Introduction 

Section 72 of the Indian Contract Act, 1872 (ICA) deals with the liability of a person to whom the money is paid or thing delivered, by mistake or under coercion. This Section is one of the five obligations which are known as quasi contracts. Quasi Contracts are contained in Sections 68 to 72 of ICA and these obligations are based on the principle that law as well as justice should try to prevent unjust enrichment.    

Section 72 of ICA 

• Section 72 of the ICA deals with the liability of a person to whom the money is paid or thing delivered, by mistake or under coercion. 
• This section states that a person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it. 
• Illustrations:  
  • A and B jointly owe 100 rupees to C, A alone pays the amount to C, and B, not knowing this fact, pays 100 rupees over again to C. C is bound to repay the amount to B. 
  • A railway company refuses to deliver certain goods to the consignee, except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive. 

Essential Elements of Section 72 of ICA 

• This section is based on the doctrine of unjust enrichment and incorporates the rule of equity.  
• This section must refer to a payment which was not legally due, and which could not have been enforced.  
• Section 72 did not conflict with section 21 of the ICA. 
• The person claiming under this section should plead and prove a loss or injury.  

Case Laws 

• Sales Tax Officer v. Kanhaiya Lal Saraf (1959):  
  • In this case, it was held that the money paid under mistake is recoverable whether the mistake be of fact or of law. The term mistake has been used without any limitation under section 72 of ICA.  
• Shri Shiba Prasad Singh v. Maharaja S.C Nandi (1949):  
  • In this case, it was held that payment by mistake in section 72 of ICA must refer to a payment which was not legally due, and which could not have been enforced.  
• Trilok Chand Moti Chand v. Commr. Of Sales Tax (1970):  
  • The Supreme Court in this case exemplified the scope of the word ‘mistake’. The Court held that the payment made under coercion would have been recoverable under section 72 of ICA had it not been for the expiry of the period of limitation. The payment under coercion has to be treated in the same way for the purpose of a claim as the payment under mistake of law.  
• S. Ketrabarsappa v. Indian Bank (1987):  
  • In this case it was held that the word coercion in Section 72 of ICA implies under pressure. It has been used in its general or ordinary sense and not as defined in Section 15 of ICA.