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1979 Supreme(All) 711
Allahbad High Court
H.N.SETH,V.K.MEHROTRA
De-Smet (India) Private Ltd. - Appellant
Versus
B.P. Industrial Corporation (P.) Ltd. - Respondent
Decided On : 12/21/1979
V. Swarup and J. Swarup, for Appellant; Swami Dayal, for Respondent.
A person who has been unjustly enriched at the expense of another is required to make restitution to the other.
Headnote:
CONTRACT - ADVANCE PAYMENT - REFUND - UNJUST ENRICHMENT - BURDEN OF PROOF - EXCESS BENEFIT OVER HARM SUFFERED.
Fact of the Case:
Plaintiff paid Rs. 100,000 to the defendant as part payment for a plant to be supplied by the defendant. The contract fell through and the defendant refused to refund the money. The plaintiff sued for the refund of the money.
Finding of the Court:
The court held that the plaintiff was entitled to a refund of the money paid to the defendant as it was not earnest money and the contract had fallen through. The court also held that the defendant was not entitled to deduct any amount from the refund as it had not suffered any loss due to the breach of contract.
Issues: 1. Whether the plaintiff was entitled to a refund of the money paid to the defendant. 2. Whether the defendant was entitled to deduct any amount from the refund.
Ratio Decidendi: 1. The court held that the plaintiff was entitled to a refund of the money paid to the defendant as it was not earnest money and the contract had fallen through. The court relied on the principle that a person who has been unjustly enriched at the expense of another is required to make restitution to the other. 2. The court held that the defendant was not entitled to deduct any amount from the refund as it had not suffered any loss due to the breach of contract. The court held that the burden of proving that the benefit received by the defendant was in excess of the harm suffered by him, and the extent of such an excess, was on the defendant.
Final Decision: The court dismissed the appeal and the cross-objection.
H. N. SETH, J. :- This first appeal by De-Smet (India) Private Ltd. defendant is directed against the judgement and decree of second Additional Civil Judge, Agra dated 2-6-1975, decreeing the suit filed by B.P. Industrial Corporation (P) Ltd. for recovery of Rs. 100,000 with proportionate costs. There is also before as a cross-objection by the plaintiff praying that the decree passed by the trial court should be modified so as to decree its entire claim for a sum of Rupees 116,000.
2. B.P. Industrial Corporation (P.) Ltd. filed Suit No. 51 of 1966 in the court of the second Additional Civil Judge, Agra for recovery of Rs. 116,000 the defendant De-Smet (India) Private Ltd. Briefly stated the case set up in the plaint was that the plaintiff wanted to set up a continuous solvent extraction plant, and with that end in view, it in the month of June 1964, invited quotation from the defendant. The defendant vide its quotation dated 18th June 1964 offered to supply to the plaintiff De-Smet continuous and fully automatic solvent extraction plant for a "sum of Rupees 13,92,690. In order to secure the order the defendant agreed to waive the condition in the quotation that the plaintiff should pay one third price of the plant as advance along with its order and that the plaintiff had in unequivocal terms intimated the defendant that it shall pay a sum of Rs. 50,000 only as advance and eventually by a letter dated 3rd August 1964 it accepted the offer made by the defendant. The plaintiff also sent a chaque of Rs. 50,000 as advance for the supply of the plant. On receipt of the letter of acceptance and the cheque for Rs. 50,000 the defendant intimated the plaintiff that the order placed by it had been registered and that it was going ahead with it. Even though the contract was complete and the plaintiff was not liable to pay anything further towards advance payment for the plant, the defendant started pestering the plaintiff for further advance. Subsequently the plaintiff asked the defendant to amend the order so as to include in it the order for the rice bran processing equipment also thereby increasing the price of the plant to be supplied by the defendant to Rs. 15,56,099. The defendant confirmed the amendment of the order through a letter dated 23rd Sept. 1964. Although there was no obligation on the plaintiff to pay any further amount by way of advance, still in order to maintain good relations between the parties, it paid a further sum of Rs. 50,000 the defendant as, further advance by a cheque dated 2-1-1965. The defendant was still not satisfied and it submitted three Hundis worth Rupees 1,50,000 which the plaintiff did not honour. Thereupon the defendant refused to supply the plant and committed breach of contract. The plaintiff accordingly claimed that it was entitled to the refund of Rs. 100,000 together with interest thereon amounting to Rs. 6,000 as also a sum of Rs. 10,000 as damages, total Rs. 1,16,000.
3. The defendant contested the suit. It alleged that while submitting the quotation it had made it absolutely clear to the plaintiff that all orders placed by it would be subject to payment of one third of the value of the order as advance payable along with the order itself and the remaining two-third amount was to be paid against despatch documents. However, at the special request of Sri V.N. Bhagat, Managing Director of the plaintiff Company it agreed to accept only 25% of the value of the order as advance and made this position clear vide its letter dated 3rd August 1964. During the meeting between Shri Ram Sharma of the defendant company and Sri V.N. Bhagat of the plaintiff company which took place at Calcutta, Sri Bhagat pleaded that the plaintiff was not in a position to pay the entire advance at once and that it would pay Rs. 50,000 initially and would pay the balance in about two months, time. The defendant accepted the order placed by the plaintiff in the belief that the plaintiff would carry out the said unde
