ONLINE SPECIAL PROGRAM FOR COMMERCIAL

COURT JUDGES BY MAHARASHTRA JUDICIAL

ACADEMY AND INDIAN MEDIATION CENTRE &
TRAINING INSTITUTE, UTTAN
ON
THE SPECIFIC RELIEF ACT
1
BY JUSTICE ABHAY AHUJA,
JUDGE, HIGH COURT OF BOMBAY
November 21, 2021
2 (I)INTRODUCTION
A. THE SPECIFIC RELIEF ACT

 The Specific Relief Act, 1963 was enacted to define and amend the law relating to certain
kinds of specific relief, repealing and replacing the Specific Relief Act, 1877.

 Specific performance is an equitable relief given by a court to enforce against the

defendant the duty of doing what he had agreed by contract to do; the plaintiff may,
therefore, obtain judgment of specific performance even though there has not, in the strict
sense, been any default by the defendant before the issue of the writ.

 This law is part of procedural and an adjectival law. It contains provisions, inter alia,
pertaining to specific performance of contracts, contracts not specifically enforceable,
parties who may obtain specific relief and against whom such specific performance may
be obtained.

 The Act also confers wide discretionary powers upon courts to decree specific
performance and to refuse injunction, etc. (Adhunil Steel Ltd. V. Orissa Manganese and
Minerals Pvt. Ltd. (2007) 7 SCC 125)
3 INTRODUCTION
 B. SOME HISTORY
 Our legal system is based on the English Legal System.
 Common remedies in the middle ages were limited
 Distraint on property
 Imprisonment for debt
 Action for ejectment
 Recovery of land
 Early stages of judicial institutions
 Power of courts to enforce decision was very rudimentary

Continued……..
4 INTRODUCTION
 Procedure of judgment granting specific relief with value of goods and damages as an alternative
but no specific delivery enforceable
 Payment of money was the only satisfaction which could be awarded by the court even though
such compensation was not adequate satisfaction
 Until the later part of the 19th Century the specific relief law as we know had not taken roots
 Chancellor exercised power of the King as an extraordinary measure to make the defect good
when ordinary means failed
 Chancellor’s justice could compel a person to actually perform and not merely to pay damages

Continued…….
5 INTRODUCTION

 Disobedience was akin to contempt of a King and punishable by imprisonment

 Courts of common law could not give specific relief in the ordinary civil jurisdiction
until the middle of 19th Century
 In England the jurisdiction to grant specific performance was formerly exercisable
only by a court of equity. The Specific Relief Act is founded on the English
Jurisprudence of Equity and therefore, it would be permissible to refer to English
Law on the subject. (AIR 1972 SC 1826).
 Court of equity had no power to award damages
 Plaintiff who sought specific relief and did not claim damages in the alternative had
no remedy other than action under common law.
6 (II) THE SPECIFIC RELIEF ACT
A.
 Originally drafted on the lines of the Draft New York Civil Code, 1862
 Main provisions embody the doctrines evolved by the equity courts of England.
 Earlier applied in India as principles of justice, equity and good conscience.
 Was applied to cases where common law was inadequate i.e. not being able to do
full justice in the case even though Plaintiff had a legal right.
 Suitor had to show some special cause for seeking extraordinary relief.
7 HISTORICAL BACKGROUND
B. Specific Relief Act of 1963
 In the 1877 Act there was scope for improvement in language and substance.
 Suggestion was that specific relief as a form of judicial review belongs to adjectival
law instead of a separate enactment it could be part of CPC and Transfer of
Property Act.
 The Law Commission considered the suggestion in its 1958 report opining that
since the said Act contained certain equitable principles and remedies which stood
apart both historically as well as intrinsically from Common Law rules embodied in
the CPC it was appropriate not to disturb the existing arrangement of having a
separate law.
 The law commission also considered that the revised act was different from the
provisions considered in the CPC and Statutes such as Transfer of Property Act,
Indian Trusts Act, Indian Partnership Act and different origin from them.

