Lawfarm Team
Asked October 13, 2015

Money mistakenly transferred to employee in his leave period and now co. want it back?

  • 1 Answer

I had fallen ill and had sought leave from my company for a period of 3 months. I agreed to take the leave on a LWP basis (leave without pay). However due to an error on their part I kept getting my salary automatically for all the last three months. I was worried that they will throw me out of the job, so I had applied to another company, which selected me. But this new company is asking for me “release letter’ which the previous company is not willing to give. They suddenly realised their mistake and want me to refund the entire money at one go. I was very unwell and needed the money. I even have medical records to prove the same. Am I bound to return to them the money that they gave me by mistake?

Answer 1


Keeping in mind the facts provided, the salary which you have received due to the error of HR must be returned back. According to section 72 of the Indian Contract Act, 1872 a person to whom money has been paid or anything delivered by mistake must be repaid or returned. So according to our understanding there has been some kind of mistake with the HR department of your previous organization due to which you have received salary for your LWP also. Clearly going by the law of contracts since this was a mistake you must return all the money received from them Even the case of unjust enrichment applies here. Unjust enrichment means in certain situation it would be unjust to allow the defendant to retain a benefit at the plaintiff expense. This has been seen in various situations where goods have been delivered to the wrong address and later they refused to give back those goods to the true owner. In such situations a case of unjust enrichment had been filed. Similarly in your case since your salary has been given to you by mistake and you are refusing to give it back to them, your previous company can file a suit of unjust enrichment against you. If you don’t return the money back your previous company can even file a suit of detinue against you. Detinue means wrongful refusal to return the money or goods back to the plaintiff on demand. According to the facts of your case since your previous company has demanded your salary back and you have not returned it back to them there are all possibilities that the suit of detinue could be applied against you by the opposing party. If a suit of detinue is file against you, you may even have to pay damages to your pervious company.

Agree Comment 0 Agrees over 5 years ago

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