Section 72 Contract Act: Liability of person to whom money is paid, or thing delivered, by mistake or under coercion

Section 72 of Indian Contract Act: Liability of person to whom money is paid, or thing delivered, by mistake or under coercion

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

A person to whom money has been paid, or anything delivered, by mistake or under coercion , must repay or return it.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Legal Commentary & Landmark Judgments: Section 72

Section 72 of the Indian Contract Act, 1872 obligates any person who has received money or property by mistake or under coercion to repay or return it.

Core Legal Standard: Section 72 codifies the restitutionary doctrine of money had and received.
Operational Mechanism: A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.
Supreme Court: The Supreme Court has authoritatively established that 'mistake' under Section 72 includes both mistake of fact and mistake of law.

Coercion in Section 72 is used in its ordinary general sense and is not restricted to the narrow definition under Section 15.

Key Landmark Precedents:

Sales Tax Officer, Banaras v. Kanhaiya Lal Mukundlal Saraf (AIR 1959 SC 135): The Constitution Bench settled that 'mistake' under Section 72 encompasses mistakes of law. Tax paid under an unconstitutional or mistakenly interpreted statute must be refunded by the State under Section 72.
Mafatlal Industries Ltd v. Union of India (1997) 5 SCC 536: A 9-judge bench ruled that refund claims under Section 72 are subject to the defense of unjust enrichment: a taxpayer cannot obtain a refund if they have already passed on the tax burden to consumers.
CIT v. V.MR.P. Firm (AIR 1965 SC 1216): The Supreme Court held that money paid under a mutual mistake as to statutory rights is recoverable under Section 72.

Legal Commentary:

Section 72 governs tax refunds, mistaken banking wire transfers, and commercial overpayments. In banking operations, when funds are erroneously credited to an unintended account, the recipient is statutorily bound under Section 72 to refund the entire amount immediately.

Section 72: Liability of person to whom money is paid, or thing delivered, by mistake or under coercion

Section 72 of Indian Contract Act: Liability of person to whom money is paid, or thing delivered, by mistake or under coercion

Legal Commentary & Landmark Judgments: Section 72