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D Docto Or of I L Phil in Law Losop DOCTRINE OF UNJUST ENRICHMENT UNDER CONTRACTUAL OBLIGATIONS: A CRITICAL APPRAISAL THESIS Submitted FOR THE AWARD OF THE DEGREE OF Doctor of Philosophy in Law By MOHAMMAD ZAFAR Under the Supervision of PROF. IQBAL ALI KHAN DEPARTMENT OF LAW ALIGARH MUSLIM UNIVERSITY ALIGARH (U.P) INDIA 2015 IPage i Dedicated to My revered Mother Mrs. Chand Tara & Father Mr. Mohammad Taiyab Certificate This is to certify that Mr. Mohammad Zafar has completed his Ph.D. thesis captioned “Doctrine of Unjust Enrichment under Contractual Obligations: A Critical Appraisal” for the award of the Degree of Doctor of Philosophy in Law under my supervision. This is original work and meaningful contribution to the existing legal knowledge. This is fit for submission for the award of the Degree of Doctor of Philosophy in Law. (Prof. Iqbal Ali Khan) Acknowledgement The Almighty Allah always blessed me with all the strength which I required at moments when I felt slightly derailed from the track. It is He who has disposed the proposed. At the outset, I deem it a great privilege to place on record my deep sense of gratitude to my Supervisor Prof. Dr. Iqbal Ali Khan Chairman & Dean, Department of Law, AMU, Aligarh and Incharge/Director, Dr. Ambedkar Chair of Legal Studies and Research, Department of Law, AMU, Aligarh. Without his constant support both academic and moral it would not have been possible for me to complete this research work. I do acknowledge his rich academic contribution and cooperation of this work. I feel pleasure in expressing my deep sense of gratitude and thanks to Dr. Mohammad Tariq, Associate Professor, Faculty of Law AMU, Aligarh for his sympathetic and inspiring attitude. I have been greatly benefited by his vast knowledge and constructive suggestions. Sincere gratitude is also expressed to all my teachers especially, Prof. Saleem Akhtar, Prof. Akhlaq Ahmad, Prof. Javaid Talib, Prof. Zaheeruddin, Prof. Zubair A. Khan, Prof. Shakeel Ahmad Samdani and Dr. Badar Ahmad, Associate Professor whose sincere encouragement was a tremendous moral support to me. I am also grateful to Dr. Wasim Ali, AssociateS Professor, Dr. Shakeel Ahmad, Associate Professor, Dr. Zafar A. Khan, Dr. Hashmat Ali Khan, Dr. Nafees Ahmad, (Late) Dr. Zafar Iqbal, Dr. M. Kalimullah, Dr. Ishrat Hussain, Dr. Tabassum Chaudhary and Dr. Roshan Aara for their constant support, unforgettable help and encouragement. i I feel my sincere duty to express my heartfelt thanks to Ms. Rabab Khan, Assistant Professor Department of law, AMU, Aligarh for her inspiration, cooperation and academic contributions. Parents are the symbol of love, affection and everlasting bless. I have been lucky enough to enjoy the everlasting encouragement, love, affection, guidance and blessing of my parents. Words are insufficient to express my gratitude to my father Mr. Mohammad Taiyab and my mother Mrs. Chand Tara for being a constant source of motivation. My brothers Mr. Mohammad Zama, Late Mr. Mohammad Rizwan, Er. Mohammad Zeeshan, Mr. Mohammad Alam and my seniors and friends Dr. Mujibur Rehman, Mr. Shakeel Ahmad, Dr. Dinesh Sharma, Dr. Mohammad Azwar Khan, Dr. Ankit Misra, Fakhruddin, Maaz-Ul-Haque, Dr Faizan-Ur- Rehman, Abdul Ahad deserve special mention that always inspired me during this research work. I express my sincere thanks to the office members of the Department of Law and Law Seminar Library who rendered great assistance to me in collection of materials. I feel heavily indebted to express my most sincere thanks to Mr. Zaheer Ahmad, Mr. Zarrar, Mr. Sharif, Mr. Mohammad Mian, Mr. Azim, Mr. Anwar, Mr. Israr, Mr. Farrukh, Department of Law, AMU, Aligarh and all those who helped me in one way or the other in completing of this academic endeavor. Dated:…………….. (Mohammad Zafar) ii CONTENTS List of Cases viii-xxxii Introduction 1-13 CHAPTER I: 14-60 Unjust Enrichment and Restitution: A Conceptual Framework 1.1 Introduction 1.2 Unjust Enrichment: Historical Perspective 1.3 Doctrine of Unjust Enrichment 1.4 Theory of Unjust Enrichment 1.5 Relation between Unjust Enrichment and Restitution 1.6 Scope of Unjust Enrichment and Restitution 1.7 Doctrine of Restitution 1.8 Persons Not Competent to Contract 1.9 Restitution under English Law 1.10 Compensation by a Minor under Indian Law 1.10.1 Compensation under Indian Contract Act 1.10.2 Compensation under Special Relief Act 1.10.3 Lahore High Court View 1.10.4 Allahabad High Court View CHAPTER-II: 61-94 Restitutionary Techniques under Common Law and Specific Relief Act A. Restitutionary Techniques under Common Law 2.1 Introduction 2.2 Historical Background 2.3 Common Law and Equity 2.4 Quasi Contract 2.4.1 Action for Money had Received 2.4.2 Action for Money Paid 2.4.3 Quantrum Meruit 2.4.4 Quantrum Valebat 2.5 Rescission 2.6 