Section 69 of Indian Contract Act
Section 69 of the Indian Contract Act, 1872 — Reimbursement of person paying money due by another, in payment of which he is interested
Text of Section 69:
"A person who is interested in the payment of money which another is bound by law to pay, and who therefore pays it, is entitled to be reimbursed by the other."
Explanation of Section 69
Section 69 provides a remedy based on the principle of quasi-contract. It applies when a person pays money which another person is legally bound to pay, and the payer has an interest in making that payment.
This section does not depend on any formal contract between the two parties. Instead, it recognizes an equitable obligation to reimburse the person who has discharged another’s legal liability to protect their own interest.
Essential Conditions under Section 69
The other person must be legally bound to pay the amount:
The liability of the person whose debt is paid must be enforceable by law.
The person making the payment must be interested in the payment:
He must have a direct interest (not a mere desire) in making that payment, usually to protect his own property or rights.
The payment must be made to a third party:
The money must be paid to someone other than the person seeking reimbursement.
The person making the payment must not be acting as a volunteer:
He must not be a mere stranger to the transaction, or pay out of charity or goodwill.
Legal Principle: Quasi-Contractual Obligation
Even though there is no contract, the law treats the situation as if there were one, to prevent unjust enrichment — i.e., to ensure that no one benefits unfairly at another’s expense.
Illustration (as per Act)
A holds land in which B has an interest. The revenue due on the land is payable by B, but A, to protect his own interest, pays the amount. B is bound to reimburse A.
Leading Case Law:
Gajanan Moreshwar v. Moreshwar Madan (1942) Bom. 302
Facts:
The defendant mortgaged property to a creditor.
The plaintiff, having an interest in the property, paid off the creditor to protect his own rights.
He then sought reimbursement from the defendant.
Held:
The court held that the plaintiff had an interest in the payment, and since the defendant was legally bound to pay the debt, the plaintiff was entitled to be reimbursed under Section 69.
Another Case:
Maddela Muthayya v. Andavolu Venkataswami (AIR 1935 Mad 855)
Facts:
A person paid municipal tax due on property in which he had an interest, but which was legally the responsibility of another.
Held:
The court applied Section 69 and allowed reimbursement, since the payer had a legal interest in the property and was not a volunteer.
Important Points to Remember:
Section 69 creates a right to claim reimbursement, even when there is no contract between the payer and the person liable.
The section prevents unjust enrichment.
The intention behind payment is crucial — the payer must not be doing a favor or paying voluntarily.
Conclusion
Section 69 is a powerful remedy in situations where a person protects his own interest by paying someone else’s lawful debt. It promotes equity and fairness, by ensuring that no one benefits at the cost of another who had to step in to avoid personal loss. It is a core part of the law of quasi-contracts in Indian jurisprudence.
RELATED Blog
0 comments