return under section 72

In the case of Food Corporation of India v. K. Venkateswara, the rice millers were paid extra from the agreed
amount due to mistake in quality wise classification of rice. The rice millers were then to reimburse the extra
amount paid

2.1.4 Life Essentials of a claim of Unjust Enrichment

• The defendant was enriched at the claimants expense

• There was no legal valid basis for the defendants receipt of the benefit as the same was not a gift
• There exists no defence to the claim

The liability under the law of Restitution comes neither as a result of consent nor as a result of wrongdoing but as
an independent category of cause of action.

Sections 68 to 72 of the Indian Contract Act 1872, only deals partially with the law of restitution.

Section 70 specifically deals with obligations of a person enjoying the benefit of a non-gratuitous act.

In State of West Bengal Vs B.K. Mondal and Sons, AIR1962SC779, three conditions were laid down under the
section 70: The first one was that a person should lawfully do something for the other person. The second one was
that while doing so the person should not be acting gratuitously. The third one was that the person for whom the
said work was done should enjoy the benefits of that.
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3. Referral Judgements
In India, the doctrine of unjust enrichment is codified in enactments such as the Contract Act, 1872 (Sections 68-
72), the Central Excise and Customs Law (Amendment) Act, 1991. The law has been further developed by various
judgments.

The report article focuses on most important judgments of the Courts of India.

v The Supreme Court on 13th February, 1996 in the Writ Petition No. 967 of 1989 ordered certain chemical
industries situated in Bichhri, Udaipur District of Rajasthan to pay Rs.373.85 million to the residents of
Bichhri. Certain environment protection organizations had brought to the notice of the Court how the
chemical industries were polluting soil and water from the hazardous waste generated by their activities.
By the judgment dated 13.02.1996 the Court fixed the liability (the specific amount was to be determined
by an appointed body). The Court while deciding the matter chose to analyse the law of unjust enrichment
on the basis that no one can take advantage of his own wrong.

3.1 Product-Based Industry

3.1.1 Automobile

Raj Bala vs Skoda Auto India Pvt. Ltd. on 16 July, 2008

Complainant purchased Skoda Car from the OPs by paying Rs. 11,97,269/- on 28th March, 2008. Within a period
of 8-10 days she observed instability in steering wheel, gross bubbling in Clutches of the vehicle . She took the
car to the workshop of OPs five times but defects could not be removed. On having been supplied the defective
vehicle, the complainant has asked for refund of the cost of vehicle and compensation of 15 lacs for mental agony
and harassment.

3.1.2 FMCG

Devyani Beverage Limited vs Pankaj Dua on 11 November, 2008

On account of floating mosquitoes in the 500 ml Pepsi cola bottle purchased by the respondent No.1 allegedly
manufactured by the appellant, the District Forum has vide impugned order dated 12th January 2005 found the
appellant guilty for deficiency in service for manufacturing defective cola and directed to pay Rs. 10,000/- as
compensation and Rs. 1000/- as cost of litigation.

3.1.3 Convenience goods

Satish Jha vs Britannia Industries Ltd on 14 February, 2008

Appellant has purchased a bread for Rs.8/- from respondent No.2, manufactured by respondent No.1 on
06.10.2006. On detecting a hard fibre like substance embedded in it, he called the local and registered officer but
they did not take any interest. Admittedly he did not consume the bread nor had suffered any physical injury. On
account of having been sold defective bread, the appellant filed claim of Rs.2,00,000/- before the District Forum.

The object of Consumer Protection Act 1986 is not to enrich the consumer unjustly or give him handle to blackmail
the trader or service provider. In terms of Section 14(1)(d) of the Consumer Protection Act 1986 as consumer is
entitled to an amount as compensation as to the actual loss suffered by him or the injury suffered by him. In the
result we do not find any merit in the appeal and dismiss the same

