Introduction
The Specific Relief Act 1963 (Act) sets out the remedies available to parties whose contractual or civil rights have been violated. The Act sets out two main remedies to a party whose contract has not been performed: (i) the party may ask the court to compel performance of the contract (specific performance); or (ii) the party may seek monetary compensation instead of performance.
Amendment
The Specific Relief (Amendment) Bill, 2017 (Bill) was introduced by the Minister of Law and Justice Mr Ravi Shankar Prasad on 22 December 2017 and was passed by the Lok Sabha on 15 March 2018.
The Bill seeks to reduce the wide discretionary powers of the courts in granting specific performance of contracts. It seeks to make specific performance a general rule rather than an exception, subject to certain limited grounds.
The highlights of the Bill are as under:
Recovery of possession of immovable property
While the Act permitted a suit for recovery of possession of immovable property to be filed by persons put out of possession or anybody claiming through such disposed persons, the Bill amends Section 6 of the Act and allows persons through whom the dispossessed got possession to file a suit for recovery of possession of immovable property.
Comment: This is a welcome clarification. The amendment now takes away the anomaly which existed i.e., whether a person who is in de-jure possession and not de-facto possession, can maintain an action under Section 6 of the Act.
Court's Discretion to grant Specific Performance
Section 10 of the Act, has been substituted and the discretionary power of the court to grant specific performance has been reduced.
Comment: The substituted Section 10 proposes to reduce the discretionary jurisdiction of the court in granting specific performance of contract. The amendment now seeks to mandate every court to grant specific performance of contract as a general rule.
Engagement of Technical Experts
The Bill contemplates an appointment of an expert to assist the court on specific issues involved in the suit.
Comment: This amendment is much-needed since, often the Courts are not equipped with technical expertise to access the actual issues involved in the suit, for example, suits involving complex development/ re-development of housing societies, public utility services etc.
Substituted Performance
The Bill also provides for substituted performance; in the event where a contract is breached, the aggrieved party is entitled to arrange for performance of the contract by a third party or by his own agency, and to recover the costs and expenses incurred, including compensation from the defaulting party. Such party would have to serve a written notice at least 30 days before undertaking such substituted performance. However, once substituted performance is sought, specific performance cannot be urged/claimed.
Comment: The proposed amendment seeks to serve as an alternative remedy for aggrieved parties.
Requirement to plead readiness and willingness to perform contractual obligations removed
The Bill seeks to relax the stringency of pleadings in the suit, and provides that the party must only prove readiness and willingness; the requirement to 'aver' is sought to be removed.
Provisions specific to Infrastructure Projects
Injunctions
The Act enables courts to grant injunctions to parties, while it provides for exceptional circumstances wherein injunctions may not be granted. The Bill however, by introducing Section 20A, attempts to prevent courts from granting such preventive relief in the form of injunctions to infrastructure projects, especially if the same were to cause hindrance or delay in its continuance or completion.
Types of projects
Various categories of projects and infrastructure sub-sectors have been provided in the Schedule to the Bill. The categories along with some infrastructure sub-sectors are: (i) transport including roads, ports, airports, urban public transport; (ii) energy relating to electricity, oil, gas; (iii) water and sanitation including waste management, water supply and treatment, irrigation (iv) communication including telecommunication services and towers and (v) social and commercial infrastructure with respect to educational institutes, sports, hospitals, tourism, affordable housing etc.
Special Courts
The Bill provides for designation of certain civil courts as Special Courts, by the State Government, in consultation with the Chief Justice of a High Court. Such courts will be entrusted with disposing cases related to infrastructure projects within twelve months from the date of service of summons to the defendant, with the ability to extend the same for another six months after recording reasons thereof.
Khaitan Comment
It has become imperative to change existing provisions pertaining to enforcement of contracts governing such activities. With the rapid growth, and expansion of infrastructure activities, the need to reduce uncertainty in such projects or those involving large public investments is necessitated.
Finally, the move to modernize the Act, to promote growth and investment and to reduce intervention by courts in infrastructure projects, which will largely benefit the public is a step in the right direction. Once the Rajya Sabha passes the Bill, the Act is expected to provide a boost to the infrastructure development in India, thereby facilitating ease of doing business in the country.
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