Introduction 

• The Specific Relief Act, 1963 (SRA) was enacted to provide remedies to persons whose civil or contractual rights have been violated. 
• Chapter II of the SRA states the provisions for the Substituted Performance of the Contract. 
• The substituted Performance is an exception to the specific performance of the contract. 
• These contracts cannot be enforced specifically as per section 14 of the SRA. 

What is 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.

Origin of Substituted performance of the Contract 

• The Specific Relief (Amendment) Act, 2018: 
  • A six-member committee was constituted to review the working of the SRA. 
  • The Amendment provided substitution of new section for section 20.   
  • The amendment removed the court’s discretion to grant or refuse specific performance.  
  • 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. 
  • Due to the breach, the aggrieved party may now seek substituted performance from a third party or one of its agencies, and it may also recover the cost associated with providing the substituted performance from the party that violated the agreement.  Such performance can only be acquired upon serving a notice of minimum 30 days to the defaulting party. However, substituted performance will not be applicable if the Parties have a contract that states otherwise.
• Object of the Substituted Performance 
  • The object was to enhance the business in India and to make it more flexible. 
  • Generally, it is seen that the damages provided in the contract doesn’t fulfil the end purpose. 
  • This section was introduced so as to enforce the contracts with more effectiveness.

What is Section 20 of SRA? 

• Substituted Performance of Contract 
  • Subsection (1) states that when the contract is breached due to non-performance of promise by any party to the contract, the party who suffers the loss has the option of substituted performance. 
    • The contract may be performed by the third party or by his own agency, and recover the expenses and other costs actually incurred, spent or suffered by him, from the party committing such breach. 
    • The same should not be in contradiction with the Indian Contract Act, 1872 and must be done with the consent of the parties. 
  • Subsection (2) states that the party suffered must serve a notice in writing of not less than 30 days to the party who has breached the contract to perform his part of the contract. 
    • On refusal of such performance the party who has suffered the loss may get the substituted performance. 
    • The party who suffers such a breach shall not be entitled to recover the expenses and costs under sub-section (1) unless he has got the contract performed through a third party or by his own agency. 
  • Subsection (3) states that after received substituted performance the party cannot claim relief of specific performance against the breach. 
  • Subsection (4) states that a party shall not be prevented from claiming compensation for the loss suffered due to breach of contract.

Landmark Judgements 

• Mukesh Singh And 4 Ors v. Saurabh Chaudhary and Another (2019): 
  • The Allahabad High Court held that: 
    • Specific performance cannot be claimed as an absolute right 
    • The party seeking specific performance must prove:  
      • They were ready and willing to perform their part. 
      • They had performed all essential terms. 
      • There was no default on their part. 
• Sushil Kumar Agarwal v. Meenakshi Sadhu and Others (2019): 
  • The Court established that: 
    • Specific performance is a discretionary remedy 
    • Courts must consider the following factors:  
      • Fairness to both parties 
      • Hardship to either party 
      • Current market conditions 
      • Conduct of parties throughout
• M. Sakhunthala Manuelraj v. T. Anbalagan Alexandar (2023): 
  • The Madras High court held that: 
    • Party can claim under Section 20 of Specific Relief Act for substituted performance. 
    • Parties must give proper notice to claim additional cost and original contract terms remain relevant. 

Conclusion 

Substituted performance represents a pragmatic approach in contract law that allows for flexibility while maintaining the fundamental principles of contractual obligations. When circumstances make original performance impossible or impractical, parties can fulfill their duties through alternative means that reasonably satisfy the contract's essential purpose. However, this substitution must be substantially equivalent to the original obligation and typically requires the agreement of all parties involved. Once accepted, the substituted performance legally discharges the original contractual duty, preventing any claim of breach. This doctrine reflects the law's recognition that business relationships and circumstances can change, and that allowing reasonable alternatives to strict performance often better serves both parties' interests than insisting on literal compliance or declaring a breach.