Tracing and Claiming 2.6.1 Tracing and Claiming at Common Law 2.6.2 Tracing in Equity 2.6.3 Contractive Trust 2.6.4 Equitable Lien or Charge 2.6.5 Subrogation 2.6.6 Resulting Trusts 2.7 Restitutionary Claims 2.8 Restitution on Ground of Failure of Consideration 2.9 Restitution for ‘Wrongs’ iii B. Restitutionary Techniques under Specific Relief Act 2.11 Introduction 2.12 Development of Law under Specific Relief Act CHAPTER-III: 95-190 Defective Transfers A. Mistake 3.1.1 Introduction 3.1.2 Mistake and Ignorance 3.1.3 Fact and Law 3.1.3.1 Origins of the Distinction 3.1.3.2 The Former Exceptions to the Mistake of Law Rule 3.1.4 The Ground of Restitution 3.1.5 Restrictions on Recovery 3.1.6 Submission to an honest Claim : Proposition 2(a) 3.1.7 Good Faith Purchase : Proposition 2(b) 3.1.8 Change of Position : Proposition 2(c) 3.1.9 What Constitutes a Mistake of Law 3.1.10 Contributory Negligence 3.1.11 Non-Money Benefits 3.1.12 Common Law 3.1.13 Statutory Recognition 3.1.14 Other Authority 3.1.15 Equity B. Misrepresentation 3.2.1 Introduction 3.2.2 Actionable Misrepresentation 3.2.3 Rescission and Indemnity 3.2.4 Limits to the Right to Rescind 3.2.5 The Misrepresentation Act, 1967 3.2.6 Rescission Mistake 3.2.7 Common Law Mistake 3.2.8 Equitable Mistake C. Duress 3.3.1 Introduction 3.3.2 Coercion under India Contact Act, 1872 3.3.3 Scope of Section 15 3.3.4 Essential Ingredients of Coercion 3.3.5 Coercion under English Law 3.3.6 Distinction Between English Law and Indian Law 3.3.7 Act Forbidden by the Indian Penal Code 3.3.8 Threat to Commit Suicide, Whether Coercion 3.3.9 Recommendations of Law Commission 3.3.10 Whether an Act done under Compulsion of Law Constitutes Coercion. 3.3.11 Unlawful Detaining of Property iv 3.3.12 Difference between Coercion and Duress D. Undue Influence 3.4.1 Introduction 3.4.2 Applicability of English Equity Principles in India3 3.4.3 General Principles : Section 16 of Section (1) 3.4.4 Parties to the Contract. 3.4.5 Special Relationship and Domination Will 3.4.6 Obtains an Unfair Advantage Over the Other 3.4.7 Clause (2) – Types Domination of Will E. Inequality and Unconscionability 3.5.1 Introduction 3.5.2 Unconscionable Bargains 3.5.3 Concept of unconscionability 3.5.3.1 Position in United Kingdom 3.5.3.2 Position in India 3.5.4 Report of Law Commission 3.5.5 Statutory Intervention in Unfair or Unconscionable Transactions 3.5.6 The doctrine of Inequality of Bargaining Power 3.5.7 Inequality of Bargaining Power and Public Policy F. Necessitous Intervention 3.6.1 Introduction 3.6.2 Maritime Salvage 3.6.3 Agency of Necessity 3.6.4 Principle of Necessitous Intervention 3.6.5 Requirement for Validity of Necessity 3.6.6 A Critique of the Doctrine of Necessity 3.6.7 Bailment CHAPTER-IV: 191-202 Unjust Enrichment under Indian Contract Act, 1872: An Analysis 4.1 Introduction 4.2 Theoretical Bases of quasi-Contractual Liability 4.2.1 Implied Contract 4.2.2 Unjust Enrichment 4.3 Quasi Contract in English Law 4.4 Payment to the defendant’s use 4.5 Payments made under Mistake of Fact 4.6 Payments made under an Ineffective Contract 4.7 Payments made under Compulsion 4.8 Quantum Meruit CHAPTER-V: 203-235 Unjust Enrichment under the Constitution of India 5.1 Introduction 5.2 Contracts of Lease v 5.3 Limitation on Liability 5.4 Government Contract 5.5 Judicial Review of Contracts of Government or Government bodies 5.6 Government Liability in Contracts 5.7 Applicability of Section 65 and 70 of the Contract Act, vis-à-vis Article 299 (1) of the Constitution of India 5.8 Agency in Government Contract 5.9 Unjust Enrichment: Modern Approach CHAPTER-VI: 236-256 Restitution from Public Authorities 6.1 Introduction 6.2 Nature of Restitution 6.3 Restitution Past 6.3.1 Policy 6.3.1.1 Constitutional Considerations 6.3.1.2 Implications for the General Community 6.3.1.3 Balancing Principle and Pragmatism 6.3.2 Establishing Unjust Enrichment 6.3.3 Determining the Ambit of the Ground of Ultra Vires Receipt 6.3.3.1 Does this Ground apply to all types of Ultra Vires Payment 6.3.3.2 Is the Ground of Restitution confined to the recovery of over paid taxes. 6.3.3.3 Must the Claimant have Protested about the Law fullness of the demand 6.3.3.4 Restricting the right to restitution 6.4 Restitution Present 6.4.1 The Relationship between the Ground of Restitution 6.4.2 Limiting the Right to Restitution 6.4.2.1 Failure to Exhaust Statutory remedies 6.4.2.2 Change in a settled view of the Law 6.4.2.3 Compromise 6.4.2.4 Unjust Enrichment 6.5 Restitution Future CHAPTER-VII: 257-265 Enrichment by Wrongdoing 7.1 Introduction 7.2 Who is Fiduciary? 7.3 Fiduciary Relationships 7.4 The obligation of the Fiduciary 7.5 Remedies for Breach 7.6 Diversion of Opportunity CHAPTER-VIII: 266-312 Illegality and Public Policy as Defences 8.1 Introduction 8.2 Contracts
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