India: Power Of Civil Court To Award Compensation In Addition To And In Lieu Of Specific Performance Under Specific Relief Act, 1963

The Hon'ble Supreme Court in a recent judgment of Universal Petro Chemicals Ltd v. B. P. PLC and Others¹ had the occasion of dealing with the ambit of Section 21 of the Specific Relief Act, 1963 ("the Act") vis-à-vis a claim for damages in addition to a claim for specific performance. In that context the Hon'ble Supreme Court examined the statutory requirement of the necessity of pleadings to sustain the grant of damages/compensation. This article endeavors to highlight the observations of the Hon'ble Supreme court from the perspective of Section 21 of the Act.

STATUTORY BACKDROP:

Section 21 of the Specific Relief Act, 1963 provides that the plaintiff may also claim compensation for breach of performance by Defendant, in addition to claim for specific performance of a contract. Section 21 provides that Court may grant compensation in a suit if the court decides that specific performance ought not to be granted but there is a contract between the parties which has been broken by the defendant. The Court may also grant compensation if the court decides that specific performance ought not to be granted, and that some compensation for breach of the contract should be made to the plaintiff. In this regard, the quantum of compensation under Section 21 of the Act is determined with reference to Section 73 of the Indian Contract Act, 1872.

The grant of compensation under Section 21 of the Act, however, is subject to a caveat, in that, Sub-section (5) of the Section 21 of the Act provides that no compensation shall be awarded unless the plaintiff has claimed such compensation in his plaint. Thus, the plaintiff is required to make a claim for compensation in lieu of, and in addition to claiming for specific performance, to invoke the benefit of Section 21 of the Act. The proviso to Section 21 of the Act also provides that where the plaintiff has not claimed any such compensation in the plaint, the court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation.

It is important to note that Subsection (5) of Section 21 of the Act was originally introduced to resolve the confusion over whether the court had the power to grant compensation in a claim for specific in absence of any pleading to that effect under the provisions of Specific Relief Act, 1963. Prior to the enactment of the Specific Relief Act, 1963 the Law Commission in its 9th Law Commission Report had also referred to the diverse opinions expressed by High Courts recommended that in no case should compensation be decreed unless it is claimed by a proper pleading. In The Arya Pradeshak Pritinidhi Sabha v. Lahori Mal,² Lahore High Court had held that the Court has the power to award damages in substitution of or in addition to specific performance even though the plaintiff has not specifically claimed the same in its plaint and written submissions. In contrast, Madras High Court had in Somasundaram Chettiar v. Chidambaram Chettiar ("Somasundaram Chettiar")³ held that Court could not award damages in absence of a specific claim for damages. In Somasundaram Chettiar, Madras High Court also opined that the rationale for not allowing a claim for damages without a specific pleading is based on the principle that the plaintiff must establish its claim for damages and the defendant must be put on notice and correspondingly have an opportunity to adduce evidence that the damages claimed are excessive or that the plaintiff has not sustained any damages.

Footnotes

1 Universal Petro Chemicals Ltd. v. BP PLC and Ors, 2022 SCC OnLine SC 199.

2 AIR 1924 Lahore 713.

3 AIE 1951 Mad 282.

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