Pepsico India Holdings Pvt. Ltd. vs Sh. Satendra Kumar on 9 September, 2016
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Briefly stated the facts giving rise to the present appeals are that the complainant is an Advocate by profession.
On 28.06.2008, the complainant purchased three 300 ml. bottles of Pepsi cold drink from M/S Sharma Sweets,
Opposite Roadways Bus Stand, Roorkee for serving the same to his clients. When the complainant was giving the
said bottles to his clients for consumption, he found that inside one of the said bottles, which was seal packed,
there was a pouch. The complainant showed the said bottle to the proprietor of M/S Sharma Sweets, who told that
they have sold the bottle in the same condition as it was supplied to them by the opposite party No. 4 - Shiv
Agencies and he will take up the matter with the opposite party No. 4 and the bottle be returned to him. The
complainant contacted the opposite party No. 4, who told that the responsibility of the quality of the product is
that of opposite party No. 1 - Varun Beverages Limited. The complainant made several calls on the helpline
number of opposite party Nos. 1 to 3 for lodging his complaint, but the complaint was not lodged. The complainant
also tried to lodge his complaint on the website of Pepsi, but to no avail. The complainant sent a legal notice dated
29.06.2008 to opposite party Nos. 1 to 3, but no action was taken by them in spite of service of the notice. Alleging
unfair trade practice on the part of the opposite parties, the complainant filed a consumer complaint before the
District Forum, Haridwar. The District Forum has imposed punitive damages of Rs. 2,00,000/- upon the opposite
parties.

3.2 Service- Based Industry

3.2.1 Aviation

Shweta Goyal vs Sri Lankan Airlines Ltd on 26 May, 2008

The complainant and her husband were on a honeymoon trip from Delhi to Kualalampur via Colombo. They were
to go to Malaysia. On arrival at Kualalampur they found that they had lost the baggage containing all their
belongings. According to the complainant the Airlines is liable to compensate her in terms of Rule-25 of the
Carriage by Air Act in view of its admission that they had affixed a wrong tag number to the baggage. However,
the compensation claimed by the complainant is highly exaggerated, apparently to invoke the jurisdiction of this
Commission, which is in the following components:-

i) Cost of Baggage: Rs.15,000-00

ii) Cost of goods in the lost baggage: Rs. 1,25,000-00

iii) Amount spent in purchasing new clothes and other articles: Rs. 27,000-00

iv) Sentimental value attached to the gifted articles: Rs. 5,00,000-00

v) Compensation for mental agony and harassment caused: Rs. 10,00,000-00

vi) Compensation for mental agony and harassment caused to the husband of the complainant. Rs. 10,00,000-00
Total = Rs.26,67,000-00

The State Commission by the impugned order dated 21- 08-1998 arrived at a conclusion that the claim made by
the complainant was grossly exaggerated. Hence, the complaint was returned with directions that, if so advised,
the complainant may approach the District Forum after putting in proper valuation amount of compensation. The
appeal is therefore dismissed. The petitioner shall pay Rs. 5000/- as costs to the respondent. It would be open to
the complainant to approach the District Forum by filing complaint.

No forum constituted under the Act will be within its right to put its own value either by reducing or enhancing
the value put by a complainant under the assumption that ultimately the complaint may not be able to sustain his
claim beyond a particular amount. Doing so would amount to prejudging the complaint. A complainant is entitled
to place such value on his complaint and to claim such compensation as he deems proper and the valuation so put
by the complainant shall decide the jurisdiction of the Consumer, rather than the value substituted by a forum.
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3.2.2. Healthcare

Meenu Khanna, vs Dr. Ram Manohar Lohia Hospital, on 28 May, 2008

On the allegations of the complainant having been administered an Injection of Phenargan, when she approached
the Opposite party (O.P in short) Hospital for treatment, resulting in the fingers of the left hand of the complainant
losing sensation, for which she is still under treatment and huge expenses are incurred by her and has been
rendered handicapped.

There are no documents to show the expenses incurred by her and the problem being suffered by her due to the
negligence or wrong treatment of the O.P. The complainant has claimed compensation of Rs.25.00 Lakhs. The
object of Consumer Protection Act is not to enrich the consumer unjustly. It is only to compensate the consumer
for the mental agony or harassment or for the injury suffered reasonably keeping in view the consideration paid
by the consumer.

3.2.3 Telecommunication

Bharti Telenet Limited vs Richa Jindal on 18 August, 2008

On the allegation of having charged installation charges for installing a new telephone connection in spite of there
being a scheme of not charging such charges, the appellant has been, vide impugned Order dated 30-06-2005
passed by the District Forum, directed to pay compensation of Rs. 20,000/- and Rs.1000/- and refund of Rs.
2,000/- as cost of litigation besides refunding the security of Rs. 1000/-. Feeling aggrieved the appellant has
preferred this appeal.