Continued…..
8 HISTORICAL BACKGROUND
Specific Relief Act of 1963
 The Act only dealt with certain kinds of equitable remedies viz.
i) Recovery of possession of property
ii) Specific Performance of contract
iii) Rectification of Instruments
iv) Recission of contracts
v) Cancellation of instruments
vi) Declaratory decrees
vii) Injunctions
Continued…..
9 HISTORICAL BACKGROUND
Specific Relief Act of 1963
 The recommendations of the Law Commission report was acted upon and then
came the Specific Relief Act of 1963 omitting all illustrations as in the Act of 1877.
10 C. In 1993 the Law Commission undertook suo
moto review of the Specific Relief Act, 1963

 As a result of such wide discretionary powers, the courts in majority of cases

award damages as a general rule and grant of specific performance had become
an exception.
 However, with the rapid growth in economic activity involving enormous
commercial activities including foreign direct investments, public-private
partnerships, public utilities infrastructure developments, etc., since the enactment
of this statute, there was a need for extensive reforms in the related laws to
facilitate enforcement of contracts and settlement of disputes in a speedy manner.
There had been a general feeling that the Act was not in tune with the rapid
economic growth in the country and the expansion of infrastructure activities.
 Law Commission undertook a review of the Act of 1963 to identify issues in law, to
make law simpler and to reduce litigation on technicalities.
 The 147th report of the Law Commission Report recommended amendments to
section 1, 6, 15, 16, 20, 22, 28 and 33.
 D. Expert Committee, on the amendment to the Specific Relief Act 1963 was set up by
11 Ministry of Law to review the Act from the point of enforceability of contracts and other
reliefs provided therein in the context of the economic developments taken place in the
changed scenario involving contracts based on infrastructure developments and Public
Private Project and Public Projects involving huge investments.

The Committee report suggested extensive changes including the provisions of

substituted performance of contracts
Classification and special treatment of Infrastructure Projects as a distinct class of
public utility contracts involving public interest and for specific performance as a
rule and damages as an exception in case of breach of contracts.
The Recommendations made by the Expert Committee were considered which
gave birth to the Specific Relief (Amendment) Act, 2018.
12 (III) THE SPECIFIC RELIEF (AMENDMENT) ACT,
2018

Four important changes were made to the Specific Relief law by the Specific Relief
(Amendment) Act, 2018:
(i) re-orient the rule of specific relief adopted in India-specific relief is now the
rule and damages the exception;
(ii) discard certain distinctions and exceptions made in the law of specific
relief-e.g. distinction between contracts related to immovable property and
movable property;
(iii)introduce provisions for substituted performances and lastly
(iv)set out special provisions for infrastructure contracts.
13
A. What is specific performance as a
Rule:
 In the 1963 Act damages was a Rule and specific performance was an exception.
 This was on the premise that once a party was unable / refused to perform his
obligations, enforcing performance would be ineffectual.
 The present amendments bind a party to performance of his obligations and if he is
unwilling / unable to perform despite notice, section 20 introduces the option to
obtain substituted performance and to obtain costs, expenses and compensation
from the breaching party.
 a. Section 10
 Earlier, section 10 along with sections 11(2), 14, 16 and 20 set forth a network of
rules guiding the courts in enforcing specific performance of contracts, which was
essentially discretionary.

Continued…..
14 What is specific performance as a Rule:

e.g. u/s.10 a contract would be specifically enforced where the damage caused by the
non performance could not be ascertained or where compensation for such non
performance would afford adequate relief.
Also there was a distinction between contracts for movable and immovable properties
:Breach of contract for transfer of immovable property was presumed not to be
adequately relieved by compensation in terms of money; whereas in the case of
breach of immovable property, it was presumed that the same could be adequately
compensated in terms of money.

