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CA Foundation · Business Laws · The Indian Contract Act, 1872

Kiran pays Rs 8,000 of municipal tax that Lalit, a house owner, was legally bound to pay. Lalit's property would otherwise have been attached. Kiran was interested in protecting a lease he held in that property. Lalit refuses to reimburse Kiran. What is the legal position?

Kiran can recover Rs 8,000 from Lalit. A person who has an interest in a payment that another is legally bound to make, and who pays it, is entitled to reimbursement under a quasi-contract. No prior agreement or written request is required, because the obligation arises by law.

  1. AKiran cannot recover because there was no prior agreement with Lalit
  2. BKiran can recover Rs 8,000 because a person interested in the payment who pays money another is bound to pay is entitled to reimbursementCorrect
  3. CKiran can recover only if Lalit had requested the payment in writing
  4. DKiran can recover only half the amount as a gratuitous payment

Explanation

Under the quasi-contract rule, a person who is interested in the payment of money which another is bound by law to pay, and who pays it, is entitled to be reimbursed. No prior agreement is needed. Kiran had an interest in protecting his lease, so option A is wrong.

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