India: Recent Amendments Made In The Specific Relief Act – A Brief Overview

Last Updated: 13 November 2018
Article by Apoorv Sarvaria

There have been some changes in the civil dispute resolution practice area through the Specific Relief (Amendment) Act, 2018 which has made some important amendments to the Specific Relief Act, 1963 (hereinafter referred to as "the Act"). The Specific Relief (Amendment) Bill, 2017 was introduced in the Parliament on December 22, 2017. It was passed by the Lok Sabha on March 15, 2018 and the Rajya Sabha on July 23, 2018. It received the assent of the President on August 1, 2018.

Highlights of the Specific Relief (Amendment) Act, 2018

Some key changes have been made to the Act. They are:

  1. In Section 6 of the Act, the Parliament has widened its scope by specifying that a suit for recovery of possession under Section 6 of the Act may be filed either by the person who was dispossessed without his consent or any person "through whom he has been in possession" or any person claiming through that person. Hence, the amendment has widened the scope of persons who may file a suit under Section 6. Before the amendment, only the person who had been wrongly dispossessed or any person claiming through him could have filed this type of suit. Now, even a person through whom the aggrieved person had been in possession of the immovable property, may file a suit under Section 6 of the Act.
  2. The second amendment is in Section 10 of the Act. It is one of the most important amendments in the legislation as it has made specific performance of a contract the rule instead of being an alternative in cases where the actual damage for non-performance could not be ascertained or where the compensation for non-performance would not be an adequate relief. Section 10 of the Act has been substituted and instead the newly inserted Section 10 states that the specific performance of a contract shall be enforced by the court subject to the provisions contained in sub-section (2) of Section 11, Section 14 and Section 16 of the Act.

    Before this amendment, Section 10 of the Act read as under:

    "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—

    1. when there exists no standard for ascertaining actual damage caused by the non-performance of the act agreed to be done; or
    2. 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—

      1. that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money; and
      2. that the breach of a contract to transfer movable property can be so relieved except in the following cases:—

        1. 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;
        2. where the property is held by the defendant as the agent or trustee of the plaintiff."
    The old Section 10 of the Act uses the phrase "may, in the discretion of the court". It is clear from the usage of these words that the intention of the legislature at the time of the enactment of the Act was to give discretion to courts in deciding to direct or to not direct specific performance of a contract. This discretion existed even when a contract satisfied the conditions that (i) the actual damage due to non-performance was unascertainable or (ii) the compensation in money for non-performance would not afford adequate relief. Vide Explanation (i) to Section 10, in cases of contract to transfer immovable properties, the courts had to presume that the breach cannot be adequately relieved by compensation in money. Vide Explanation (ii), in cases of transfer of movable properties, the presumption was that the breach can be relieved by compensation in money except in cases where the property is not an ordinary one or is of special value or interest to the plaintiff or consists of goods not easily obtainable, or where the property is held by defendant as the agent or trustee of the plaintiff. This Explanation led to satisfaction of conditions to prove a case for specific performance in cases of transfer of immovable properties and in certain cases of transfer of movable properties. However, even then the usage of the words "may, in the discretion of the court" ensured that specific performance of any contract would not be ordered automatically upon satisfaction of the abovementioned conditions and the courts had a discretion in granting or not granting the relief of specific performance of contracts.

    However, by way of the amendment through the Specific Relief (Amendment) Act, 2018 all the discretion in court is taken away by the Parliament by stating that the specific performance of a contract "shall be enforced" by the court subject to provisions contained in sub-section (2) of Section 11, Section 14 and Section 16 of the Specific Relief Act, 1963.

    The whole object behind this amendment seems to aim at strict enforcement of specific performance of contracts not necessarily dealing with transfer of immovable properties or other cases of transfer of movable properties as referred in the Explanation to the unamended provision. Therefore, the Bill seeks to permit specific performance by courts as a general rule.

