Contracts Module - 4
Contracts Module - 4
Specific relief refers to the remedy provided by the court to enforce a specific performance or
prevent the breach of an obligation.
The Specific Relief Act, 1963 provides the legal framework for granting specific relief in civil
cases. In other words, Specific relief refers to a legal remedy provided by courts to enforce a
specific obligation or obtain a specific performance from a party in a civil dispute. It is a
discretionary remedy granted by the court and is aimed at ensuring justice in cases where
monetary compensation is not an adequate solution.
It is Indian legislation that governs the principles and procedures for granting specific relief. It
defines the various forms of specific relief and lays down the conditions under which such relief
can be granted.
It aims to restore the party to the position he or she would have been in if the contract or
agreement had been performed as agreed. It may involve compelling a party to carry out their
contractual obligations or restraining them from committing a wrongful act.
Specific relief is an equitable remedy, which means it is based on principles of fairness and
justice rather than strict legal rules. It is discretionary in nature, and the court considers various
factors, such as the nature of the contract, the conduct of the parties, and the practicality of
enforcing the relief, before granting specific relief.
Q. What are the reliefs sought under Specific Relief Act 1963?
The Specific Relief Act, 1963 extends to the whole of India, except the State of Jammu and
Kashmir. The Specific Relief Act deals only with certain kinds of equitable reliefs and these are
now:
• Rectification of Instrument
• Rescission of Contracts
• Cancellation of instruments
• Declaratory Decrees
• Injunctions
Q. What are the Possessory Remedies under Specific Relief Act, 1963?
The Specific Relief Act, 1963, lays down clear provisions for the recovery of possession of both
immovable and movable property. It ensures that possession is protected, disputes are resolved
through lawful means, and remedies are provided to those wrongfully dispossessed. The Act
addresses these issues under Sections 5, 6, 7, and 8.
Specific performance is granted in cases where damages are not adequate, such as contracts
involving unique goods or immovable property. For example, in a dispute over the sale of land,
the court may direct the seller to transfer the property to the buyer, as land is considered unique,
and monetary compensation may not be sufficient to substitute for it. Additionally, the court may
enforce specific performance when the contract involves obligations that are fair and reasonable
for both parties to perform.
This section establishes the circumstances under which specific performance is an appropriate
remedy. It states that:
   ● Partial Enforcement: The court may enforce the part of the contract that can still be
       performed, provided it is reasonable and does not cause undue hardship to the defendant.
   ● Practical Example: If a contract involves the sale of several plots of land but one plot
       becomes legally unavailable due to a dispute, the court can order the sale of the
       remaining plots.
   ● Fairness Consideration: The court ensures that partial enforcement does not lead to an
       unfair advantage for one party or a disproportionate burden on the other.
Section 14 outlines the situations where specific performance cannot be granted. These
exceptions are based on the nature of the contract, its terms, and the practical difficulties
involved in enforcement. The contracts falling under this section are:
   ● Nature: Specific performance cannot be granted for contracts that require personal
       services or skills.
   ● Reason: These contracts are inherently dependent on the unique skills or personal
       judgment of the party, and compelling someone to perform them is impractical.
   ● Examples:
           ○ A contract for an artist to paint a specific picture.
           ○ A contract for an individual to perform a live music concert.
           ○ Contracts involving personal or professional advice (e.g., legal or medical
               services).
2. Contracts with Uncertain Terms (Section 14(c))
   ● Nature: If the terms of the contract are vague, ambiguous, or uncertain, it cannot be
       enforced by specific performance.
   ● Reason: The court cannot compel a party to perform a contract if it is not clear what is
       expected from them, as the obligations must be definite and measurable.
   ● Examples:
           ○ A contract to deliver a “reasonable quantity of goods,” without specifying the
               quantity.
           ○ A contract for the sale of goods with no clear terms regarding price, delivery, or
               quality.
   ● Nature: Contracts that require constant supervision by the court cannot be specifically
       enforced.
   ● Reason: Judicial enforcement is impractical for contracts requiring ongoing supervision
       or complex monitoring, as courts are not equipped to manage the day-to-day performance
       of such contracts.
   ● Examples:
           ○ A contract to construct a building, where performance requires continuous
               monitoring and checking for quality, safety, and other conditions.
           ○ A contract where the court would need to oversee the operation of a business.
