Section 65 The Indian Contract Act, 1872
Section 65 – The Indian Contract Act, 1872
📘 Topic: Obligation of person who has received advantage under void agreement or contract that becomes void
📜 Bare Act Text:
Section 65.
“When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.”
🔍 Explanation in Simple Terms:
Section 65 lays down the principle of restitution — i.e., when a contract is void (from the beginning) or becomes void (later), the party who has received a benefit must return it or compensate the other party.
📘 When Does It Apply?
Void ab initio (from the beginning):
Example: An agreement made without free consent or for an illegal object is discovered to be void.
Becomes void later:
Example: Due to impossibility of performance (Section 56), or a legal change, or other reasons.
⚖️ Illustrations:
A pays B ₹10,000 for land, not knowing that the land actually belongs to the government and can’t be sold.
👉 Once the agreement is discovered to be void, B must return ₹10,000.
A contracts with B to deliver goods, but before delivery the contract becomes void due to war.
👉 If B had prepaid money to A, then A must refund the money.
🔑 Key Legal Principle:
Prevents unjust enrichment.
Restores both parties to the position they were in before the contract.
🧾 Not Applicable When:
The agreement was illegal or unlawful (e.g., based on fraud or immoral acts).
Parties knew the agreement was void or illegal at the time.
📚 Case Law Example:
Kanhaiyalal v. D.R. Banaji (AIR 1958 MP 240)
Court held that once a contract becomes void, any benefit already received must be returned under Section 65.
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