    The amendment in this Section seems to have been moved to remove uncertainty in the performance of contracts in order to encourage parties to enter into developmental agreements and promote infrastructural projects for rapid economic growth of the nation.
  3. The third amendment is made in Section 11 of the Act which deals with specific performance of contracts connected with trusts. The proposed amendment is similar to that in Section 10. Here again, the words "contract shall" instead of "contract may, in the discretion of the court" have been substituted. The amendment seeks to take away the discretion of courts and is aimed to guide the courts to mandatorily enforce specific performance.
  4. The fourth amendment is in Section 14 of the Act which specifies the contracts which are not specifically enforceable. The old Section is substituted by the new one which aims to retain only some of the unamended clauses. It states that only such contracts are not specifically enforceable where either (i) substituted performance in accordance with Section 20 of the Act has been obtained, or (ii) where the performance is of continuous duty which the courts cannot supervise; or (iii) where the contract is dependent on personal qualifications of parties that the court cannot enforce it of its material terms; and (iv) where the contract is determinable.
  5. The fifth amendment is insertion of a new Section 14A which deals with power of Courts to engage experts to assist the court on any specific issue involved in the suit. The provision is made to empower civil courts to engage an expert whose opinion or report will form part of the record of the suit and can be examined on the same. Court may further direct any person to give relevant information, or produce or provide to the expert access to any relevant document, goods or property for inspection. However, it would be interesting to see how courts will use this provision for achieving the ends. Also, the provision saves the other provisions of the Code of Civil Procedure, 1908 on this aspect.
  6. The sixth amendment is in Section 15 of the Act which deals with the persons who may obtain specific performance. It now includes a limited liability partnership (LLP) formed from the amalgamation of two existing LLPs, one of which may have entered into a contract before the amalgamation.
  7. Section 16 of the Act has been amended as a consequence of the Parliament's approach to enforce specific performance irrespective of grant of damages or compensation as an alternative for breach or non-performance. Also, the requirement stated in clause (c) of Section 16 to aver that the party is ready and willing to perform the essential terms of the contract has been done away with. Now, the party seeking specific performance only needs to prove the same and is not required to aver in the pleadings. It would be interesting to note the effect of this amendment on the suits seeking specific performance as the courts were used to denying the relief of specific performance when the plaintiff failed to aver its readiness and willingness to perform the contract. 

  8. The eighth amendment is in Section 19 of the Act whereby provision has been made by inserting clause (ca) which enables specific performance of a contract to be enforced against a limited liability partnership which arises out of amalgamation when the limited liability partnership which had entered into a contract had got subsequently amalgamated with another limited liability partnership.
  9. The ninth amendment is in Section 20 of the Act whereby the concept of substituted performance of contracts has been introduced. The whole unamended Section 20 which provided for discretion to decree specific performance has been substituted by a new section. This new provision gives an option to the party which has suffered a breach to go for substituted performance through a third party or by its own agency and recover the expenses and other costs actually incurred, spent or suffered by such party from the party which had committed the breach. However, sub-section(2) of Section 20 requires the party who has suffered such breach to give a written notice of not less than 30 days to the party in breach. Also, the proviso to this sub-section makes it clear that the party who has suffered such breach would be entitled to recovery of such expenses and costs only if the contract has been performed through a third party or by its own agency. Sub-section(3) makes it further clear that once substituted performance has been opted, the party suffering breach would not be entitled to claim relief of specific performance against the party in breach. However, sub-section(4) protects claims of compensation from the party in breach.
  10. The Amendment Act of 2018 has further introduced Sections 20A, 20B and 20C to the Act. Section 20A has made special provisions for contracts relating to infrastructure projects which have been specified in the Schedule inserted in the Act by the Amendment Act of 2018. It prohibits a civil court to grant an injunction in relation to such infrastructure projects where grant of such injunction would cause impediment or delay in progress or completion of such projects. Section 20B provides for designation of Special Courts to try a suit under the Act in respect of contracts relating to infrastructure projects. Section 20C provides for expeditious disposal of suits filed under the provisions of the Act to be disposed of within 12 months from the date of service of summons to the defendant, which may be extended for a further period not exceeding six months in aggregate.
  11. There is a small amendment in Section 21 (which deals with power to award compensation) wherein sub-section(1), the words "in addition to" have been substituted for the words "either in addition to, or in substitution of". This amendment is manifestation of the intention of the Legislature to promote specific performance of contracts rather than claiming compensation in substitution of specific performance.
  12. The amendment in Section 25 is a consequence of the introduction of the Arbitration and Conciliation Act, 1996 and repeal of the old Arbitration Act, 1940.
  13. There is a further amendment in Section 41 of the Act which enlists the situations in which an injunction cannot be granted. Clause (ha) has been inserted which provides that an injunction cannot be granted if it would impede or delay the progress or completion of any infrastructure project or interfere with the continued provision of relevant facility related to such project or services being the subject-matter of such project.

These amendments made by the Parliament clearly show the intention of taking away the wide discretion of courts to grant specific performance and to make specific performance of contract a general rule. Moreover, the provisions introducing substituted performance of contracts and recovery of expenses and costs, including compensation, from the party in breach are made so that projects are not delayed and development is not hindered by breaches. Special provisions made in relation to infrastructure projects also carry the same intention. The Amendment Act of 2018 has further empowered the courts to engage experts in specific cases. It would, however, be interesting to see the approach of courts while implementing the changes made in law through these amendments.

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.

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