Contract Law

Specific Relief Act

Specific Relief:

Specific relief means relief in specie. It is a remedy which aims at the exact fulfilment of an obligation
or the specific performance of a contract. This remedy compels the other party to perform or to
forbear according to the terms and stipulation of the agreement. This is also known as equitable
relief.

Contracts which may be specifically enforced:

The fundamental rule of law is that equity will grant specific performance in case of only such
contracts which are valid at law. Section 9 of the Specific Relief Act, 1963 lays down the law to this
effect by providing that where any relief is claimed in respect of a contract, the person against whom
the relief is aimed may be filed by way of defence and ground.

Section 10 provides that except as otherwise provided the specific performance of any

contract may in the discretion of the court be enforced in the following cases:

1) Lack of standard for ascertaining the damages

2) Where compensation is not adequate relief

3) Substantial work done by the plaintiff

1) No standard for ascertaining damages:

When there exist no standard for ascertaining the actual damages caused by breach of contract, the
specific performance may be enforced in the discretion of the court. For instance, if the article sold is
such that it is available in the market, the loss is ascertainable on the basis of the difference between
the contract price and the market price on the date of breach of contract. In such a situation ,
specific performance is not permitted.

2) When money compensation is not adequate relief :

When the act agreed to be done is such that compensation in money for its non-performance would
not afford adequate relief, the specific performance of any contract may in the discretion of the
court be enforced.

Example:

A contracts with B to sell him a house for Rs. 1000/-. B is entitled to a decree direction A to convey
the house to him.

In Ram Karan vs. Govind Lal case the parties entered into an agreement for the sale of agricultural
land. The buyer had paid full sale consideration to the seller, but the seller even then avoided
executing the sale deed as per the agreement. The buyer brought an action for the specific
performance of the contract.

The Court held that the buyer is entitled to specific performance.

3) Substantial work done by the plaintiff:

In Banwari Lal Agarwala vs. Ram Swarup Agarwala, the Court observed that where from some special
or practical features or incidents of the contract either in its subject-matter or in its terms or in the
relations of the parties, it is impossible to arrive at a legal measure of damages at all or at least with
any sufficient degree of certainty so that no real compensation can be obtained by means of action
at law, the contract will be enforced in specie.

The Court held that the tenant was entitled to a decree of specific performance. However, under the
following grounds, the courts cannot grant the remedy of specific performance:

1) Where monetary compensation is an adequate relief

2) Where the court cannot supervise the actual execution of the work

3) Where the contract is for personal services

4) Where the contract is not enforceable by either party against the other

The various types of specific reliefs that may be granted by the court under the Specific Relief Act
are:

1) Recovering Possession of Property (Sections. 5-8)

2) Specific Performance of Contracts (Sections. 9-25)

3) Rectification of Instruments (Section. 26)

4) Rescission of Contracts (Sections. 27-30)

5) Cancellation of Instruments (Sections. 31-33)

6) Declaratory Decrees (Sections. 34-35)

7) Preventive Relief (Sections. 36-42)

1) Recovering Possession of Property: - Sections. 5-8

Section 5-8 of the Act deals with recovery of property. When a person is dispossessed from
property, the necessary relief to pray for is one for recovery of possession.

Section 5 provides that a person entitled to possession of specific immovable property may recover
it by a suit filed under CPC. He may file a suit for ejectment on the basis of strength of his title and
get a decree for ejectment and then execute the decree in accordance with the provisions of CPC.

This section deals with action for recovery of possession of specific immovable property based on
title. The essence of the section is that whoever proves a better title is a person entitled to
possession. The title may be on the basis of ownership or possession.

In L.N. Aswathama vs. P. Prakash, the Hon’ble SC held that possession follows title where the
plaintiff establishes title to suit property he is entitled to decree for possession.

Section 6 provides for a special remedy of possession by way of a summary procedure for a person
dispossessed of immovable property w/o consent and otherwise than in due course of law.
This section deals with action for recovery of possession of specific immovable property merely by
proving previous possession and subsequent wrongful dispossession. Under the section it is not
necessary to prove a better title against the occupier even if the occupier is able to show his title by
ownership, contract, prescription or inheritance.

