Section 65 of the Indian Contract Act, 1872 imposes an obligation on a person who has received a benefit from another person as a result of a non-gratuitous act. This provision applies when one party has incurred expenditure or performed work for another without any intention of doing so gratuitously. In such cases, if the recipient enjoys such non-gratuitous benefits and then avoids performance of his part in exchange, Section 65 operates to create an obligation on them.
The interpretation of Section 65 by courts is dependent upon various factors like contract law principles, equity doctrines, and legal maxims. The courts interpret this section broadly with regard to situations where companies have enjoyed benefits but have not paid their suppliers or contractors timely enough, resulting in allegations that they breached their contractual obligations.
However, the court recognizes that there are problem areas associated with Section 65. One significant problem area relates to how it intersects with other provisions or sections covered in Indian Contract Law or Equity Jurisprudence. Nevertheless, there are numerous judgments and case laws relating to Section 65 addressing these problems which provide clarity for its interpretation.
Here are some notable judgments/case laws highlighting Section 65:
1) Gokul V/s Ramchandra (AIR1955SC27): In this landmark case concerning payment disputes between parties executing contracts for government road construction works by handcart carriage basis. It was held that if the contractor fails to complete his work due to unforeseeable circumstances beyond his control or those caused by public authorities he may still recover cost related expenses from department/person enjoying benefits under Non-Gratuitous Act principle .
2) Lakshmiah v. State Bank Of Mysore (1990 AIR1737): A bank sanctioned loan proceeds without confirming title deeds/encumbrance certificate of borrower’s property against existing guarantee hypothecated thereof for securing repayment; no direct benefit conferred therefore-by appellant bank’s act falls under the non-gratuitous category of Section 65.
3) Alok Kumar v. State Of U.P (2010 SCR (1) 506): In this case, it was held that if a government employee provides services or goods to another person without receiving any payment for those services/goods he/she may still recover cost related expenses from such persons enjoying benefits under Non-Gratuitous Act principle .
4) Jugal Kishore v. Shankarlal Gulabchand Jewellers and Ors (2006 AIR SCW 1693): The Supreme Court upheld that in cases where there is no written agreement between parties and one party has worked for another to increase his profits, then the other party should pay compensation as per principles of quantum meruit/Non-Gratuitous Act.
5) Shanti Prasad v. Director Of Consolidation (1978 AIR 882): Herein, beneficiaries tried taking over land worth hundreds of crores by showing forged documents during consolidation proceedings; court recognized the fruits/economic gains received while rejecting defense plea attempting to avoid obligations required to be performed under Non-gratuitous Acts principles.
To conclude, Section 65 is a critical provision included in Indian Contract Law that creates an obligation on recipients who have enjoyed non-gratuitous acts’ benefits but fails to perform their part on time. The courts interpret Section 65 broadly and use it frequently in disputes involving delayed payments or unfulfilled contractual obligations. Despite some problem areas relating; several landmark judgments/case laws cited above provide much-needed clarity regarding its interpretation and application through principles like quantum meriut/Non-Gratuity Profit Principle etc., ensuring fairness between contracting parties & social justice ideals envisaged within legal system itself!
from
via best lawyers in Chandigarh
