India: Commercial Law Flash - September 2018

Last Updated: 24 September 2018
Article by Varun Kalsi and Sakshi Seth

This Flash apprises you of the recent amendments to the Specific Relief Act, 1963 ("Act") pursuant to the Specific Relief (Amendment) Act, 2018 and assesses its likely impact on contractual arrangements.

1. Specific performance  

Previously, Indian courts would exercise their discretion in granting specific performance of contracts by non-performing parties by applying principles enshrined in the un-amended Act. However, with the recent amendments the old section 10 has been substituted with a new section, which makes it unambiguous that courts shall now have limited discretion in decreeing specific performance of a contract, which "shall be granted" subject to limitations prescribed in sections 11(2), 14 or 16 of the Act. Accordingly, specific performance of a contract is now the rule rather than exception. Further, section 11 of the Act concerning private trusts has also been amended to replace the words "contract may, in the discretion of the court" with "contract shall" thereby clarifying the renewed legislative intent.

PSA view: These amendments are a welcome change for non-defaulting parties who are keen on seeking performance of a contractual bargain by defaulting parties, as now, there are only very limited reasons for courts to deny specific performance. This also acts as a deterrent to parties who would execute contracts, knowing that there is high probability that they will not perform their part of the contract in future. Further, now the onus will be on courts to justify not granting specific performance of a contract covered under section 10. Going forward, this may improve the ease of doing business and also, encourage parties to perform their contractual promises. It is pertinent to note that in case of contracts concerning acts done in performance of a private trust, it is now literally mandatory for courts to grant specific performance provided that the requirements of section 11 are met.

2. Substituted performance

We now have a new section 20, which states that if a party does not perform its part of a contract, then the aggrieved party shall have the option of seeking substituted performance either through a third party or its own agent. However, such substituted performance can only be availed if a written notice of at least 30 days is furnished to the defaulting party requiring it/him/her to perform its/his/her part of the contract within a specified period, failing which, the aggrieved party may opt for substituted performance. The statute entitles an aggrieved party to recover expenses and other costs actually incurred, spent or suffered  by the aggrieved party in effecting the substituted performance, from the defaulting party. It is noteworthy that the party claiming substituted performance forfeits its/his/her right to seek specific performance of the same contract.

PSA view:  This is a new concept that has been introduced in the Act while allowing parties to contract out of the provision by agreeing otherwise. It is not uncommon for parties to agree to such substituted performance in property development arrangements in the event the developer abandons development of a real estate project that it had undertaken. Irrespective, it is a step in the right direction as now, there is statutory recognition of the principle along with the fact that an aggrieved party can recover costs and expenses incurred in conducting the substituted performance from the defaulting party, which is in addition to the party's right to claim damages suffered consequent to non-performance of the defaulting party. Of course, we foresee that this amendment may reduce litigation to the extent that parties will always have an option to chose between specific or substituted performance. 

3. Special provisions concerning infrastructure projects

Sections 20A, 20B and 20C have been introduced especially to govern reliefs sought under the Act that are relative to contracts concerning infrastructure projects. Section 20A states that no court shall grant a relief under the Act where it is of the view that doing so would cause an impediment or delay in the progress or completion of such infrastructure project. "Infrastructure Project" is defined in the explanation to section 20A(1) as categories of projects mentioned in the new Schedule to the Act and includes transport, energy, water and sanitation, communication, social and commercial infrastructure, etc. Section 20B captures creation of special courts by state governments to entertain reliefs emanating from this Act with respect to contracts concerning such projects while section 20C stipulates a timeline for disposal of such proceedings.

PSA view: The intent here is to ensure that private parties to an infrastructure project do not hinder its progress in the event of a dispute with the government, and if at all there is a dispute, it is resolved in an expeditious manner. It is indeed a proactive measure taken by the legislature to ensure that there is no undue delay in completion of infrastructure projects while the interests of the private party are also protected, perhaps, through special courts that should be designated by the appropriate state government in future. However, time will tell if this has any impact on the timelines for completion of such projects or on the participation of private parties in them.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Sakshi Seth
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
 
Email Address
Company Name
Password
Confirm Password
Position
Industry
Mondaq Newsalert
Select Topics
Select Regions
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions