Things delivered by mistake or coercion
Section 72 of the Indian Contract Act, 1872
In one minute
If you pay money by mistake, or hand over goods because you are forced to, the person who received them must give them back. Section 72 says so in one sentence. You do not have to prove that the receiver did anything wrong.
In exams, the double payment by joint debtors, the illegal railway charge, and the rule that "mistake" covers both fact and law earn the marks. In real life, it is the basis of refunds of excess payments and of taxes collected without authority.
Exam focus
- Frequency: Rarely asked
- Usually asked as: Long answer (10 to 15 marks)
Legal provision
- Section 72: a person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.
- Illustration (a): A and B jointly owe 100 rupees to C. A alone pays the amount to C. B, not knowing this, pays 100 rupees over again to C. C is bound to repay the amount to B.
- Illustration (b): A railway company refuses to deliver certain goods to the consignee except on 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.
- Section 43: each joint promisor may compel every other joint promisor to contribute equally to the performance of the promise, unless a contrary intention appears from the contract.
Meaning and definition
Section 72 is the last of the five quasi-contractual situations. It has two grounds. The first is a payment or delivery made by mistake. The second is a payment or delivery made under coercion. In both, the receiver has something that the giver never meant to give freely.
The reason is unjust enrichment. The receiver should not keep what he had no right to take. The law does not ask whether the receiver was honest. It asks only whether the payment came from a mistake or from compulsion.
The flowchart shows the questions that a court asks.
- 1. Was money paid, or a thing delivered, to the person who now holds it?No: section 72 does not apply.
- 2. Was it paid or delivered by mistake, whether of fact or of law, or under coercion in the wide sense of compulsion?No, it was a free and informed payment: the receiver need not return it.
- 3. Was the sum legally due from the giver anyway, for example under a contract?Yes: it cannot be recovered, because the giver paid only what he owed.
- 4. All the tests are met.The receiver must repay the money or return the thing.
Detailed explanation
Step 1: mistake of fact
The simplest case is a mistake about a fact. The payer believes something that is untrue and pays because of it. He may not know that the debt is already paid, or that the amount is wrong, or that the person to be paid is another.
Illustration (a) shows a double payment. A has already paid the joint debt, and B pays it again without knowing. C holds money he is not entitled to, and he must repay B.
Example. Devika's electricity bill for March is generated twice by mistake, and she pays both. The second payment was made by mistake, so the utility must refund it.
Step 2: mistake of law
The Indian rule differs from the old English rule that ignorance of law is no excuse and that money paid under a mistake of law could not be recovered. The Privy Council held in Sri Sri Shiba Prasad Singh v. Maharaja Srish Chandra Nandi (1949) that "mistake" in section 72 covers a mistake of law too. The Supreme Court followed this in Sales Tax Officer, Banaras v. Kanhaiya Lal Mukundlal Saraf (1958).
In Kanhaiya Lal, a firm paid sales tax. The Allahabad High Court later held the tax on forward transactions beyond the State's power. The firm recovered what it had paid. The Court dismissed the State's appeal with costs. The fact that the State had spent the money in the ordinary course of its affairs made no difference.
Example. A trader pays a cess in 2023 because he believes the law requires it. In 2024, the High Court strikes the cess down as beyond the State's power. He may recover the sums paid under section 72, because he paid under a mistake of law.
Step 3: the sum must not have been due
The Privy Council in Shiba Prasad Singh said that a payment "by mistake" in section 72 must be one that was not legally due and could not have been enforced. If the giver owed the money, he cannot call it a mistake. He may be entitled to a refund only of the part that exceeded what he owed.
Step 4: coercion
The word "coercion" in section 72 is not tied to its technical definition in section 15. The Law Commission of India noted that it is used in the general and ordinary sense. It covers every kind of compulsion, such as holding a person's goods until he pays an illegal charge.
In illustration (b), the railway threatens no offence, yet the consignee has no real choice if he wants his goods. He pays under compulsion, so he recovers the illegal part of the charge.
Example. A municipal clerk will not release a building plan approval unless the applicant pays Rs 5,000 that the rules do not allow. The applicant pays to avoid delay and then claims a refund. The payment was made under compulsion, so he may recover it.
Step 5: money and anything delivered
Section 72 covers "money" and "anything delivered". The receiver must repay the money, or return the goods. If the goods cannot be returned, he must pay their value. This follows from the nature of the claim, which is to take away the unjust gain.
Step 6: joint debtors who pay twice
In the joint debtors' case, section 72 and section 43 work together. The receiver C repays the second payment to B, as illustration (a) says. As between A and B, each joint promisor must contribute equally to the debt (section 43). If A alone has paid the whole debt, A may call on B for B's share.
Section 72 at a glance
| Ground | What the law requires | Example |
|---|---|---|
| Mistake of fact | The payer believed a wrong fact and paid because of it | B pays a joint debt again, not knowing A had paid it |
| Mistake of law | The payer believed he was bound by a law that did not bind him | Tax paid under a provision later held beyond the State's power |
| Coercion | The payer paid under compulsion in the general sense | Goods held until an illegal charge is paid |
| Remedy | The receiver must repay or return it | C repays B the extra 100 rupees |
Don't confuse: coercion and mistake in section 72 and in free consent
The words "coercion" and "mistake" also appear in the law of free consent. Their roles are different.
| Point | Free consent (sections 15, 20 to 22) | Section 72 |
|---|---|---|
| Purpose | To decide whether a contract is valid or voidable | To decide whether money or goods must be returned |
| Coercion | Technical: an act forbidden by the penal law, or unlawful detaining of property, to get an agreement | General: any compulsion |
| Mistake of law | A mistake about Indian law does not make a contract voidable (section 21) | A mistake of law is enough to recover the payment |
| Contract needed | Yes, there is an agreement | No |
Section 15 still names the Indian Penal Code. The Bharatiya Nyaya Sanhita, 2023 replaced that Code on 1 July 2024, so the section is read with the Sanhita.
