Introduction

• The Specific Relief Act, 1963 (SRA) was enacted to provide remedies to persons whose civil or contractual rights have been violated.
• One such relief provided under the act is regarding specific performance of contracts.

Specific Performance of Contracts

• The specific performance is an equitable relief.
• The person seeking the remedy must first satisfy the court that a normal remedy of damages is inadequate. There is a presumption that in cases of contracts for transfer of immovable property, damages will not be adequate.
• The specific performance until 2018 was a discretionary remedy, a major change was introduced by the Amendment to the Act in 2018 which made specific performance of contracts a mandatory remedy.
• The act provides for Specific Performance of Contracts under Section 10 to 14A and Section 16.

Section 10 - Specific performance in respect of contracts

• The provision provides that it is mandatory for the courts to enforce Specific Performance of Contracts.
• 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.

Section 12 - Specific performance of part of contract

• This Section deals with the specific performance of part of a contract. It states that-

(1) Except as otherwise hereinafter provided in this section, the court shall not direct the specific performance of a part of a contract.

(2) Where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed be a only a small proportion to the whole in value and admits of compensation in money, the court may, at the suit of either party, direct the specific performance of so much of the contract as can be performed, and award compensation in money for the deficiency.

(3) Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed either—

(a) forms a considerable part of the whole, though admitting of compensation in money; or

(b) does not admit of compensation in money; he is not entitled to obtain a decree for specific performance; but the court may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the contract as he can perform, if the other party—

(i) in a case falling under clause (a), pays or has paid the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed and, in a case, falling under clause (b) pays or has paid the consideration for the whole of the contract without any abatement; and

(ii) in either case, relinquishes all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant.

(4) When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed, the court may direct specific performance of the former part.

• The clause (1) of Section 12 describes a general rule that court shall not grant specific performance of a part of a contract.
  • The clauses (2) to (4) of Section 12, however, are exceptions to the general rule.
• In B. Santoshamma v. D. Sarala (2009, the Supreme Court held that the Court may, under Section 12 of SRA direct the party in default to perform specifically, so much of his part of the contract, as he can perform, provided the other party pays or has paid the consideration for the whole of the contract, reduced by the consideration for the part which must be left unperformed.

Exceptions to Specific Performance of Contracts

Section 10 of SRA mentions that provisions of Section 11(2), 14, 16 of the Act must be considered before granting specific performance.

Section 11 - Cases in which specific performance of contracts connected with trusts enforceable

• It states that -

(1) Except as otherwise provided in this Act, the specific performance of a contract shall be enforced when the act agreed to be done is in the performance wholly or partly of a trust.

(2) A contract made by a trustee over his powers or in breach of trust cannot be enforced.

• Limitation period for claiming relief under this provision is provided by Article 54 of the Schedule (Periods of Limitation) under the Limitation Act, 1963 is three years from the time fixed for completing the sale, or (where the title is accepted after the time fixed for completion) the date of the acceptance.

Section 14 - Contracts not specifically enforceable

• The following contracts cannot be specifically enforced, namely:

(a) where a party to the contract has obtained substituted performance of contract in accordance with the provisions of section 20.

(b) a contract, the performance of which involves the performance of a continuous duty which the court cannot supervise.

(c) a contract which is so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms.

(d) a contract which is in its nature determinable.

• Substituted Performance - Substituted performance of contract means, where a contract is broken, the party who suffers would be entitled to get the contract performed by a third party or by his own agency and to recover expenses and costs, including compensation from the party who failed to perform his part of contract. This would be an alternative remedy at the option of the party who suffers the broken contract.

Section 16 - Personal bars to relief

• Specific performance of a contract cannot be enforced in favour of a person —

(a) who has obtained substituted performance of contract under section 20; or

(b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in subversion of, the relation intended to be established by the contract; or

(c) who fails to prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant.

Explanation. —For the purposes of clause (c), —

(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;

(ii) the plaintiff must prove performance of, or readiness and willingness to perform, the contract according to its true construction.

Readiness and Willingness

• Willingness – It refers to the mental element.
  • Readiness – It means translating the will into action, readiness must be backed by willingness.
• In the case of His Holiness Acharya Swami Ganesh Dassji v. Sita Ram Thapar (1996), the Supreme Court held that there is a distinction between readiness to perform the contract and willingness to perform the contract. Readiness means the capacity of the plaintiff to perform the contract which includes his financial position to pay the purchase price. For determining his willingness to perform his part of the contract, the conduct of the person has to be properly scrutinised.