The law of restitution and the principle against unjust enrichment has developed to a great extent under common law alongside the law of contract and the law of tort. Essentially, for a claim to be made under the unjust enrichment principle, there are four questions which are relevant – first, has the defendant been benefitted/enriched; secondly, was the enrichment at the plaintiff’s expense; thirdly, was the enrichment unjust; and finally, are any defenses available. The first and the third category were recently elaborated on by the UK Court of Appeal, in Gibb v. Maidstone & Tunbridge Wells,  EWCA Civ 678. The issue arose (in obiter, as the case was decided by the majority on another point) as to whether the foregoing of a claim can be considered to be a ‘benefit’. Lord Justice Laws stated the principle thus:
“If everything else is equal I can see no principled distinction between a benefit consisting in money paid and a benefit consisting in a claim foregone. For the purpose of this branch of the law the material benefit may take many forms…”
The approach that ‘benefit’ need not be only monetary is clearly borne out on precedent – there are several cases where the receipt of a service has been considered to be a benefit. A view was taken (Beatson, The Use and Abuse of Restitution) that pure services – i.e. services which do not produce an end product – are non-beneficial. This argument has however been criticized on strong grounds elsewhere (Burrows, The Law of Restitution).
, principles of restitution would be dealt with under the Contract Act. Section 70 requires that where a person lawfully does anything for another person, or delivers anything to that other person, not intending to do so gratuitously, and the other person enjoys the benefit thereof, he is bound “to make compensation to the former in respect of, or to restore, the thing so done or delivered.” On a literal reading, this is somewhat confusing – is there a restitutionary remedy under this section or is there a compensatory remedy? This same issue also arises on the text of Section 65 of the Contract Act which deals with payments made under a void contract. Here too, the section uses the words “bound to restore it, or to make compensation for it…” The fundamental difference between restitution and compensation is that the former is concerned with the return of the benefit derived by the defendant while the latter is concerned with compensating the loss suffered by the plaintiff. The two are conceptually different – and the difference can result in different practical outcomes too. Going further in Indian law, Section 72 states that a person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it. This section does not contemplate pure services; and again, is restricted to mistake/coercion. So where does that leave the law of restitution in India ? Will the law of restitution as a matter of common law continue to apply outside the Contract Act? India
The Supreme Court considered the question in Mahabir Kishore v. State of
. The Court stated: Madhya Pradesh
“The doctrine of 'unjust enrichment' is that in certain situation 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 contract. But the English law has not yet recognised any generalised right to restitution in every case of unjust enrichment. As Lord Diplock has said, "there is no general doctrine of "unjust enrichment" recognised in English law. What it does is to provide specific remedies in particular cases of what might be classed as unjust enrichment in a legal system i.e. based upon the civil law."
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 be unjust. This justifies 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 where inevitable expense has been saved…”
The last sentence of the second paragraph is noteworthy – it would appear then, that the proposition highlighted by the Court of Appeal in Gibb v.
Maidstone recently was already covered under the Supreme Court’s broad reading of what constitutes ‘enrichment’. However, the first paragraph quoted above requires additional comment. While it may be true at the time the Supreme Court decided the case that there was no law of restitution as such clearly recognised; subsequently, the House of Lords has laid to rest all doubt in this regard in Lipkin Gorman v. Karpnale  2 AC 548. Subsequently, however, High Courts have clarified that recourse to the law of restitution would be available even outside the Contract Act as a matter of common law. After quoting the Supreme Court decision, one High Court has noted (Ganganagar Sugar Mills v. Madanlal Ramswaroop), “It may be seen that provisions under Chapter V of Contract Act only gives some of the instances of obligations arising from certain circumstances, not arising from contract but on general principle, to wit to prevent a man from retaining the money of or some advantage derived from another which it is against conscience that he should keep in the words of Lord Wright. But the fact that Contract Act gives statutory recognition to some of the circumstances, does not preclude availability of remedy of restitution in other cases…”
Much more recently, in Jay Vee Rice & General Mills v. State of Haryana (Civil Appeal 8236/2010, judgment dated September 23, 2010), the Supreme Court has cited with approval the dicta of Lord Wright Fibrosa v. Fairbairn,  AC 32, which has subsequently formed the platform for the law of restitution to launch itself in England. Consequently, common law developments in this area would continue to be of relevance to Indian law, whether or not the principles laid down in the Contract Act are relevant.
There is a danger, however, that unjust enrichment would be used in every case of perceived injustice or inequity - something that would result in great uncertainty and would result in the substitution of what the law regards as unjust with subjective notions of inequity. The risk of this approach already exists through dicta in Sahakari Khand Udyog v. Commissioner of Central Excise, (2005) 181
ELT 328 (SC), which leaves open the proposition that the law of restitution would apply in all cases where the retention of benefit is contrary to justice or against equity (see thejudgment of the Bombay High Court in Shah Paper v. Union of India, (2010) 250 ELT 346 (Bom)). The better, principled approach is stated by Professor Burrows, “… the question of what is unjust is not to be answered by a vague appeal to individual morality: it is a reference to what the decided cases show as unjust…” Gibb v. Maidstone again offers some guidance with how enrichment should be treated as unjust:
“There is, I think, something of a tension … between these two propositions. (1) The categories of unjust enrichment claims cannot be closed, for if they were this branch of the law would be condemned to ossify for no apparent reason; and nothing could be further from the common law's incremental method. But (2) such a claim must fall "within one of the hitherto established categories of unjust enrichment" which suggests (at least) that the categories rather than any overriding principle are paramount. The authorities' reluctance to assert first principles may be ascribed to the justified fear of the palm tree: if the principle of unjust enrichment does no more than to invite one judge after another, case by case, to declare that this or that enrichment is inherently just or unjust, it is not much of a principle … we may see at once that clear reasoning is at least required for the elaboration of any extension of unjust enrichment. Clear reasoning, if it allows a claim in seemingly new circumstances, will provide clear analogues with other cases. No doubt this is what Mann J had in mind when he qualified his reference to established categories by the phrase "or some justifiable extension thereof"…”
Perhaps, such an incremental approach could be adopted in Indian law too.