By Sudiksha Gupta & Swati Y. Kunchikorve
THE AMENDING ACT OF 2018 AND ITS EFFECT ON CHAPTER II OF SPECIFIC RELIEF ACT
Specific Relief Act, 1963 is an act of the Parliament of India. This Specific Relief Act has recently amended in 2018 by Act 18 of 2018. This amendment came into force on 1st August 2018. This act provides remedies for persons whose contractual rights have violated. There are several remedies available which are granted by the court, one of the remedies available is the specific performance of a contract, therefore by virtue of this Act the status of this equitable remedy has been elevated to an equitable remedy. The details of specific performance of contract have been briefly explained in Chapter II of the Specific Relief Act, 1963 containing 17 sections in total starting from sec 9 respectively.
The Specific Relief (Amendment) Act, 2018, amended many sections of Chapter II of the Specific Relief Act, 1963. It substituted some of the sections by changing the whole concept of the section and adding new dimensions to that section. This latest amendment, amended section 10, 11, 14, 15, 16, 19, 20, 21, 25 and added section 14A, 20A, 20B, 20C. We will look into the sections which have changed the whole scenario of the Specific Relief Act, 1963 after amendment. Those sections are 10, 11, 14, 14A, 20, 20A, 20B and 20C.
DEFENCES RESPECTING SUITS
Generally, it has been noticed that while reading any law generally the principle is first explained and then the remedies and finally defences available to the defendant are discussed but strangely the legislature positioned sec.9 as the first section of the chapter which deals with defence part and provides that except as otherwise provided in this chapter, all those defences which are available under the law of contracts such as the incapacity of parties, coercion, fraud, misrepresentation etc. could be availed by the defendant against whom any relief has been claimed under this chapter.
CONTRACTS NOT SPECIFICALLY ENFORCEABLE – A COLLECTIVE READING OF SECTIONS -10, 11(2),14,16,20
Section 10 of the Specific Relief Act, 1963 has amended in 2018. Before the amendment, the court was having discretionary power whether to give the decree on specific performance of a contract or not.
But, after an amendment in 2018, this discretionary power of the court has gone, now it is mandatory for the court, subject to the provisions of sec.11(2), sec. 14 and sec.16 to grant a decree for the specific performance of a contract. The word “may” in the older text was replaced by “shall” by the new amendment act, giving an impression that the now this remedy has become as a matter of right for a party to the suit, rather than merely being a discretionary power of the Court.
In order to have a complete understanding of sec. 10 a collective reading of Sec. 11(2), 14, 16 is essential for culling out instances where a court is not under any obligation to grant a decree of specific performance.
Ø Starting with Sec. 11(2), in a nutshell, this section mentions of the conditions which if exist prohibit specific enforcement of the contracts relating to trusts, first being when a trustee makes a contract in excess of his powers and second being when the contract was made in breach of trust, while the former portrays a situation of incompetency, the latter encompasses within itself all those acts in violation of the obligations and duties so imposed by the trust.[1]
Ø Now coming to Sec. 14, which talks about all those contracts which cannot be specifically enforced. The amending act of 2018 has completely substituted the old text of the said section by the new one and moreover a new section namely Sec. 14A was also added to the Act of 1963, which basically empowers the Court to engage an expert for the purposes of seeking assistance in certain specific cases. On the other hand, sec 14(a) of the Act provides for a situation where the party to the contract has obtained substituted performance of a contract in accordance with sec. 20 of the act, which lays down the policy as to how to obtain the substituted performance of a contract.
Ø Before 2018, sec. 20 provides for ‘discretionary power of the court as to decreeing specific performance’ but after amendment, the whole section and its concept completely got changed. Broadly the section lays down that in a case where a contract was breached due to non-performance of promise by either of the party, the party suffering loss can exercise an option of substituted performance either by his own agency or by a third party provided that the suffering party must serve a notice of not less than 30 days to the party in fault calling him to perform the contract within the stipulated time frame so mentioned in the notice and it shall only either on refusal or failure of the party in fault to perform, the other party i.e. the suffering party may seek substituted performance and also can recover the costs incurred, spent or suffered from the party in fault, however once substituted performance has been obtained, the suffering party automatically deprives itself of claiming specific performance against the party in breach by virtue of sec 20(3).
Ø Further clause b of sec 14 lay down that all those contracts which involve the performance of a duty which is continuous in nature and the same couldn’t be supervised by the court for e.g., an undertaking by the tenant to cultivate the farm in a particular manner[2] is something of nature which a court can’t supervise. Clause c of the impugned section speaks of contracts involving personal skills just like contracts to paint, act, dance etc. since these contracts vary from individual to individual, the specific performance of the same can’t be enforced, in case the person so contracted to paint becomes insane, dies or permanently ill. The last of all which is clause (d) disapproves specific enforcement of determinable contracts for e.g., all those cases where the contract is revocable at the option of the other party.
