Restitution for mistaken payment: money credited by error is recoverable, with pre-suit and post-suit interest applying on fiduciary liability.

Money paid and withdrawn by mistake is recoverable under restitution, and the recipient cannot retain sums received without a corresponding entitlement. Where the mistaken receipt creates a fiduciary obligation to restore the money, pre-suit interest may be claimed under the Interest Act from the date the mistaken credit arose, with the rate linked to prevailing bank deposit rates. Post-suit interest may be awarded under the Code of Civil Procedure at the ordinary rate where the transaction is not commercial. The document states that the mistaken amount was recoverable together with interest at the specified rates, and the decree was modified accordingly.

---

---

Issues: (i) Whether money credited and withdrawn by mistake was recoverable from the recipient. (ii) Whether the payer was entitled to interest on the mistaken payment, and if so, from what date and at what rate.

Issue (i): Whether money credited and withdrawn by mistake was recoverable from the recipient.

Analysis: The mistaken second credit was established by the oral and documentary evidence. Money paid by mistake is refundable under the law of restitution, and the recipient could not retain a sum received without a corresponding entitlement. The relationship created by such mistaken receipt gave rise to fiduciary obligations in favour of the payer.

Conclusion: The mistaken sum of Rs. 1,00,000 was recoverable from the recipient.

Issue (ii): Whether the payer was entitled to interest on the mistaken payment, and if so, from what date and at what rate.

Analysis: Pre-suit interest was not available on agreement or trade usage. However, the obligation to restore money arising from a fiduciary relationship attracted the Interest Act. On the facts, the fiduciary duty arose on the date of the mistaken credit, and the rate was fixed with reference to the prevailing bank deposit rate. Post-suit interest was allowable under the Code of Civil Procedure at the ordinary rate, the transaction not being commercial.

Conclusion: Interest was payable at 9% per annum from 21-6-1980 until the filing of the suit and at 6% per annum from the date of suit until realisation.

Final Conclusion: The decree was modified to grant recovery of the mistaken amount together with interest at the specified rates, and the appeal succeeded only to the extent of the modified relief.

Ratio Decidendi: Money paid by mistake is recoverable, and where the obligation to restore such money arises from a fiduciary relationship, pre-suit interest is payable under the Interest Act from the date the cause of action arises.

---