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Indian Contract Act, 1872 · Chapter IV: Of the Performance of Contracts · Contracts which need not be performed

Section 65: Obligation of person who has received advantage under void agreement, or contract that becomes void

In plain words

When an agreement is found to be void, or a contract becomes void, anyone who received an advantage under it must return it or pay compensation for it to the person they received it from.

Example: A pays B 1,000 rupees in return for B's promise to marry A's daughter C, who turns out to be dead. The agreement is void, but B must repay the 1,000 rupees.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Read the in-depth explanation, with key Supreme Court rulings ↓

Official text

When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it.

Illustrations

(a) A pays B 1,000 rupees, in consideration of B's promising to marry C, A's daughter. C is dead at the time of the promise. The agreement is void, but B must repay A the 1,000 rupees.

(b) A contracts with B to deliver to him 250 maunds of rice before the first of May. A delivers 130 maunds only before that day, and none after. B retains the 130 maunds after the first of May. He is bound to pay A for them.

(c) A, a singer, contracts with B, the manager of a theatre, to sing at his theatre for two nights in every week during the next two months, and B engages to pay her a hundred rupees for each nights performance. On the sixth night, A wilfully absents herself from the theatre, and B, in consequence, rescinds the contract. B must pay A for the five nights on which she had sung.

(d) A contracts to sing for B at a concert for 1,000 rupees, which are paid in advance. A is too ill to sing. A is not bound to make compensation to B for the loss of the profits which B would have made if A had been able to sing, but must refund to B the 1,000 rupees paid in advance.

Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Understanding this section

Section 65 requires anyone who has received an advantage under an agreement discovered to be void, or a contract that becomes void, to restore it or pay compensation to the person it came from.

Two situations

  • An agreement discovered to be void: it was void from the start, but the parties learn this later (mutual mistake, a party who turns out to be incompetent).
  • A contract that becomes void: valid at first, it later becomes impossible or unlawful (section 56).

Where it does not help

  • Agreements known by both parties to be void or illegal from the start. Courts will not help either party to an illegal bargain where both are equally at fault.
  • Minors: the Privy Council in Mohori Bibee held section 65 inapplicable, because a minor's agreement is void ab initio, not 'discovered to be void'. Restitution against minors is now governed by section 33 of the Specific Relief Act, 1963.

Illustrations worth remembering

Money paid for a promise to marry someone who was already dead must be returned. Rice delivered and kept must be paid for, even though the contract failed. A singer who could not perform must return the advance, but owes nothing for the organiser's lost profits.

Key Supreme Court rulings

  • Tarsem Singh v. Sukhminder Singh 1998 INSC 51

    Where the parties discovered their mutual mistake only later, the agreement was 'discovered to be void' under section 65, so the seller could not forfeit the earnest money and had to return it.

Common mistakes

  • Applying section 65 to agreements both sides knew were illegal.
  • Applying it to minors' agreements; use the Specific Relief Act instead.

Read with: Section 20 Indian Contract Act, 1872, Section 56 Indian Contract Act, 1872, Section 64 Indian Contract Act, 1872

Prepared with AI assistance as a study aid. Every ruling listed was checked against the Supreme Court's own judgments on this site, and quoted words appear in those judgments; linked names open the full judgment. Read the judgments themselves before relying on them. Not legal advice.

Supreme Court judgments citing the section 65