A suit under this section should be brought within 6 months from the date when the dispossession
occurs. A decree under this section does not operate as res judicata on a question of title though it is
res judicata on the question of possession.

Section 7 & 8 deal with recovery of movable property. Property of every description except
immovable property is movable property.

Under section 7, specific movable property can be recovered by a suit under the provisions of CPC.
The remedy of recovery of specific movable property means the property itself and not its
equivalent.

Limitation Act prescribes a period of 3 years for a suit under section7 from the date when property is
wrongfully taken or detainer’s possession becomes unlawful.

Section 8 provides for the relief of specific delivery of movable property at the instance of the
plaintiff entitled to its immediate possession from the defendant (any person other then its owner)
having possession or control of it in four cases:-

(i) where the defendant holds it as the trustee/agent of the plaintiff

(ii) if compensation for its loss will not be an adequate relief

(iii) if the actual damage caused by its loss is extremely difficult to ascertain or

(iv) when its possession has been wrongfully transferred from the plaintiff.

2) Specific Performance of Contracts: - Sectionss. 9-25

Sections 9-25 of the Act deals with specific performance of contracts. It is a remedy which aims at
the specific performance of a contract i.e., it compels the other party to perform or to forbear
according to the terms and stipulation of the agreement. The court passing the decree of specific
performance does not cease to have jurisdiction over the decree, it can execute the decree in the
manner prescribed in

Order 21, rule 32 of CPC or rescind it under section. 28 of the Act under certain circumstances.

If the party having an opportunity of obeying the decree of specific performance has wilfully failed to
obey it, the decree may be enforced by detaining him in civil prison or by attachment of his property
or by both.

Article 54 of the Schedule to the Limitation Act, 1963 sets out the limitation for a suit for specific
performance as 3 years from the date fixed for the performance or if no such date is fixed when the
plaintiff has notice that performance is refused. Section 9 of the Act makes it clear that the
defendant may take all those defences which are available to him under any law relating to
contracts.

Section 10 of the Act sets out considerations for the court based on the possibility of ascertaining
the damage caused by non-performance or the ability to relieve the non-performance by
compensation in money.
Section 11 enumerates situations where specific relief will not be granted

Section 12 gives the cases when specific performance may be granted as a part of a contract

Section 13 & 17 address a suit for specific performance filed against and by a vendor or lessor with
imperfect or no title

Section 14 states the contracts which are not specifically enforceable

Section 15 provides details regarding eligibility to seek specific performance

Section 19 provides for the persons against whom it can be claimed

Section 16 lists circumstances in which plaintiff is not competent to file for the relief

Section 18 provides for cases where specific performance can be had of contracts with a variation

Section 20 directs the circumstances in which the discretion may or may not be exercised in granting
the relief

Section 20(2) lists circumstances where it would be inequitable, unfairly advantageous or cause
hardship for one party if specific relief was ordered thus giving the court the discretion not to grant
specific performance

Section 21 enables the plaintiff to seek compensation

Section 22 gives the power to award other reliefs like possession, partition or refund of earnest
money

Section 24 bars a suit for compensation after dismissal of suit for specific performance

Section 23 provides that the mere fact of liquidation of damages in not a bar to specific performance

Section 25 makes applicable the above sections to certain awards and testamentary directions to
execute settlements.

3) Rectification of Instruments: - Section 26

Section 26 of the Act deals with rectification of instruments. According to Section 2(14) of the Indian
Stamp Act, instrument includes every document by which any right or liability is or purports to be
created, transferred, limited, extended, extinguished or recorded.

The section provides for rectification of:

a) A contract in writing or

b) Other instrument in writing

but not Articles of Association of a company if through fraud or mutual mistake of the parties it does
not reflect the real intention of the parties. Rectification may be ordered at the instance of either
party to the contract or instrument or his representative-in-interest. It may be sought:

(i) By way of a suit for rectification instituted by either party to the contract or his representative or

(ii) By the plaintiff or the defendant in any suit in which any right arising under the instrument arises.

