Restitution for illegal payment denied where transfer fee was knowingly paid under an unlawful bargain, not coercion or mistake.

A dispute concerning transfer fees in a co-operative society was held to fall within the Co-operative Court's jurisdiction because the respondent had already become a member and the controversy also covered later society-member claims. On restitution, the Court distinguished an unlawful excess demand from recoverable payment: although the bye-law allowed only a limited premium, the respondent paid with legal advice and full knowledge to secure transfer, so the payment was made under an illegal bargain knowingly entered into, not under coercion or a later-discovered mistake. Refund was therefore denied, and money paid under such an illegal transaction was treated as irrecoverable under the Contract Act.

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Issues: (i) Whether the Co-operative Court had jurisdiction to entertain the dispute between the society and the transferee member; (ii) Whether the amount paid towards transfer of membership was recoverable on the ground of coercion, mistake, or illegality under the Contract Act.

Issue (i): Whether the Co-operative Court had jurisdiction to entertain the dispute between the society and the transferee member.

Analysis: The dispute was filed after the respondent had become a member of the society and related not only to the alleged coercive demand for transfer fees but also to later claims connected with repairs. A dispute of this nature fell within the statutory forum governing society-member disputes.

Conclusion: The objection to jurisdiction failed.

Issue (ii): Whether the amount paid towards transfer of membership was recoverable on the ground of coercion, mistake, or illegality under the Contract Act.

Analysis: The governing bye-law permitted only a limited premium, and any demand in excess of that limit was unlawful. However, the evidence showed that the respondent entered the transaction with legal advice, knew the nature of the payment, and consciously paid the amount to secure transfer of the flats and membership. The payment was therefore made under an illegal bargain known to be unlawful, not under a later-discovered mistake. The material also did not establish coercion as defined by the Contract Act. On those facts, the case did not fall within the restitutionary relief available for money paid by mistake or under coercion, and a contract void ab initio for illegality could not be used to recover the paid consideration.

Conclusion: The respondent was not entitled to refund or restitution of the amount paid.

Final Conclusion: The impugned orders were set aside and the writ petition succeeded, as the respondent could not recover the amount paid under the illegal transaction.

Ratio Decidendi: Money paid under an illegal bargain known to be unlawful at the time of payment is not recoverable under Sections 65 or 72 of the Indian Contract Act, 1872, and coercion or later-discovered mistake must be proved to invoke restitution.

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