SPECIFIC PERFORMANCE OF

CONTRACT
Semester-II: 2017
CONTRACT-I
Dr. Risham Garg
 SPECIFIC PERFORMANCE OF CONTRACT
Specific Relief Act 1963- CH- II(Sections 9-25)
 Definitions: A contract is an agreement upon consideration to do or not
to do a particular thing, if the person on whom this contractual obligation
rests, fails to discharge it, other party has a right either to insist on the
literal and actual performance of the contract or to obtain compensation
for the non-performance of it. The former is called "specific
performance.“
 Fry: "The specific performance" of a contract is its actual execution
according to its stipulation and terms, and is contrasted with damages or
compensation for the non-execution of the contract.
 Pomeroy- Specific performance as consists in the contracting party,
exact fulfilments of obligation which he has assumed in his doing or
omitting the very act which he has undertaken to do or omit.
 Halsbury- "Specific performance" as an equitable relief given by the
court in cases of breach of contract in the forms of a judgment that the
defendant do actually perform the contract according to its terms and
stipulation.
Where agreement is not enforceable by
law – no specific performance
 A contract; according to the Indian Contract Act, is an agreement
enforceable by law. From every contract there immediately and
directly results an obligation on each of the contracting part
towards the other to perform such of the terms of the contract as
he has undertaken to perform.
 Ameer Mohd v. Barkat Ali, AIR 2002 Raj 406: If the person on
whom this obligation rests, fails to discharge it, these results in
morality to the other party a right at his election either to insist on
the actual performance of the contract or to obtain satisfaction for
the non-performance of it.
 A valid contract has to satisfy the requirement of section 10 of the
Contract Act. There has to be an agreement. It has to be between
the parties competent to contract. There must be free consent of
the parties it should be lawful consideration with lawful object and
should not have been declared to be void.
 S. 9. Defences respecting suits for relief
based on contract.-
 Except as otherwise provided herein, where any relief is claimed under
this chapter in respect of a contract, the person against whom the relief is
claimed may plead by way of defence any ground which is available to him
under any law relating to contracts.
 The effect of section 10 of the Contract Act read with section 9, of the
Specific Relief Act is to bar the enforcement of all void unlawful and
imperfect agreements. Thus, where there is merely moral religious or
social obligation rather than a legal obligation specific enforcement of the
same cannot be claimed. The bar to a suit for specific performance would
cover an agreement by a minor as the same is void.
 For example, the defendant can take the defence provided under the
Indian Contract Act, 1872 such as incapacity of the parties, fraud, mistake,
under influence on coercion.
 Bishandayal and Sons v. State of Orissa, (2001) 1 SCC 555: AIR 2001 SC
544: it has been held that even a Government contract which is
concluded without fulfilling the requirement prescribed by article 299 of
Constitution of Indian cannot be specifically enforced.
 2 categories of contracts under Specific
Relief Act
 From the point of view of the specific performance of
contracts under Specific Relief Act, 1963 contracts can be
divided into two categories:
 (i) contract which can be specifically enforced, and
 (ii) contract which cannot be specifically enforced.
 S. 10. Cases in which specific
performance of contract enforceable.-
 Except as otherwise provided in this Chapter, the specific performance of any contract
may, in the discretion of the court, be enforced-
(a) when there exist no standard for ascertaining actual damages caused by the non-
performance of the act agreed to be done; or
(b) when the act agreed to be done is such that compensation in money for its non-
performance would not afford adequate relief.
Explanation.-Unless and until the contrary is proved, the court shall presume-
(i) that the breach of a contract to transfer immovable property cannot be adequately
relieved by compensation in money; and
(ii) that the breach of a contract to transfer movable property can be so relieved except in
the following cases:-
(a) where the property is not an ordinary article of commerce, or is of special value or
interest to the plaintiff, or consists of goods which are not easily obtainable in the market,
(b) where the property is held by the defendant as the agent or the trustee of the plaintiff
on the breach of contract By one party the other has two alternatives.
(i) to bring an action for breach of contract
(ii) to sue for the specific performance of the contract.
In an action for specific performance, he can require actual execution of the contract in
terms of the agreement between the parties.
 Illustrations
 (a) A agrees to buy and, B agrees to sell, a picture by a dead painter
and two rare china vases. A may compel B specifically to performance
this contract, for there is no standard for ascertaining the actual
damages which would be caused by its non-performance.
 (b) A contracts with B to sell to him a horse for Rs. 1000 B is entitled
to a decree directing A to convey the horse to him, he paying the
purchase-money.
 (c) A contract to sell and B contracts to buy, certain number of
railway shares of a particular description. A refuses to complete the
sale. B may compel A specifically to performance this agreement for
the shares are limited in number and not always available in the
market, and their possession carries with it the status of a
shareholder which cannot otherwise be procured.
 (d) A contracts with B to paint a picture for B who agrees to pay
therefor Rs. 1000. The picture is painted. B is entitled to have it
delivered to him on payment or tender of Rs. 1000.