Inside the idea. A bank collects a service charge that its own rules do not allow, and the customer pays to get his account released. The customer recovers it under section 72, even though no offence was threatened.
Just outside it. Ravi pays his landlord the full rent that his lease requires. He later wishes he had paid less. He cannot recover the rent, because the sum was legally due and he paid it knowing the facts.
Common mistakes
- Saying that only a mistake of fact is covered. Mistake of law is covered too.
- Applying the technical meaning of coercion in section 15 to section 72. Section 72 uses the wide, ordinary sense.
- Asking the receiver to prove his innocence. His good faith is not the test.
- Claiming a refund of money that the giver legally owed. A debt that was due is not recoverable.
Apply it
Problem
A and B jointly owe Rs 200 to C. A pays the debt to C. B, not knowing this, pays Rs 100 again to C. What are the rights of A and B against C?
Issue. Can B recover the second payment from C, and what remedy does A have?
Rule. A person to whom money has been paid by mistake must repay it (section 72, illustration (a)). Each joint promisor may compel the others to contribute equally to the performance of the promise (section 43).
Application. A discharged the whole debt, so C was owed nothing more. B paid Rs 100 under a mistake of fact, because he did not know that A had paid. C is holding Rs 100 that he has no right to. A has no claim against C, because C received only what was due to him from A. A has paid more than his share of the joint debt, so he may call on B to contribute.
Conclusion. B may recover Rs 100 from C under section 72. A has no right against C. A may claim from B the equal share of the debt that B owes him under section 43.
Leading case laws
- Sales Tax Officer, Banaras v. Kanhaiya Lal Mukundlal Saraf (1958)
Facts. A Banaras bullion firm paid sales tax of Rs 1,365-12-0 for 1948-51. The Allahabad High Court held that the tax on forward transactions was ultra vires (beyond the power) of the State to levy. The Supreme Court decided the State's appeal on 23 September 1958. AIR 1959 SC 135.
Principle. Section 72 covers money paid under a mistake of law. The State could not escape by saying it had spent the money in the ordinary course.
Why it matters. It is the leading Supreme Court case on refunds under section 72.
- Sri Sri Shiba Prasad Singh v. Maharaja Srish Chandra Nandi (1949)
Facts. A lessee of the Jharia estate under a mining lease of 22 October 1898 paid royalty at an enhanced rate. He later claimed that the lease did not require the higher rate and sued to recover the overpayment. The Privy Council decided the appeal on 18 July 1949. AIR 1949 PC 297.
Principle. "Mistake" in section 72 includes a mistake of law. It must be a payment that was not legally due.
Why it matters. It settled that mistake of law is within section 72.
- Moses v. Macferlan (1760)
Facts. Moses endorsed notes to Macferlan on a promise that Macferlan would not sue him on them. Macferlan sued him in the Court of Conscience, and Moses had to pay. Moses then sued to recover the money.
Principle. The action for money had and received lies wherever the defendant is obliged by natural justice and equity to refund.
Why it matters. It is the English root of the principle that section 72 applies.
How to write this answer in the exam
5-mark answer
- State section 72: money paid or a thing delivered by mistake or under coercion must be repaid or returned.
- Give the Act's illustration (a) or (b).
- Say that mistake covers fact and law (Shiba Prasad Singh).
- Say that coercion here has the wide, ordinary sense.
10-mark answer
- Place section 72 among the quasi-contractual claims and state unjust enrichment.
- Explain mistake of fact, with illustration (a).
- Explain mistake of law, with Shiba Prasad Singh and Kanhaiya Lal.
- Explain coercion, with illustration (b), and contrast section 15.
- State the limit: a sum legally due is not recoverable.
- For a joint debtors problem, apply section 72 for B against C and section 43 for A against B.
Key points to remember
- Money paid or goods delivered by mistake or under coercion must be repaid or returned (section 72).
- Mistake covers both fact and law (Shiba Prasad Singh; Kanhaiya Lal).
- Coercion in section 72 means any compulsion, not just the technical meaning in section 15.
- The receiver's good faith is not the test.
- A sum that was legally due cannot be recovered.
- Joint debtors who pay twice: the receiver repays the second payer (illustration (a)), and contribution follows under section 43.
Quick self-test
1. Does section 72 cover a mistake of law?
Yes. The Privy Council in Shiba Prasad Singh and the Supreme Court in Kanhaiya Lal held that mistake covers both fact and law.
2. Is the meaning of coercion in section 72 the same as in section 15?
No. Section 72 uses the word in its wide, ordinary sense of compulsion.
3. A and B jointly owe Rs 100 to C. A pays, and B pays again by mistake. What must C do?
C must repay the second payment to B (section 72, illustration (a)).