The Doctrine of
Unjust Enrichment : Explained

The doctrine of unjust enrichment is a legal concept that arises when one party benefits at the expense of another without proper justification. Let’s delve into the key aspects of this doctrine:

    01.Definition:

Unjust enrichment occurs when someone gains an advantage or enrichment due to chance, mistake, or unfair circumstances, without having earned it. The law considers such enrichment to be unjust, and it demands that the enriched party make restitution to the injured party.

    02.Example:
  • Imagine Annie takes her two dogs to a groomer for clipping and cleaning.
  • The groomer successfully services the first dog but fails to attend to the second dog due to time constraints.
  • If the groomer receives payment for both dogs but only services one, it would be unjust enrichment.
  • Similarly, if Annie pays for both dogs but only receives services for one, she would also be unjustly enriched.
  • In this scenario, Annie could seek restitution (i.e., a refund) for the service she paid for but didn’t receive.

      • 03.Elements of Unjust Enrichment:
  • Consideration : There must be some form of consideration (e.g., payment or property transfer) between the claimant and the defendant.

  • Unjust Factor : An unjust factor must exist that undermines the claimant’s initial good-faith business dealings with the defendant. Unjust enrichment typically arises in breach of contract cases, personal injury matters, or criminal violations.

      • 4.Remedies:
  • When unjust enrichment is proven, the court may order restitution or compensation.

  • Restitution aims to restore the injured party to their original position before the unjust enrichment occurred.

  • Compensation may involve monetary payment or other remedies to address the unfair benefit received by the enriched party.

    Remember that unjust enrichment seeks to rectify situations where one party gains unfairly at the expense of another, ensuring equity and fairness in legal matters

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    If burden of excess octroi duty is passed onto consumers, then granting its refund will amount to ‘unjust enrichment’; Bombay HC dismisses Colgate’s plea. 

    Petitioner paid octroi duties to Respondent 1, Mumbai Mahanagar Palika between April 1995, and March 2001 and there was neither any record nor any clear averment that the octroi duty paid was “under protest” or “without prejudice”…

    The Court stated that it was reasonable to infer that petitioner had already passed on the burden of such octroi duties to its millions of consumers. Therefore, if the Bombay Municipal Corporation (‘BMC’), a public authority, was directed to refund the alleged excess octroi duty collected by it to petitioner, then petitioner would certainly be unjustly enriched, and it was impossible to direct or enforce the direction for petitioner to return this amount to millions of its consumers.

    Colgate Palmolive ( India ) Ltd. Vs Mumbai Mahanagar Palika, 2024

    In Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 (‘Mafatlal Industries Ltd. Case’), wherein the Supreme Court held that “a claim for refund, whether on the ground that excess tax has been collected by misinterpreting or misapplying the provisions of relevant law or on the ground that the relevant provision of the law under which it was levied is or has been declared to be unconstitutional, can succeed only if the Petitioner alleges and establishes that he has not passed on the burden of duty on another person/other persons”. The Supreme Court in Mafatlal Industries Ltd. Case (supra) also held that “where the burden of the duty has passed, the Petitioner cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden, and only that person can legitimately claim its refund. But where such a person does not come forward, or it is not possible to refund the amount to him for one reason or another, it is just and appropriate that the amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition”….

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