 Essentials
 (i) No standard for ascertaining damages.-
 Banwari Agarwala v. Ram Swarup Agarwala,AIR 1998 Pat 88
 It was held that the plaintiff tenant was entitled to a decree
of specific performance of contract u/s10 of Specific Relief
Act. Hence, the tenant suit for specific performance is to be
decreed.
 Where from some special or practical features or incidents
of the contract either in its subject-matter or in its terms or
in the relation of the parties, it is impossible to arrive at a
legal measure of damages at all, or at least with sufficient
degree of certainly so that so real compensation can be
obtained by means of an action at law, the contract will be
enforced.
 .
 (ii) When money compensation would not provide
adequate relief.-
 Ram Karan v. Govind Lal, MANU/RH/0222/1999 : AIR 1999
Raj 167: There was 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, viz., he prayed for a
direction to the seller to execute the sale deed.
 It was held that the case was covered by section 10(b) of
the Specific Relief Act therefore, the seller was directed to
specifically performs the contract by executing sale deed in
favour of the buyer.
(iii) Pecuniary Compensation not
recoverable.-
 The insolvency of a defendant is generally a ground for
granting specific relief to the plaintiff under the head.
Where there is a probability that pecuniary compensation
if awarded cannot be recovered, specific performance may
be granted
 Brahmavati v. Ramesh Chand, AIR 1980 All 296: The
Allahabad High Court has held that in a suit for a specific
performance of a original contact, extension of the period
for convenience given only by some heirs could not
deprive the purchaser of his remedy for specific
performance.
 Section 14. Contracts which cannot be
specifically enforced.-
(1) The following contracts cannot be specifically enforced, namely:-
(a) a contract for the non-performance of which compensation in money is an adequate relief;
(b) a contract which runs into such minute or numerous details or which is so dependant on the personal qualification or volition of the parties, or
otherwise from its nature is such, that the court cannot enforce specific performance of its material terms;
(c) a contract which is in its nature determinable;
(d) a contract the performance of which involves the performance of a continuous duty which the court cannot supervise.
(2) Save as provided by the Arbitration Act, 1940 (10 of 1940), no contract to refer present or future differences to arbitration shall be specifically
enforced, but if any person who has made such a contract (other than an arbitration agreement to which the provisions of the said Act apply) and
has refused to perform it, sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit.
(3) Notwithstanding anything contained in clause (a) or clause (c) or clause (d) of sub-section (1), the court may enforce specific perform once in the
following cases-
(a) where the suit is for the enforcement of a contract-
(i) to execute a mortgage or furnish any other security for securing the repayment of any loan which the borrower is not willing to repay at once:
Provided that where only a part of the loan has been advanced the lender is willing to advance the remaining part of the loan in terms of the contract, or
(ii) to take up and pay for any debenture of a company.
(b) where the suit is for-
(i) the execution of a formal deed of partnership, the parties having commenced to carry on the business of the partnership, or
(ii) the purchase of a share of a partner in a firm.
(c) where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land:
Provided that the following conditions are fulfilled, namely-
(i) the building or other work is described in the contract in terms sufficiently precise to enable the court to determine the exact nature of the building
or work.
(ii) the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-
performance of the contract is not an adequate relief, and
(iii) the defendant has, in pursuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed
or other work is to be executed.
 According to sec. 14 following contracts
cannot be specifically enforced-
1. Where compensation in money is an adequate relief
[section 14(1)(a)].-
 Illustrations
 (a) A contracts to sell, and B contracts to buy, a lakh of
rupees in the four per cent loan of the Central Govt.
 (b) A contracts to sell, and B contracts to buy, 40 chests of
indigo at Rs. 1000 per chest.
 Ashok Kumar Srivastava v. National Insurance Co. Ltd., AIR
1988 SC 2046: In case of contract for the sale of something
which has its special value and is not an ordinary article of
commerce, such as rare coins, the contract can be
specifically enforced, because compensation in money will
not constitute an adequate relief in such a case.
 2. Contracts which runs into minute or
numerous details s. 14(1)(b).-
 The following kinds of contracts cannot be specifically enforced-
 (i) A contracts which run into such minute or numerous details, or
 (ii) Which is so dependent on the personal qualification or volition of the
parties, or
 (iii) otherwise from its nature is such, that the court cannot enforce specific
performance of its material terms.
 Illustrations
 (i) A contracts to render personal service to B.
 (ii) A contract to employ B on personal service.
 (iii) A, an author, contracts with B, a publisher, to complete a literary work.
 B cannot enforce specific performance of these contracts.
 EC, State Warehousing Corp v. Chandra Kiran Tyagi, AIR 1970 SC 1244:
 The Supreme Court held that ordinarily, the contracts for personal services
cannot be specifically enforced. But this rule is subject to following three
exceptions:
 (i) where a public servant has been dismissed from service in violation of A.311
 (ii) where a worker has been dismissed from service under industrial law,
 (iii) where a legal body acts in violation of the provisions of the statute.
