DECISIONS OF The SUPREME COURT WHICH HAVE APPLIED THE

DOCTRINE OF UNJUST ENRICHMENT

R.S. Joshi v. Ajit Mills [1978]1SCR338 dealt with the question of unjust enrichment.
Section 46 of the Bombay Sales Tax Act provided that no person shall collect any sum by
way of sales tax which is not exigible according to law. Section 37 provided for penalties in
case of violation of the provisions of Section 46. Not only the person so collecting was liable
to pay a penalty , but in addition thereto, any sum collected by the person by way of tax in
contravention of Section 46 was also liable to be forfeited to the State Government.
Holding such provision to be valid, the Court held that:

“The professed object of the law is clear. The motive of the legislature is irrelevant to
castigate an Act as a colourable device. The insurance of consumer interests against likely
excesses in the working of a statute are not merely an ancillary power but surely a necessary
obligation of a social welfare state. One potent prohibitory process for this is to penalize the
trader by casting a no-fault or absolute liability to 'cough up' to the State the total 'unjust'
taking snapped up and retained by him 'by way of tax' where tax is not so due from him. The
true key of constitutional construction is to view the equity of the statute and sense the social
mission of the law. Social justice clauses integrally connected with the taxing provisions
cannot be viewed as a mere device.”

In Shiv Shanker Dal Mills Etc. v. State of Haryana [1980]1SCR1170 , the question arose
arose with reference to market fees collected under a provision which was struck down in
Kewal Krishan Puri v. State of Punjab [1979]3SCR1217 .
The enhancement of market fee from two to three percent was held to be bad, whereupon the
traders demanded refund of the excess market fee collected from them. The Court held that
though refund of the fee so collected may be legally due to the traders, the traders may be
repaid amount only to the extent they have not passed on the burden to their customers. To
the extent they have passed on, it held, they were not entitled. This principle was deduced
from the concept of distributory justice underlying Article 38 and 39 of the Constitution of
India as from the discretionary nature of the power under Article 226 of the Constitution.

Amar Nath Om Prakash v. State, of Punjab [1985]2SCR72 was also a case arising with
reference to market fee, i.e., an indirect tax.
Section 23-A of the Punjab Agricultural Produce Markets Act enabled the market committees
to "retain the fee levied and collected by it from a licensee in excess of that leviable under
Section 23, if the burden of such fee was passed on by the licensee to the next purchaser .
The validity of the said provision was called in question in this case.
The Court held that the primary purpose of the said section was to prevent refund of licence
fee to dealers who have already passed on the burden of such fee to purchasers and who want
to unjustly enrich themselves by obtaining refund from the market committee.
The said provision, it was held, recognised that the consumer public who have borne the
ultimate burden are the persons really entitled to refund and since the market committee
represents their interests, it is entitled to retain the amount.
It was pointed out that the provision for retention by market committee had to be made
because of the practical impossibility of tracing the individual purchasers and consumers who
have ultimately borne the burden.
It was held that it was "really a law returning to the public what it has taken form the public,
by enabling the Committee to utilise the amount for the performance of services required of it
under the Act.
Instead of allowing middlemen to profiteer by illgotten gains, the legislature has devised a
procedure to undo the wrong that has been done by the excessive levy by allowing the
Committees to retain the amount to be utilised hereafter for the benefit of the very persons for
whose benefit the Marketing legislation was enacted."

State of Madhya Pradesh v. Vyankatlal [1985]3SCR561 marks a definite milestone in the

application of the doctrine of unjust enrichment.
Director of Civil Supplies, issued a notification fixing ex-factory prices of sugar for different
sugar factories. The supply price was a little higher than the ex-factory price. The notification
required the difference between the supply price and the ex-factory price to be credited to the
Government Sugar Fund.
Pursuant to the demands made by the State, the sugar mills deposited certain amounts into
the said Fund under protest and then instituted suits for refund of the amounts so deposited.
The High Court upheld the plea of the sugar mills that the Director of Civil Supplies had no
authority in law to fix the ex-factory prices. This meant that the sugar mills were entitled to
the refund of the amounts paid by them into the Fund.
The State appealed against the said decision.
Following the principle of Shiv Shankar Dal Mills and Amar Nath Om Prakash, the Court
held that the burden of paying the amount in question was transferred by the sugar mills to
the purchasers and, therefore, they were not entitled to get a refund. Only the persons on
whom lay the ultimate burden to pay the amount would be entitled to get a refund of the
same. The amount deposited towards the Fund was to be utilised for the development of
sugarcane. If it is not possible to identify the persons on whom had the burden been placed
for payment towards the Fund, the amount of the Fund can be utilised by the Government for
the purpose for which the Fund was created, namely, development of sugarcane. There is no
question of refunding the amount to the respondents who had not eventually paid the amount
towards the Fund. Doing so would virtually amount to allow the respondents unjust
enrichment.