4. Contracts for the Sale of Goods Not Specific or Unique (Section 14(e))
   ● Nature: Specific performance cannot be granted for the sale of goods that are not specific
       or unique.
   ● Reason: Goods that are common or replaceable do not require specific performance, as
       damages can sufficiently compensate for the loss.
   ● Examples:
           ○ A contract for the sale of mass-produced goods like clothing, furniture, or
               electronics.
           ○ A contract for the sale of a large quantity of common items, such as grains or raw
               materials.
   ● Nature: Contracts that involve illegal activities or are impossible to perform are excluded
       from specific performance.
   ● Reason: Courts cannot enforce contracts that require unlawful actions or are not
       physically or legally possible to fulfill.
   ● Examples:
           ○ A contract to sell stolen goods or contraband.
           ○ A contract requiring the performance of an act that is impossible due to legal
               restrictions, such as a contract to sell land that is already owned by someone else.
Section 20 of the Specific Relief Act, 1963 outlines the substituted performance of contracts.
The key provisions of this section are as follows:
   ● Default by the Promisor: If a party to the contract fails to perform their obligations or
       defaults in the contract, the other party may, with the permission of the court, have the
       contract performed by another party.
   ● Notice Requirement: The party seeking substituted performance must give reasonable
       notice to the defaulting party of their intention to have the contract performed by another
       party. This notice allows the defaulting party an opportunity to perform the contract
       before a third party steps in.
   ● Court's Permission: The substituted performance of the contract cannot be carried out
       without the permission of the court. The court assesses whether it is appropriate for a
       third party to perform the obligations and whether it will affect the original intent of the
       contract.
   ● Nature of Contract: The performance must be of such a nature that it can be carried out
       by someone else without defeating the essence of the contract.
   ● Feasibility: The court will allow substituted performance only if it is feasible and does not
       alter the overall purpose of the contract. If the contract can be completed by a third party,
       the court may grant permission for such substitution.
   ● Personal Contracts: As previously stated, the remedy of substituted performance is not
       applicable to contracts requiring personal skill or performance, such as contracts with
       artists, athletes, or professionals, where the personal attributes of the performer are
       central to the contract's purpose.
For instance, If a construction company is contracted to build a house and fails to complete the
work, the client could hire another contractor to finish the project, with court approval. The
original contractor might be required to compensate the client for any additional costs incurred
due to their default.
Rectification of instruments is a legal remedy under the Specific Relief Act, 1963, which
allows a court to correct or amend a written instrument (such as a contract, deed, or agreement)
to reflect the true intention of the parties. This remedy is available when there is a mistake in the
instrument, either due to error, fraud, or omission, and it is necessary to correct it in order to
ensure that the instrument accurately represents what the parties agreed upon.
1. Nature of Rectification
    ● Purpose: The primary purpose of rectification is to correct an instrument that does not
        accurately reflect the true intentions or agreement of the parties due to a mistake.
        Rectification does not alter the actual agreement or create a new agreement but rather
        ensures that the instrument corresponds to the true understanding of the parties.
    ● Key Element: Rectification is typically applied when the mistake is clerical, accidental,
        or due to misrepresentation, but the agreement between the parties was valid. The
        instrument itself, however, might contain errors that distort or do not match the actual
        intentions of the parties involved.
To obtain rectification under Section 26, the following conditions must be met:
3. Process of Rectification
    ● Application to Court: A party seeking rectification must apply to the court for the
        correction of the instrument. The application must include details about the mistake, the
        true intention of the parties, and the evidence supporting the claim.
    ● Court’s Role: The court examines the instrument, the facts of the case, and any available
        evidence. If the court is satisfied that there is an error in the instrument, it will order
        rectification to ensure that the instrument accurately reflects the true intention of the
        parties.
    ● Form of Rectification: The court may either direct that a new instrument be drawn up to
        replace the existing one or order that the existing instrument be amended. Rectification
        can involve adding, deleting, or altering specific terms or provisions in the document.
Suppose two parties agree to a contract where one party will supply goods to another at a
specified price. However, due to a clerical mistake, the price mentioned in the written contract is
lower than what was actually agreed upon. The aggrieved party can apply for rectification of the
contract to reflect the correct price.
5. Limitations on Rectification
    ● No Alteration of Substantial Terms: Rectification is not meant to alter the terms of the
        contract substantially. The intent is to correct a mistake in the document, not to change
        the essence of the agreement.