Ø The act under Sec.16, further categorizes certain class of persons who cannot be awarded the relief of specific performance of contracts. Such types of persons are who either has obtained substituted performance of the contract under Sec.20 or those who have failed to prove that they have performed or always was ready to perform their part of the contract or those class of people who are mentioned under Sec 16(2).
CONTRACTS SPECIFICALLY ENFORCEABLE
As we saw that after amendment in section 10 of the Specific Relief Act, 1963, the discretionary power of the court has gone where cases in which specific performance of contract enforceable, likewise happened to section 11 of the act. The discretionary power of the court in section 11 of the Specific Relief Act, 1963, to decide upon the enforceability of the remedy of specific performance of contract connected with trusts has also been taken away by virtue of an amendment to sub-section 1 of the impugned section.
The provisions relating to the specific performance of part of the contract is dealt under Sec. 12, clause 1 of the same down a general rule that the court ought not to grant specific performance of part of the contract, however, clauses 2-4 provides an exception to this general rule. The only deciding factor for the purposes of deciding whether or not the order of specific performance is to granted or not is the proportion the part which can be performed bears to the part which remained unperformed.
Section 13 somewhat is based on the doctrine of estoppel and broadly deals with the rights of a purchaser or lessee against the person having no title or imperfect title, although this section is limited to contracts relating to selling and letting the property.
OTHER IMPORTANT PROVISIONS
The part of the chapter which specifically deals with the prime issue as to who all can avail this remedy and who all are barred from availing the same has been briefly discussed from sections -15 to 19 broadly. Recently new clauses namely clause ‘fa’ and clause ‘ca’ were added to the bare text of sec.15 and sec. 19 respectively.
After the amendment of 2018, section 20A, 20B and 20C have added newly. Section 20A talks about special performance for contracts relating to the infrastructure project specified in the schedule so that these projects won’t delay in their progress or completion. In this schedule, there are 5 categories of infrastructure projects, namely, Transport, Energy, Water and Sanitation, Communication, Social and Commercial Infrastructure. If the contract is related to any of these infrastructure project then no injunction shall grant by the court, if granting injunction delay these projects progress or completion.
Section 20B of the Specific Relief Act, 1963, has given the provision of the Special Courts to try the suits in respect of contracts relating to infrastructure projects mentioned under the schedule.
We should see section 20C has the biggest feature of this whole act (The Specific Relief Act, 1963) because this section talks about the time limit, to dispose of a suit under the Specific Relief Act, 1963. This section specially mentioned about the Code of Civil Procedure, 1908 (Act 5 of 1908) and it says that whatever contained in the Code of Civil Procedure, 1908, a suit under Specific Relief Act must be disposed of by the court within 12 months, a further extension for a valid reason in writing only six months, not more than that. This section is like a gem for the whole Specific Relief Act because the party to the suit of specific performance will definitely get speedy justice after this amendment. To understand the importance of this section, we have to look back that what was there before the amendment. The party had to wait for the decree of specific relief for years and years and sometimes more than a generation, but now, the time limit for decree has set and fixed (12 months).
Sections 21 -24 are majorly related to the powers of the court, the newly amended section 21 provides that the party can ask for both the remedies i.e., compensation and specific performance of contract together as well, Sec.22 empowers the court to grant the relief of possession, partition etc. Further Sec.23 clarifies the position that liquidation of damages will be no bar to the relief of specific performance. Dismissal of a suit of specific performance of a contract or part thereof will bar the right to sue for compensation for the breach of impugned contract.
Lastly, section 25, all in all, is the concluding section of Chapter 2 of the Act and was also among those sections so amended in 2018, this section provides for the applicability of the provisions of chapter 2 to awards to which the Arbitration and Conciliation Act, 1996 doesn’t apply and also to the directions in a will or codicil to execute a specific settlement.
CONCLUSION:
All the latest amendments are good and take into consideration all the roadblocks which were being faced while obtaining relief under a contract. Moreover, owing to increased commercial activities in India, including foreign direct investment, public-private partnerships, it was highly recommended to improve and focus upon speedy contract enforcement and the same has been taken care of by the new amendment act by abolishing the discretion of courts to grant specific performance. As a result, the parties will now perform their part of the contract with the utmost sincerity and honesty.
References:
1. The Specific Relief Act, 1963, India, available at: https://www.indiacode.nic.in/bitstream/123456789/1583/1/196347.pdf
(last visited on 14.01.2021)
2. Avtar Singh, Contract and Specific Relief ( Eastern Book Company, Lucknow, 12th edn., 2017)
3. Recent Amendments Made In The Specific Relief Act – A Brief Overview, available at :