It is necessary to plead specifically for the relief, but the court may allow the party to amend his
pleading at any stage of the proceeding. A contract may be first rectified and then specifically
enforced. However, the correction of instrument must not affect the rights acquired by a bona fide
purchaser for valuable consideration without notice. The SC has held that only donor may seek its
rectification of gift deed.

In Dagdu vs. Bhana, it was observed that what is rectified is not the agreement but the mistaken
expression of it.

4) Rescission of Contracts: - Sections. 27-30

Sections. 27 to 30 of the Act deals with rescission of contracts. Rescission is a specific relief the
object of which is to put the parties in status quo. It is converse of the relief of specific performance.

The plaintiff may sue for rescission when the consent has been obtained by fraud or
misrepresentation or where the contract is void. Where the contract is unlawful for causes not
apparent on its face and defendant is more to blame than the plaintiff, he may apply for rescission of
contract.

The remedy by way of rescission is not confined to persons named as parties to a contract, it is open
to any person who though not named as a party to a contract is interested in the contract or whose
interest are affected by it.

Rescission will be refused -

(i) where the plaintiff has expressly or impliedly ratified the contract i.e., elected to abide
by it; or
(ii) where the parties cannot be substantially restored to the position in which they stood
when the contract was made; or
(iii) where a third-party has acquired a substantial right or interest in the subject matter of
the contract during the subsistence of the contract in good faith
(iv) where rescission of part of contract is not possible because it can’t be severed from the
rest of the contract.

Section 28 gives the vendor or lessor the right to seek rescission in the same suit when after a
suit for specific performance is decreed the plaintiff fails to pay the purchase money within the
fixed period.

Section 29 lays down that where the plaintiff seeks specific performance of a contract in writing,
he may also pray in the alternative that if the contract cannot be specifically enforced it may be
rescinded and delivered up to be cancelled and the court may pass such an order if it refuses to
enforce the contract specifically. A person suing for rescission cannot in the alternative sue for
specific performance.

Section 30 is based on the principle that one who seeks equity must do equity. The section
provides that the Court decreeing rescission may direct not only payment of compensation to
the other party but also restoration of benefit received under the contract by the party in whose
favour rescission is decreed.

5) Cancellation of Instruments: -Sections. 31-33

Sections 31 to 33 of the Act deals with cancellation of instruments. It is a discretionary relief. The
relief of cancellation of an instrument is founded upon the administration of protective justice for
fear that the instrument may be vexatiously or injuriously used by the defendant against the plaintiff
when the evidence to impeach it may be lost or that it may throw a cloud of suspicion over his title
or interest.

The jurisdiction under sections. 31-33 is also exercisable when it is invoked by a minor or where the
instrument is sought be set aside on the ground that the person signing it was not of sound mind
when signing.

Section 31 provides for cancellation of both void and voidable documents. When a document is void
ab initio, a decree for setting aside the same would not be necessary as the same is non rest in the
eye of law as it would be a nullity. The relief by way of cancellation of an instrument may be claimed
not only by a party to the instrument, but any person against whom the instrument is void or
voidable. A suit for cancellation must be filed within 3 years from the date when the facts entitling
the plaintiff to have the instrument cancelled first become known to him under section 59 of the
Indian Limitation Act, 1963.

The Court may in its discretion cancel only part of an instrument allowing the remaining part to
stand under section. 32 of the Act.

In Karodi vs. Dasai, it was observed that a sale of joint property made by one joint owner without
consent of other joint owners can be cancelled to the extent of shares of those joint owners who did
not consent to the sale.

Section 33 embodies the principle that he who seeks equity must do equity. This section provides
that the defendant is also liable to restore the benefit or compensate the plaintiff where he has
successfully defended the suit on the ground that the contract was void or voidable, but where he
resists a suit on the ground that the contract is void owing to his incapacity at the time of the
contract he must restore any benefit whether proprietary or monetary which he has actually
received under the contract without any liability to make any compensation.