The object of the Consumer Protection Act is not to enrich the consumer unjustly but to compensate the consumer
for the actual loss taking into account the nature of deficiency in service. For charging Rs. 800/-, the appellant has
been directed to pay Rs. 20,000/- as compensation.

Later, taking over all view of the matter and nature of deficiency in service on the part of the appellant, it was
deemed that interest of justice shall be met if the amount of compensation is reduced to Rs. 10,000/- for the mental
agony and harassment, besides Rs. 1,000/- as cost of litigation.
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CONCLUSION

The unjust enrichment has been stated to have three things:

· That the defendant has been enriched by the receipt of benefit.

· He must have been enriched at the expense of plaintiff and
· Allowing defendant to keep the benefit will be unjust.

The theory of unjust enrichment came through English law. In the early 18th century, the general lawyers knew
nothing about the theory of unjust enrichment, even then in number of situations they had given remedies that
were later categorised under theory of unjust enrichment.

In all the cases of unjust enrichment wherever the court feels that one person has taken benefit out of another
person and has not given anything in return, the court makes the person liable and directs the person to compensate
or return the benefit.

The main objective of conducting the project was to understand the decision of courts in Indian Scenario on the
topic of unjust enrichment. Various remedies are available for unjust enrichment in Indian Contract Act, 1872.
Section 68-72 deals with remedies available in the case of unjust enrichment in various cases like when necessary
goods are provided to one person, obligation of a person enjoying benefit of a non-gratuitous act, responsibility
of the finder of goods, thing delivered to another person by mistake or coercion. The courts also in most of the
cases have always tried to give decision in favour of plaintiff in the case of unjust enrichment. Whenever the court
feels that the defendant has taken benefit from the plaintiff and has not compensated him, then court directs the
defendants to either compensate the benefit received by the defendant.

In section 72 of Indian Contract Act, only thing delivered by mistake or coercion is taken into consideration.
Like coercion and mistake there are other ways also like undue influence, misrepresentation, fraud which can
be used by a person to take benefit out of another person. So, provision related to misrepresentation, fraud and
undue influence should also be made under Indian Contract Act, 1872.
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REFERENCES

# http://dictionary.reference.com/browse/unjust?s=t&ld=1089 visited on 30th January, 2019

# Birks, Peter, Unjust Enrichment- Clarendon Law Series 2nd edition referred on 30th January, 2019

# Pollock and Mulla- Indian Contract & Specific Relief Acts, Volume II 13th edition 2009 referred on 31st
January, 2019

# https://www.livelaw.in/exploring-the-law-of-unjust-enrichment-in-india/ visited on 13th February, 2019

# Black Law Dictionary, 8th edition, Page 1573 referred on 6th February, 2019

# Encyclopediac Law Lexicon, Justice C.K. thakkar Volume 4 ashoka law house page 4874 referred on 6th
February, 2019

# Oxford law student dictionary J.E. Penner page 302 referred on 6th February, 2019

# Capital Legal and Medical Dictionary B L Bansal and Rajiv Raheja volume 2 edition2006 page 1778 referred
on 6th February, 2019

# Encyclopaedic Law Dictionary Dr. AR Biswas 3rd edition 2008 wadhwa Nagpur page 1486 referred on 6th
February, 2019

# Merriam Webster’s Dictionary of Law 1st edition 2005 page 515 referred on 6th February, 2019

# Pollock and Mulla Indian Contract Act, 1872 14th edition volume II page 1042 referred on 6th February, 2019

# Ibbetson, ‘Unjust Enrichment in England before 1600’, in Schrage(ed.), Unjust Enrichment, 121. Referred on
8th February, 2019.

# https://indiankanoon.org/ visited on 14th February, 2019

# R. Pound, ‘The progress of the law- equity’ (1920) 33 harv LR 420

# (1867) 7 WR (india) 377

# Indian Contract Act section 68-72.

# Mitra SC, The law of Contracts volume 2, 2nd edition orient publishing company. Referred on 14th February,
2019

# Mitra SC, The law of Contracts volume 2, 2nd edition orient publishing company Referred on 14th February,
2019

# Section 68, Indian Contract Act, 1872

# Section 69, Indian Contract Act, 1872

# Section 70 , Indian Contract Act, 1872

# Section 71, Indian Contract Act, 1872

# Section 72, Indian Contract Act, 1872