Restitution means something that has been lost or stolen by his owner, the process of restoring the lost or stolen thing is restitution or compensation. To compensate for the injury or loss faced by someone to recover that injury or loss or to compensate that loss is called restitution. Restitution in simple terms can also be called return, recovery, replacement, handing back, restoration. The doctrine is based on the rule of consideration in which consideration means that the person will pay consideration when he will get something in return.
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DOCTRINE OF RESTITUTION: INDIAN CONTRACT ACT
The Indian Contract Act 1872 [1] deals with the law of restitution, as per which, a person who has obtained some benefit must either restore it or compensate the victim. It refers to the obligation of a person who has acquired an undue advantage out of a void contract. For example, X pays Y Rs. 10,000, in consideration of Y’s promise to give him Z’s contract, but due to some reason and health issue, Z is dead at the time of the promise. In this situation the contract becomes void, and it’s the liability of Y to repay 10,000 Rs. to X. It is clearly mentioned in this section that if a contract or agreement is not formed or there was no agreement or contract then the doctrine of restitution will not come into play.
The restitution can be defined as to recover the loss of the owner, the act of restoring, recovering. The law implies that when a person obtains property or goods by false misrepresentation, he is often compelled to revive it to the person from whom he has received it. The doctrine applies to minors too, who can be compelled to revive the property or goods as long as the same is traceable in his possession.[2].
RESTITUTION AND COMPENSATION
The term ‘restitution’ and ‘compensation’ are totally different from each other. Restitution is provided after looking at how much gain the defendant has earned and the compensation is provided after looking or calculating the loss the plaintiff has to suffer. But in some cases, the judge can give a choice to the plaintiff to choose either one from the compensation or restitution.
In the case of Faqir Chand Seth v. Dambarudhar Bania [3], the plaintiff had given advance money for the supply of paddy to the defendant. The plaintiff was unaware of the fact that the contract which was formed between the plaintiff and defendant was in violation of the Orissa rice and paddy control order, 1965. After that, it was held that the contract formed was void and the plaintiff was entitled to receive the refund of the money he advanced to the defendant. The case law apprises the Indian Contract Act, section 65 application.
In the case of Rajasthan Ltd v. Sh. Pala Ram Gupta[4], the court held that it will never apply the provisions of the doctrine of restitution if the contract or agreement is void or illegal from the starting at the time of forming the agreement or contract.
THE DOCTRINE OF RESTITUTION OF A MINOR
Under this doctrine, if a minor has obtained benefits in any transaction, he is required to restore the benefits received by him, under the equitable doctrine of restitution. It applies only to goods or property received by a minor only up to the extent they are traced otherwise not and still in his possession. The doctrine does not apply to money in the case of minors.
When the minor has sold goods to others, the minor would not be liable for repayment or recover the loss because this would result in enforcing a void agreement or contract. In the case of Mohori Bibee v. Dharmodas Ghose [5] the court had refused to involve Section 41 of the Specific Relief Act 1877.
Section 41 of the Specific Relief Act provides compensation that justice required to be paid by the party at whose instance a contract was cancelled as in this case the lender had the knowledge and the lender was aware of the minority. As per the Specific Relief Act, 1877, under Section 33, the matter has been solved. As per Section 33, power of court to require benefit to be restored or compensation to be made when instrument is cancelled or is successfully resisted as being void or voidable.
In Lampleigh v. Brathwait [6], the defendant had killed a man and was due to be hung for murder. He asked the claimant to do everything in his power to obtain a pardon from the King. The claimant went to great efforts and managed to get the pardon requested. The defendant then promised to pay him £100 for his efforts but never paid up.
Held: Whilst the promise to make payment came after the performance and was thus past consideration, the consideration was preceded by a request from the defendant which meant the consideration was valid. The defendant was obliged to pay the claimant £100.
In Leslie v. Sheill, [7] the plaintiff was a money lender and the defendant was a minor. The defendant falsely represented his age to the plaintiff and took £ 200 from the plaintiff and then the money lender sued the defendant and said that the minor had to give me £ 475 with interest. The court held that the doctrine of restitution does not apply in this case because we are dealing with money in this case. The doctrine of restitution can be applied only when we are dealing with goods, property. The court said to restore the ill-gotten gains taken by the minor but not in the case of money.
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RESTITUTION UNDER CIVIL PROCEDURE CODE
Section 144 of the code primarily talks about two things, decree and order. It provides that when a court passes a decree or an order that has been:
- Varied or reversed in an appeal,
- Varied or reversed in a revision,
- Varied or reversed in any other proceeding,
- Set aside,
- Modified in any suit instituted for the purpose
The court shall grant relief by way of restitution on application by one of the parties. The paramount duty of the courts to not injure any litigant. Its objectives are to impose an obligation to restore them to their previous position, to afford speed relief, to shorten the litigation process.
EXCEPTIONS TO DOCTRINE OF RESTITUTION
The exceptions to the application of the doctrine of restitution are as follows:
- Where an agreement is known to be void,
- Where an agreement has been entered into between incompetent persons,
- Where the party is required to give some earned money or security and later on defaults.
CONCLUSION
The law of restitution is the recovery or gain based recovery which is to be contracted with the compensation law. According to the Indian Contract Act 1872, section 65 deals with the law of restitution. The law of restitution says that when the person receives advantages under a void contract or void agreement then the contract becomes void but also has certain exceptions. In the case of Attorney General v. Blake [8], the defendant had received a profit of around 60000 pounds as a result of the breach of contract with the claimant. The claimant was entitled to claim the compensation damages but had suffered the identifiable loss. So it was decided to go for the restitution for the wrong of breach of contract. And the judgement came in the favour of the plaintiff claimant as that the defendant has to pay over his profit to the plaintiff. In the normal breach of contract the compensation is provided, it was well known by court. But in some exceptional circumstances, the court ordered restitution. So it can be concluded and establish a principle that every right has a remedy [9]. That’s why in the case of restitution law the remedy is provided in case of wrongdoing. At last, the law of restitution is a remedy as well as a right.
REFERENCES
[1] The Indian Contract Act, 1872 (Act 9 of 1872), s. 65.
[2] The Specific Relief Act, 1963 (Act 47 of 1963), s. 33.
[3] AIR 1987 Ori 50.
[4] AIR 2001 Delhi 58.
[5] (1903) 30 Cal. 539.
[6] (1615) Hobart 105, 80 ER 255.
[7] (1914) 3 KB 607.
[8] [2001] 1 AC 268.
[9] Law essay related to contract law “Conflicting Views on Law of Restitution”, available at https://www.lawteacher.net/free-law-essays/contract-law/conflicting-views-on-law-of-restitution-contract-law-essay.php ( last date visited on October 4, 2020).
BY SAKSHI AGARWAL | INDORE INSTITUTE OF LAW , INDORE