6) Declaratory Decrees: - Sections. 34-35

Sections. 34-35 of the Act deals with declaratory decrees. A declaratory decree is a decree
declaratory of a right which is doubtful or which requires to be cleared. The object of declaratory
decrees is to prevent future litigation by removing the existing cause of the controversy. In other
words, if a cloud is cast upon the title or legal character of the plaintiff, he is entitled to seek the aid
of the court to dispel it. Questions relating to minority, rank, caste, official position, civil death,
illegitimacy or legitimacy, nationality are about legal character of a person’s name.

The effect of declaratory decrees is that by virtue of S.35 of the Act a declaration given under section
34 is binding only between the parties and their representatives. It is a declaration in personam and
not in rem. A right in rem is a right exercisable against the world at large as contrasted from a right
in personam which is an interest protected solely against specific individuals.

To enable an order of declaration, the plaintiff must establish the following:

(i) The right of the plaintiff i.e., that the plaintiff is entitled to any legal character or any right as to
property

(ii) The infringement i.e., that the defendant is denying or interested to deny the plaintiff’s title to
such legal character or right

(iii) The declaration i.e., the declaration sought is that the plaintiff is entitled to such legal or right
(iv) The consequential relief i.e., where the plaintiff is able to seek further relief than mere
injunction, he seeks such relief

If any of the first 3 conditions is not fulfilled, the suit should be dismissed. If the first 3 conditions are
fulfilled but the 4th is not, the court shall not make the declaration sued for.

Example: A plaintiff may sue for a declaration that the defendant is not his wife or her husband.

7) Preventive Relief – Section 36

In Adhunik Steels Ltd. Vs. Orissa Manganese and Minerals (P) Ltd, the Hon’ble SC has held that -
injunction is a form of specific relief. It is an order of a court requiring a party either to do a specific
act or acts or to refrain from doing a specific act or acts whether for a limited period or without limit
of time.

It acts in personam i.e., an injunction affecting land does not run with the land and hence cannot be
enforced in the absence of statutory provision against persons other than the person against whom
it is granted though it can be against LRs of deceased judgment debtor under section 50 of CPC and
against purchasers pendente lite under section 52 of TP Act, 1882. It is used to prevent irreparable
injury to the plaintiff.

It is not granted where there is an adequate remedy in damages or where it is not the appropriate
relief or where the plaintiff is not entitled to an injunction on account of his conduct or where
contract cannot be specifically enforced or where injunction would operate inequitably.

Where the injunction requires a party to do a particular thing, it is a mandatory injunction. Where it
requires a party to refrain from doing a particular thing, it is a restrictive injunction.

Section 36 provides that a court may grant temporary or permanent injunction and the grant of
injunction is the discretion of the court.

a) Temporary injunction: Sections.36, 37(1)

Section.37(1) of the Act speaks about temporary injunction. The object of temporary injunction or
interim injunction is to preserve matters pending the trial of matters in dispute, to maintain the
status quo, to preserve the property pending decision in the proceedings. Such an order is a step-in-
aid to the final adjudication. It would impose such restraint as may be necessary to stop the mischief
complained of. Such an injunction is usually so framed as to continue until a specific time or until
further order. It has no effect on the ultimate decision of the cause. It ends with the determination
of the suit, it may merge into the decree of permanent injunction when one is granted. They are
governed by Order 39, rule 1 of CPC. They are made to prevent the ends of justice from being
defeated. Section94(c) and Order .39, rule 2-A of CPC provide for consequences of disobedience or
breach of injunction.

