TOWN AREA COMMITTEE Vs. RAJENDRA KUMAR

JUDGEMENT

(1.) THE Town Area Committee, Moth, filed a suit against the respondents for recovery of Rs. 23,677.50 which comprised of the balance of the contract money and interest thereon at six per cent. THE case set up by the plaintiff was that since long the Town Area has been auctioning the right to realise weighing dues; that for the year 1962-63 the right to realise weighing dues in the Town Area was auctioned on 18- 3-1962 in favour of the defendants who made the highest bid of Rs. 42,000/- the bid was accepted by the Town Area and was approved by the Collector, Jhansi; that the defendants started realising the weighing dues but did not execute any formal agreement; that they paid Rs. 21,500/- towards the contract; that the plaintiff had no obligation to help defendants in realisation of the dues but still it extended help and assistance from time to time; and that in spite of repeated demands the defendants failed to pay the balance due and hence the suit.

(2.) THE defendants pleaded that the Town Area levied the weighing dues in 1933 and it was a tax imposed under the Market Bye-Laws. Since it was a tax it could not be validy imposed by means of a bye-law and could not be legally assigned or transferred by way of THEka and the contract being opposed to public policy was invalid and unenforceable in law. It was also pleaded that no completed and valid contract between the parties came into existence. It was further pleaded that the plaintiff committed a breach of the contract by not extending its help in realising the weighing dues and, therefore, the plaintiff was not entitled to realise the balance of the contract money. THE claim for interest was also challenged. THE suit was also said to be barred by time.

(3.) THERE is no dispute that the tax in question was imposed as far back as 1933. The right to collect the tax for the year 1962-63 was auctioned in favour of the defendants who made the highest bid of Rs. 42,000/- and that the defendants started realising the tax claiming to be so entitled under the contract entered into between them and the plaintiff Town Area and they paid to the Town Area a sum of Rs. 21,500/- towards the contract money. The defendants made the realisations throughout the year 1962- 63. On these facts it was contended that even if it be accepted that the contract between the parties was void, the defendants who had received advantage under the contract were bound to pay the balance money due to the plaintiff. Reliance was placed on S. 65 of the Indian Contract Act which contains the principle of restitution after benefit has been received and the contract is later discovered to be void. The contention appears to be sound. The basis of this principle is the doctrine of ' restitio in integrum' . The section does not make a new contract between the parties but only provides for restitution of the advantage taken by a party under the contract. The obligation to pay compensation under this section is quite different from a claim under the contract itself. The remedy is treated as quasi-contractual. The nature of the remedy has been described by Lord Wright in Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. (1943 AC 32) in the following words:- " It is clear that any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep." The principle of unjust benefit or unjust enrichment according to the jurist presupposes three things; first, that the defendant has been enriched by the receipt of a benefit, secondly, that he has been so enriched at the plaintiffs expense; and thirdly, that it would be unjust to allow him to retain the benefit. The plaintiff may have paid money to the defendants in pursuance of a transaction which he thought to be a valid contract but which in truth, through the operation of some rule of law, is null and void. It appears logical and just that such money should be recoverable in quasi contract. As observed by Lord Mansfield 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. Equity also developed, independently of the common law remedy for unjustifiable enrichment, some principles which are aimed at the same result, viz., to force a man to disgorge property in his possession which rightly belongs to the plaintiff. This very principle is contained in S. 65 of the Indian Contract Act.