Now section 10 has been recast capturing the shift in policy from damages to specific
performance and from discretion to mandate.
Continued…..
15 What is specific performance as a Rule:

 It now provides that specific performance of contracts shall be enforced by

a Court.

 The exceptions to this Rule are provided in Sections 11(2), 14 and 16

unlike earlier, where section 10 was made subject to provisions of Chapter
II.

 The distinction between contracts for movable and immovable property

has been done away along with the presumptions.

Continued…..
16 What is specific performance as a Rule:

b. Section 14
Like the earlier Section 14 the amended Section 14 also lists contracts which will not be
specifically enforced.
The four contracts have been recast. Now the changes will cover situations where (i)
substituted performance has been obtained by a party (ii) the contracts involved
performance of a continuous duty that cannot be supervised by a court (iii) contracts
that are dependent on the personal qualifications of the parties and (iv) contracts which
are by their very nature determinable. (NOTE : Though the Expert Committee had
recommended incorporation of the Rules for refusing specific performance in the earlier
section 20 in section 14 and introduced additional grounds from the UNIDROID
principles of International Commercial Contracts and Principles of European Contract
Law but the same have not been accepted in the amendments.
Continued…..
17 What is specific performance as a Rule:

 In section 14(1)(a) the ground therein which barred specific performance for which compensation in
money provided adequate relief for its non performance has been deleted.

 The expert committee in its suggestions for section 14 had allowed parties to contract out of specific
performance as a remedy but the same has not been incorporated as an exception to section 10.
c. Section 16
 In the earlier section 16, regarding personal bars, which dis-entitled a party from seeking specific
performance, the bar regarding a contracting party not being entitled to recover compensation for
the breach has been removed: this compliments the amendment to section 21.
 This ground has been replaced where new section 16 bars a person who has obtained substituted
performance from seeking specific performance of the same contract.
Continued…..
18 What is specific performance as a Rule:

 Section 11(1) mandates that specific performance of a contract shall be enforced when the action to be done is in
performance of a trust unlike earlier where the section vested discretion with respect to enforcement of such
obligations.

 IN SHORT, THE AMENDMENTS TO THE PROVISIONS OF SECTIONS 10, 11, 14 AND 16 AND THE
REPLACEMENT OF SECTION 20 HAS COMPLETELY ELIMINATED THE DISCRETION OF THE COURT IN
GRANTING RELIEF – COURTS CAN NO LONGER REFUSE SPECIFIC PERFORMANCE UNLESS SECTIONS
11, 14 AND 16 PERMITTED.

 (Note : though this was not a suggestion of the Expert Committee but the amendment has brought this in)

 New sections 10,11, 14 and 16 encapsulate the norms for specific performance.
Continued…..
19 What is specific performance as a Rule:

d. Section 21
 Section 21(1) has been amended due to this policy change and a party can no longer seek
compensation in substitution of the relief of specific performance.

 In other words, this Act will no longer apply to a suit for a compensation per-se.

 Although, the power of the court to award compensation in the event specific performance cannot
be granted continues.
20 B. What is substituted performance of
contract?
a. Section 20
 Earlier section 20 along with section 10 expanded the discretionary approach to specific performance.

 Section 20 has been removed in its entirety.

 Now Section 20 provides for an option to the contracting party for substituted performance of a contract through
a third party or its own agency in case of breach / non performance, subject to notice and opportunity to cure the
breach as the rights to substituted performance arise upon a failure to cure.

 Section 20 confers a contractual right to parties to undertake performance of the contract.

