MAHABIR KISHORE & ORS. versus STATE OF MADHYA PRADESH

Citation: [1989] 3 S.C.R. 596 · Decided: 31-07-1989 · Supreme Court of India · Bench: G.L. OZA · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
MAHABIR KISHORE & ORS. 
v. 
STATE OF MADHYA PRADESH 
JULY 31, 1989 
[G.L. OZA AND K.N. SAIKIA, JJ.] 
Indian Contract Act-Section 72-Suit for refund of money paid by 
mistake of law-Period of limitation-three years. 
Limitation Act 1968-Section 17( l)(c) and Schedule Article 113-
, 
Suit for refund of money paid under mistake of law-Period of limita- fk 
C lion-Three years-Date of knowledge of particular law being declared 
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E 
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G 
H 
void-Date of judgment of the competent court declaring that law void. 
·"' 
Words and pharases: 'Nul ne doit senrichir aux depens des 
autres'-'Jndebitatus assumpsit'-'Aequum et bonum'-Meaning of. 
The appellant firm was allotted contracts for manufacture and 
sale of liquor for the year 1959 and for the subsequent periods from 
1.1.1960 to 31.3.1961 for Rs.2,56,200 and Rs.4,71,900 respectively by 
the M.P. Govt. who also charged 7-1/2% over the auction money as 
mahua and fuel cess. As writ petitions challenging the government's 
right to charge this 7-1/2% were pending in the M.P. High Court, the 
Govt. announced that it would continue to charge it and the question of 
stopping it was under consideration of Govt. wltose decision would be 
binding on the contractors. The appellant firm paid for the above con-
tracts a total extra sum of Rs.54,606.00. On 24.4.1959 the M.P. High 
Court in Surajdin v. State of M.P., [1960] MPLJ 39 declared the collec-
tion of 7-1/2% as illegal. Even after this decision the Govt. continue to 
charge 7-1/2% extra money. Again on 31.8.1961, the High Court of 
Madhya 1 Pradesh in N.K. Doongaji v. Collector, Surguja, [1962] 
MPLJ. 130 decided that charging of 7-1/2% by the Govt. above the 
auction money was illegal. Appellants came to know of this decision only 
in or about September, 1962. 
On 17.10.1964 the appellants gave a notice under section 80 
C.P.C. to the Govt. of Madhya Pradesh requesting for the refund of 
Rs.54,606.00. failing which a suit for recovery would be riled and later 
they instituted a civil suit in the court of additional District Judge, 
Jabalpur on 24.12.1964. The Govt. resisted the suit inter alia on the 
ground of limitation. The Trial Court held that the suit was barred by 
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MAHABIR K!SHORE v. STATE OF M.P. 
597 
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limitation and dismissed it. The High Court also dismissed the appeal. A 
The appellants then came up in appeal by special leave. While allowing 
the appeal and remanding the suit to the Trial Caurt for decision on 
merits. This Court, 
HELD: 'Nul ne doit senrichir aux depens des autres' No one ought 
~ to enrich himself at the expense of others. This doctrine at one stage of B 
English common Law was remedied by 'indebitatus assumpsit' which 
action lay for money' had and received to the use of the plaintiff'. It lay 
to recover money paid under a mistake or extorted from the plaintiff by 
~-duress of his goods, or paid to the defendant on a consideration which 
I 
totally failed. On abolition of 'indebitatus assumpsit', courts used to 
imply a promise to pay which, however, in course of time was held to he c 
.,_,.. 
purely fictitious. [601G-602A] 
Courts is England have since been trying to formulate a juridical 
basis of this obligation. Idealistic formulations as 'aequum et bonum' 
and 'natural justice' were considered to he inadequate and the more 
legalistic basis of unjust enrichment is formulated. The doctrine of D 
"unjµst enrichment' is that in certain situations 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 con-
.). 
tract. But the English law has not yet recognised any generalised right 
to restriction in every case of unjust enrichment. [602H-603B] 
E 
The principle of unjust enrichment requires; first, that the 
defendant has been 'enriched' by the receipt of a "benefit"; secondly. 
that this enrichment is "at the expense of the plaintiff" and thirdly, 
that the retention of the enrichment he unjust. This justified restitution. 
Enrichment may take the form of direct advantage to the recipient 
wealth such as by the receipt of money or indirect one for instance 
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where inevitable expense has been saved. [603C-603D) 
There is no doubt that the suit in the instant case, is for refund of 
money paid by mistake and refusal to refund may result in unjust 
enrichment depending on the facts and circumstances of the c~. [6040) 
Though there is no constitutionally provided peri

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