    ● No Rectification for Disagreement: Rectification is only available when there is a
        genuine mistake or misunderstanding. If the parties disagree about the terms of the
        contract, rectification will not be allowed. In such cases, the remedy is to renegotiate the
        terms or seek other remedies such as damages.
    ● Equitable Remedy: The remedy of rectification is equitable in nature. The court must be
        satisfied that it is fair and just to correct the document and that the correction does not
        harm any other party.
Rescission essentially cancels the contract, meaning both parties are released from further
performance. The contract is treated as void from the outset, and the parties return to their
pre-contract positions as much as possible.
The objective of rescission is to restore both parties to the position they were in before the
contract was made. For example, if one party has already provided goods or services, the
contract will be rescinded, and the party will have to return any goods or payments received.
Grounds for Rescission (Section 19)
Section 19 of the Specific Relief Act, 1963 outlines the grounds on which a contract may be
rescinded:
   ● Fraud: If a contract is entered into by one party on the basis of fraud committed by the
       other party, the contract may be rescinded. Fraud can include intentional
       misrepresentation or concealment of facts.
   ● Coercion: If the contract was made under duress or with threats of harm, the contract
       may be rescinded. Coercion can involve threats to a person or property that force
       someone to enter into the contract.
   ● Undue Influence: If one party takes advantage of their dominant position to influence
       the decision of the other party in a way that undermines their free will, the contract can be
       rescinded.
   ● Misrepresentation: When one party misrepresents facts that induce the other party to
       enter into the contract, rescission may be allowed.
   ● Mistake: If both parties are under a mutual mistake concerning a fact that is material to
       the contract, rescission can be granted.
   ● A party seeking rescission must do so within a reasonable time after discovering the
       grounds for rescission. The party cannot delay their decision to rescind indefinitely.
   ● Ratification: If the aggrieved party knowingly affirms or ratifies the contract after
       learning about the fraud, misrepresentation, or coercion, they lose the right to rescind the
       contract.
   ● The aggrieved party must apply to the court for rescission. The court evaluates whether
       the grounds for rescission exist and whether it is fair and just to grant the remedy.
   ● Restitution: The principle of restitution is applied, where both parties are required to
       return what they received under the contract, as far as possible. If return is not feasible,
       the party seeking rescission may be entitled to compensation.
4. Discretion of the Court (Section 30)
   ● Rescission is not automatic and is discretionary. The court has the authority to deny
       rescission if it is unfair to the other party or if the contract has been substantially
       performed.
5. Limitation on Rescission
   ● The court will not grant rescission if it would affect the rights of third parties who have
       acquired property or rights in good faith.
6. Consequences of Rescission
   ● Once the contract is rescinded, the parties are released from their obligations under it, and
       any benefits received must be returned. If return is not possible, compensation may be
       awarded.
The cancellation of an instrument is addressed under Section 31 of the Specific Relief Act,
1963. This remedy allows for the cancellation of a written document (such as a contract, deed, or
agreement) when it is deemed to be void, ineffective, or invalid due to reasons such as fraud,
misrepresentation, or undue influence. The cancellation of an instrument is a judicial remedy that
invalidates the document, and it effectively releases the parties from the obligations or rights
conferred by that instrument.
   ● Void or Voidable: If the instrument is void from the outset or becomes void due to
       factors such as lack of consent, incapacity of the parties, or failure to comply with
       necessary legal requirements, the instrument may be cancelled.
   ● Obtained by Fraud or Misrepresentation: If the instrument was executed under
       fraudulent circumstances or if one party misrepresented material facts that induced the
       other party to sign the document, the instrument can be cancelled.
   ● Coercion or Undue Influence: If the instrument was signed under duress or undue
       influence, making the party’s consent invalid, the instrument may be cancelled.
   ● Mistake: If the instrument reflects a mutual mistake between the parties concerning a
       material fact that was fundamental to the agreement, the instrument may be cancelled.
   ● Non-compliance with Statutory Requirements: In some cases, if the instrument does
       not comply with certain statutory requirements (for example, if it is not signed or
       witnessed as required by law), the court may cancel it.
   ● Application to Court: The party seeking cancellation of the instrument must file a suit in
       the appropriate court. The application should include the grounds for cancellation and
       any supporting evidence showing that the instrument is invalid or void.