They may be granted at any stage of a suit by applying the tests of whether the plaintiff has a prima
facie case i.e., without going into the detailed merits of the case, whether the balance of
convenience is in favour of the plaintiff and whether the plaintiff would suffer and irreparable injury
if his prayer for interlocutory injunction is disallowed.

b) Perpetual Injunctions – Sections . 36, 37(2), 38-42

section 37(2) of the Act speaks about perpetual injunction. Perpetual/permanent injunction is
granted after the final determination of the rights of the parties. It is granted upon merits of the case
and continues forever .
A perpetual injunction may be granted to prevent the breach of an obligation express or implied
existing in favour of the plaintiff. It obviates the necessity of bringing action after action in respect of
every infringement of the rights so determined. If a suit for permanent injunction is not competent,
the court would have no jurisdiction even to grant an ad interim injunction.

Sections. 38 and 41 must be read together. The former lays down the conditions under which an
injunction can be granted and the latter where it cannot be granted.

Enforcement of a decree granting perpetual injunction is not subject to any period of limitation.

c) Mandatory injunctions: - Section .39

Mandatory injunction is an injunction in a positive form requiring a person or party to a suit to do a

d) Ex parte injunction:

An injunction granted to a party without hearing other party is known as ex parte injunction. Court
may grant an injunction even without hearing the other party if the court is convinced of the urgency
of the matter. Normally, it is granted for a very short period. It continues till the court hears the
other party against its continuation. After hearing the other party, the court may either discharge it
or extend it till final disposal of the case.

Specific performance when not granted - Sections.14(1), 16

Section 14(1) of the Act enumerates the classes of contracts in respect of which specific performance
cannot be enforced and S.16 sets out the personal bars to the relief of specific performance arising
out of the conduct of the plaintiff.

Section 14(1) lays down specific performance is not granted where:

(a) Compensation in money is adequate relief

A contract the terms of which and other circumstances indicate that the parties have agreed to
accept compensation in money in case of breach cannot be specifically enforced an example of
which is a suit for recovery of specified sum under a contract

(b) Contracts which

(i) runs into such minute or numerous details would in effect involve performance of duties that the
court cannot supervise and hence are not specifically enforceable an example of which is a contract
to marry

(ii) is so dependent on the personal qualification or volition of the parties an example of which is a
contract which is based on the skill of the party of whom specific performance is sought.

(c) Determinable contracts

Determination means at the will of one of parties. Contracts permitting determination at will at the
option of a party will not be specifically enforced against the party which can so end the contract an
example of which is termination upon the expiry of the term.
(d) Contracts which the court cannot supervise

The principle underlying this provision is that the Court cannot stop its normal functions for the
purpose of giving effects to the terms of a contract which cannot be conveniently supervised or
enforced by the Court itself.

Section 14(2) - Arbitration agreements: where there is an arbitration clause governing an agreement,
a suit is not maintainable under section. 14(2) of the Act.

Section 14(3) - Enforcement of certain contracts: the Court does not enforce the specific
performance of agreements to refer to arbitration.

Section 16 - This section gives grounds of defence based on plaintiff’s conduct. In the cases given in
this section, the court has regard to circumstances outside the contract and looks to the conduct of
the plaintiff. The plaintiff’s conduct must be without blemish throughout for the grant of specific
relief. This provision imposes a personal bar.

Other contracts which the courts will not enforce are:

a) Contracts which are not valid at law like agreements with/without consideration, illegal/immoral
agreements

b) Contracts lacking mutuality

Who may obtain specific performance and against whom:

Section 15 of the Act enumerates the possible classes of persons besides the actual contractors who
are entitled to sue on a contract and Section 19 mentions the possible classes of defendants against
whom specific performance can be claimed. Both these sections are exhaustive defining that by
whom and against whom specific performance can be obtained in a civil suit.

Who can claim under section 15 of the Act:

a) Party to the contract

b) Representative in interest or Principal

c) Family arrangement and marriage settlement - any person beneficially entitled

d) Reversioners

e) Amalgamated company

f) Pre-incorporation contracts made by the promoters of a company

Who can be claimed against under section.19 of the Act:

a) Parties

b) Person claiming title under a party acquired subsequent to the contract

c) Person claiming a title which might be displaced by the defendant

d) Amalgamated company

e) Pre-incorporation contracts