Continued ……
21 What is substituted performance of
contract?
 The risk and costs is on the parties in breach.
 Section 20 confers substantive rights which are to be read along with the rights and obligations of
the parties under the Contract Act, 1872.
 The parties can contract out of section 20(1).
 In case of substituted performance sub section (1), (4) and proviso to sub section (2) elaborate on
the rights of the innocent party against the breaching party following substituted performance i.e.
innocent party is entitled to recover from the breaching party, expenses and costs actually incurred
in addition to compensation.
 (Note: The provisions herein are naturally to be read along with the provisions of Indian Contract
Act 1872; for instance for determination of compensation in accordance with principles enshrined in
section 73 of the Indian Contract Act as the new Section 21 does have provision similar to earlier
Section 21(4)).
 As mentioned earlier, innocent party not entitled to specific performance after availing substituted
performance.
 Substituted performance leaves no scope for the performance of obligations by the breaching party.
22 C. What are the special provisions for
Infrastructure Projects
 Earlier under the Public Contracts (Settlement of disputes) Bill, 2014 there was a proposal to set up a tribunal
for public contracts to resolve disputes between the Government, Government agencies and contractors. This
bill was not legislated.

 Construction contracts have provisions entitling the owner of the project to take over and complete the project
by itself or through a third party at the risk and cost of the contractor. This is now recognized in section 20.

 b. Sections 20A, 20B, 20C

 New sections 20A and 20B make special provisions for infrastructure contracts. Schedule to the Act lists
categories of projects and infrastructure sub sectors which can be amended by the Central Government.

 Section 20A categorically provides that no injunction will be granted by a court in a suit under the Specific
Relief Act involving a contract for an infrastructure project if such grant would cause impediment or delay in the
progress or completion of the project.
Continued……
23 What are the special provisions for
Infrastructure Projects
 Section 41 has also been amended to include that an injunction cannot be granted it if it would
impede or delay the progress or completion of any infrastructure project or if it will interfere with the
continued provision of relevant facility to the project or services which is the subject matter of the
project.

 The overwhelming consideration being the completion of infrastructure projects.

 Section 20A along with section 41(ha) secures the substituted performance without interruption
through injunction inasmuch as section 41(ha) requires a Court to contemplate the impact the
injunction sought will have on the provision of the services or facility for which the project is set up.

 The Bar on injunction would cover arbitrations seeking relief under the Specific Relief Act.
Continued……
24 What are the special provisions for
Infrastructure Projects
 Section 20B provides for setting up of special courts to try suit relating to infrastructure projects.

 Section 20B is an attempt to carve out subjects from the jurisdiction of civil courts

 Section 20C directs disposal of suits under the amended Act (not limited to infrastructure projects)
within a period of 12 months from the date of service of summons to the Defendants, which period
may be extended by not more than a further period of 6 months in the aggregate after recording
reasons in writing for such extension. This newly added section also creates a carve out.
25 D. Other changes

 Section 6 – specifically allows a person who has juridical possession to file a suit
 - Section 14(A) gives powers to the courts to engage experts
 - Section 15(fa) and section 19(ca) provide that specific performance may be
obtained by and enforced against a LLP which is a transferee following
amalgamation of a contracting LLP with it.

Continued……
26 Other changes

 Section 16(c) dispenses with requirement for the Plaintiff to aver that he has
performed or is ready and willing to perform the contract.
 Section 21 – This is an amendment to the earlier position where plaintiff could seek
compensation in addition or in substitution to specific performance, to seeking such
compensation in addition to specific performance.
 Section 25 refers to the Arbitration and Conciliation Act, 1996 instead of Arbitration
Act, 1940.
27 IV. CONCLUSION

 The rule in the remedy-mandating specific performance-cuts across the whole spectrum of
contracts, unless a special law governs the contractual relationship:

 The earlier provisions, including the extent of discretion conferred on the courts enabled
evaluation of specific contractual relationships, contracts for movable properties, specific
performance giving undue advantage to plaintiff or causing hardship on the defendant,
balancing of equities in contracts involving transfer of interest in immoveable properties.

 The remedies available to parties under enactments such as the Indian Contract Act, 1872,
and the Sale of Goods Act, 1930, will also need to be re-considered in light of the remedies
now available.