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CS Professional · Banking and Insurance - Laws and Practice · Advances, Securities and Documentation

A bank, by an arithmetic error in its software, credits Rs 50,000 twice to the account of Sunil, who withdraws the extra sum, unaware of the mistake. Under Section 72 of the Indian Contract Act, 1872, what is Sunil's obligation?

Sunil must repay the Rs 50,000. Section 72 of the Indian Contract Act requires anyone to whom money is paid by mistake to repay it, regardless of whether he caused the mistake or knew of it.

  1. AHe must repay the amount received by mistakeCorrect
  2. BHe may keep it because he did not cause the mistake
  3. CHe must repay only if the bank proves he knew of it
  4. DHe may keep it unless the bank sues within one month

Explanation

Section 72 says a person to whom money has been paid by mistake must repay it. Neither his innocence nor lack of knowledge removes the obligation. The other options add conditions that the section does not contain.

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