Obligations of Person who has Received Advantage under Void Agreement or one Becoming Void :

In terms of section 65 of the Act, where

(a) an agreement is discovered to be void or

(b) a contract becomes void

any person who received an advantage must

(a ) restore it or

(b) pay compensation for damages in order to put the position prior to contract.

In Dhuramsey vs. Ahgmedhai (1893) 23 Bom 15, the plaintiff hired a godown from the defendant for 12 months and paid the advance in full. After about seven months the godown was destroyed by fire, without any fault on the part of plaintiff. When the plaintiff claimed refund of the advance, it was upheld that he was entitled to recover the rent for the unexpired term.

The next issue is the benefit which has to be returned must have been received under the contract. Any benefit received which is ancillary to main contract need not be returned. For example, the deposit paid for a transaction of sale of house between parties, need not be returned just because the sale transaction could not take place. This was on the ground that the deposit is only a security and not part of main contract.