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Indian contract act

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44 views3 pages

specific performance

Indian contract act

Uploaded by

Afsana
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Specific Performance of Contracts | 13 Oct 2023

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.

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