   ● Restitution: In some cases, cancellation may also involve the principle of restitution,
       requiring one or both parties to return what they have received under the instrument, if
       return is possible.
   ● Relief for Third-Party Rights: The court may also consider whether third-party rights
       would be adversely affected by the cancellation of the instrument. If third-party rights
       have been acquired in good faith and for value, the court may refuse to cancel the
       instrument.
4. Court's Discretion
The cancellation of an instrument is a discretionary remedy, and the court will assess the merits
of each case before granting the relief. Factors such as the timing of the application, whether the
party seeking cancellation has acted promptly, and whether there are any equitable
considerations will influence the court’s decision.
   ● Equitable Remedy: Like many remedies under the Specific Relief Act, cancellation is
       not an automatic right. The court will balance the interests of the parties and the effect of
       cancellation on third parties.
1. A declaratory decree is issued when a party seeks to establish or clarify their legal right
without asking for any consequential relief (such as compensation or specific action). The court
does not grant specific relief, but simply declares the legal position regarding the matter.
   ● Declaratory Decrees are discretionary and the court may decide not to grant the
       declaration if it deems unnecessary or if other reliefs are available.
   ● The court may also issue a declaratory decree without consequential relief if the
       circumstances do not require further action or enforcement.
5. Consequential Relief
Although Section 34 specifically deals with declarations and does not involve granting
consequential relief, a party seeking a declaratory decree may also apply for consequential
relief under Section 35, if needed.
   ● Consequential relief can include orders such as an injunction (to prevent further
       violations of the right) or specific performance (to compel someone to perform an act
       under a contract).
1. What is an Injunction?
Injunctions are typically sought when there is an urgent need to prevent harm that cannot be
adequately compensated by monetary damages or other remedies.
   ● Section 36 grants the power to the court to issue an injunction to prevent the breach of an
       obligation or to do something necessary to protect the legal rights of the parties.
   ● Injunctions are not automatic; they are granted by the court at its discretion based on the
       facts of the case and the adequacy of other legal remedies.
   ● Prohibitory Injunction: This injunction prevents a party from doing something that would
       infringe on another party's legal rights. For example, preventing someone from
       trespassing on a property.
   ● Mandatory Injunction: This injunction requires a party to perform a specific act or duty.
       For example, ordering a person to deliver goods that were wrongfully withheld.
   ● Temporary Injunction: A temporary injunction is granted to preserve the status quo
       until the final decision in the case is made. It is granted for a short period of time and can
       be extended as needed.
   ● Perpetual Injunction: A perpetual injunction is issued after the court has heard the
       case and comes to a final decision. This injunction is intended to permanently prevent a
       party from continuing a particular action or practice.
   ● The court can grant an injunction to prevent the breach of a contract if it is determined
       that damages or other remedies would not be an adequate relief. This remedy is
       particularly important in cases where a contract involves unique or irreplaceable subject
       matter, such as real estate or intellectual property.
   ● Under Section 39, the court may grant a mandatory injunction if it is necessary to compel
       a party to perform a specific act or duty that has been agreed upon or required by law.
The court will consider the following factors before granting an injunction:
   ● Existence of Legal Right: The party seeking the injunction must show that they have a
       legal right that needs protection.
   ● Irreparable Harm: The party must demonstrate that they will suffer irreparable harm
       (harm that cannot be compensated by monetary damages) if the injunction is not granted.
   ● Adequate Remedy at Law: If an alternative remedy, such as damages, would be
       sufficient, the court may not grant an injunction. Injunctions are generally granted when
       no other remedy is available or sufficient.
   ● Balance of Convenience: The court will weigh whether the balance of convenience
       favors the applicant (i.e., whether granting the injunction is more beneficial than denying
       it).
   ● Public Interest: The court will consider whether granting an injunction will be in the
       public interest or whether it will cause harm to the public.
   ● Section 40 grants the court the power to issue an injunction if a person is acting
       unlawfully, such as engaging in trespass or infringement of intellectual property rights.
1. Permanent Injunction
   ● If the court is satisfied that a party's legal right is being repeatedly violated or will be
       violated in the future, a permanent injunction may be granted to permanently stop the
       infringing party from committing the wrongful act.
   ● Injunctions may also be granted in specific cases such as those involving property
       disputes, intellectual property infringement, or breach of trust. In such cases, the
       injunction can be used to preserve evidence, prevent ongoing harm, or preserve the status
       quo.