 3. Contracts which are determinable by
their nature.-
 S. 14(1)(c) contracts which are determinable by their nature
cannot be specifically enforced. Eg- A and B contract to become
partners in a certain business, the contract not specifying the
duration of the proposed partnership. This contract cannot be
specifically enforced, for if it were so performed, either A or B
might at once dissolve the partnership.
 4. Contracts regarding continuous duty requiring supervision by
court.-S. 14(1)(d) provides that a contract the performance of
which involves continuing duty which the court cannot supervise
cannot be specifically enforced.
 Arbitration.- S. 14(2) provides that, except as provided by the
Arbitration Act a contract to refer a present or future dispute to
arbitration shall not be specifically enforced. An arbitration
agreement operates as a bar to the filing of a suit.
S. 16. Personal bars to relief.- "Sp. perf. cannot be
enforced in favour of a person-
 (a) who would not be entitled to recover compensation for its breach,
 or
 (b) who has become incapable of performing or violates any essential term
of, the contract that on his part remains to be performed, or acts in fraud of
the contract, or willfully acts at variance with, or in subversion of, the relation
intended to be established by the contract, or
 (c) who fails to over and prove that he has performed or has always been
ready and willing to perform the essential terms of the contract which are to
be performed by him, other than terms the performance of which has been
prevented or waived by the defendant,
 Explanation.-For the purpose of clause (c)-
 (i) where a contract involves the payment of money, it is not essential for the
plaintiff to actually tender to the defendant or to deposits in court any
money except when so directed by the court;
 (ii) the plaintiff must ever performance of, or readiness and willingness to
perform, the contract according to its true construction."
 Illustrations
 (1) A in the character of agent for B enters into an agreement with C to buy C's house A
is in reality acting not as agent for B but on his account. A cannot enforce specific
performance of the contract.
 (2) A contracts to sell B a house and to become tenant thereof for a term of fourteen
years from the date of the sale at a specified yearly rent. A becomes insolvent neither he
nor his assignee can enforce specific performance of the contract.
 (3) A contracts to sell B a house and garden in which there are ornamental trees, a
material element in the value of the property as a residence. A without B's consent, fells
the trees.A cannot enforce specific performance of the contract.
 Trimbak Shankar Tidke and Co. v.Tivrani Shankar Tidke, AIR 1985 Bom 128:
 Acc to sec 16 specific performance of a contract cannot be enforced in favour of a
person who fails to over and prove that he is 'ready and willing' to perform the essential
terms of the contract. The averment that the plaintiff is ready and willing to perform the
essential terms of the contract is necessary only in those cases. Where the plaintiff has
already performed his part of the contract.
 Syed Dastagir v.T.R. Gopalkrishna Shetty, AIR 1999 SC 3029
 The readiness and willingness to perform the contract as required by Explanation (i) to
section 16(c) means compliance is spirit and substance and not in letter and form.
 Section 18. Non-enforcement except with
variation.-
 Where a plaintiff seeks specific performance of a contract in
writing, to which the defendant sets up a variation, the plaintiff
cannot obtain the performance sought, except with the variation
so set up, in the following cases, namely-
 (a) Where by fraud, mistake of fact or misrepresentation, the
written contract of which performance is sought is in its terms
or effect different from what the parties agreed to, or does not
contain all the terms agreed to between the parties on the basis
of which the defendant entered into the contract.
 (b) Where the object of the parties was to produce a certain
legal result which the contract as framed is not calculated to
produce,
 (c) where the parties have, subsequently to the execution of the
contract, varied its terms.
 Illustrations
 (a) A, B, C sign a writing by which they purport to contract each to enter into a bond to D for
Rs. 1000. In a suit by D to make A, B, and C separately liable each to the extent of Rs. 1000
they prove that the word 'each' was inserted by mistake; that the intention was they should
give a joint bond for Rs. 1000. C can obtain the performance sought only with the variation
thus set up.
 (b) A sues B to compel specific performance of a contract is writing to buy a dwelling house. B
proves that he assumes that the contract included an adjoining yard and the contract was so
framed as to leave it doubtful whether the yard was so included or not. The court will refuse
to enforce the contract, except with the variation so set up by B.
 (c) A contracts in writing to let B a wharf, together with a strip of A's land delineated in a map
before signing the contract. B proposed orally that he should be at liberty to substitute for the
strip mentioned in the contract another strip A's land of the same dimensions, and to this A
expressly assented. B then signed a written contract. A cannot obtain specific performance of
the written contract except with the variation set up by B.
 (d) A contracts in writing to let a house to B for a certain term, at the rent of Rs. 100 per
month, putting it first into tenable repair. The house turns out to be not worth repairing, so
with B's consent, A pulls it down and erects a new house in its place: B contracting orally to
pay rent at Rs. 120 per mensem. B then sues to enforce specific performance of the contract in
writing. He cannot enforce it except with the variations made by the subsequent oral contract.
 (e) A and B enter into negotiations for the purpose of securing land for B for his life, with
remainder to her issue. They execute a contract, the terms of which are found to confer an
absolute ownership on B.The contract so framed cannot be specifically enforced.