Specific Performance of Contract Under Specific Relief Act 1963
Specific Performance of Contract Under Specific Relief Act 1963
Specific Performance of Contract Under Specific Relief Act 1963
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ACKNOWLEDGMENT
I would like to express my special gratitude to Dr. Basant Singh my teacher. Who gave me
the golden opportunity to do this wonderful project on the subject of "Specific Performance
of Contract under Specific Relief Act," which helped me do a lot of research and I came to
know so many new things. Last but not least, I want to take advantage of this opportunity to
express a sense of appreciation and love for their manual assistance to my friends and my
beloved parents.
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TABLE OF CONTENT
INTRODUCTION
The Specific Relief Act, 1963, an act comprising nearly 70% of civil litigation in sub-
jurisdictional courts in India, is primarily intended to ensure the exact fulfilment of the
obligation. It deals with the concept of the protection of the right and the prevention of the
wrong. The reliefs provided thereunder shall be equitable reliefs.
1. Rescission of contract
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Specific performance means the fulfilment of the exact terms of the contract. In that regard,
the applicant claims the specific subject-matter of which he is entitled pursuant to the terms
of the contract. For example, if A agrees to sell certain shares to B of a specific company
limited in number and after payment by B, if A refuses to sell the shares, then B is entitled to
recover those shares.
Specific performance is also a level playing field. The plaintiff seeking this remedy must first
satisfy the court that the normal remedy for damages is inadequate, the presumption being
that, in the case of contracts for the transfer of immovable property, damages will not be
adequate. Even in such cases, specific performance is not always granted, as it is a
discretionary remedy.
In other words Specific performance is a specialized remedy used by courts when no other
remedy (such as money) will adequately compensate the other party. If a legal remedy will
put the injured party in the position he or she would have enjoyed had the contract been fully
performed, then the court will use that option instead. The most common reason courts grant
specific performance is that the subject of the contract is unique, when it's not merely a
matter of money or where the true amount of damages is unclear. When a contract is for the
sale of a unique property, for instance, mere money damages may not remedy the purchaser's
situation.
Section 9 simply declares that defendant may raise any ground available in law to him while
resisting suit for specific performance. In other words all those pleas as recognized under law
of contract like incapacity of parties, the absence of concluded contract 1, the uncertainty of
1
New mofussil co. v. Shankerlal Narayandas Mundade, AIR 1941 Bom. 247; J.I.J. Hyam v. M.E. Gubbay,AIR
1916 Cal. 1
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Where there is no standard for the determination of actual damage: it is a situation in which
the plaintiff is unable to determine the amount of loss suffered by the plaintiff. If the damage
caused by the breach of contract can be ascertained, the plaintiff will not have access to the
remedy for the specific performance. For example, a person enters into a contract to purchase
a painting of a dead painter.
When compensation for money is not an adequate relief: in the following cases,
compensation for money would not provide adequate relief:
Where the subject-matter of the contract is immovable property.
Where the subject-matter of the contract is movable property and,
Such property or goods are not ordinary articles of commerce, i.e. they could be sold
or bought on the market.
The article shall be of special value or interest to the applicant. The article is of such a nature
that it is not readily available on the market. Property or goods held by the defendant as agent
or trustee of the applicant.2
In the case of Ram Karan v. Govind Lal3, an agreement for the sale of agricultural land was
concluded and the purchaser paid full consideration for the sale of agricultural land to the
seller, but the seller refuses to carry out the sale of agricultural land in accordance with the
agreement. The purchaser brought an action for the specific performance of the contract and
it was held by the court that the payment of the money would not provide adequate relief and
that the seller was directed.
2
Arbel, Yonathan A. (2015-01-16). "Contract Remedies in Action: Specific Performance". West Virginia Law
Review. SSRN 1641438
3
A.I.R. 2003 Mad. 305
4
AIR 1998 Patna, page 88
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It was held that the plaintiff tenant was entitled to a decree of specific performance contract
under Section 10 of Specific Relief Act. Where from some special or practical features or
incidents of the contract either in its subject‐matter, or in its terms or in the relations of the
parties, it is impossible to arrive at a legal measure of damages at all, or at least with any
sufficient degree of certainty so that not real compensation can be obtained by means of
action at law, the contract will be enforced in specie.
Applicable:
(1) Except as otherwise provided for in this Act, the specific performance of the contract shall
be the same. Enforced if the act agreed is wholly or partly a trust in the performance of the
act.
(2) A contract concluded by a trustee in excess of his powers or in breach of trust may not be
concluded. It was specifically enforced.5
Lord Romilly observed that: “this court cannot specifically perform the contract piecemeal,
but it must be performed in it’s entirely if performed at all.” A court of equity is not
concerned to make the new contract for the parties. The rule laid in above case is contained in
Section 12(1) of the Specific Relief Act which lays court shall not direct the specific
performance of a part of contract, except in cases coming under on or other of the three
proceeding sections. To this general rules there are certain exceptions which proceed upon
the principle of that ‘equity looks to the substance of contract and requires substantial
compliance with its conditions rather than its literal fulfillment’ and these are embodied in
Section 12 (2), (3) and (4).
Section 12(2) becomes applicable when the part of contract which cannot be performed is the
conveyance of an item which is only a small portion of the whole in value and admits of
compensation in money. The inability to perform the contract may be by reason of deficiency
5
Yashwant Singh v/ Jagdish Singh Air 1968 SC 620; State of U.P. v. Maharaja Djarmender Prasad Singh AIR
1989 SC 997; Ram Rattan v. State of U.P. 1983 SCC 188
6
1871 (12) EQ 21
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in quantity of the subject‐matter, variance in quality, defect in title or of some other legal
prohibition or lapse of time
Section 12(3) lays down the second exception the general rule under Section 12(1). The
equitable principle underlying this section is that specific performance of contract will not be
enforced for the benefit of the purchaser and cannot operate to his detriment. Following are
the important points in this sub‐section:7
Section 12(4) is the third exception to the general law provided in sub‐section 12(1). The
ordinary presumption is that a contract is intended to be dealt with as a whole and not
piecemeal. But this section permits the Court in certain cases where this presumption is
rebutted to afford relief by way of partial performance. The basic principle of Section 12(4) is
that when a contract consists of several parts which are separate from and independent of on
another, and some of which cannot or ought not to be performed, such part or parts as can and
ought to be performed may alone be specifically enforced. The court must not make a new
contract for the parties, nor proceed merely on surmises that the requirements of the section
would be satisfied, if further enquiry were allowed8
Where a person contracts to sell or let certain immovable property having no title or only an
imperfect title, the purchaser or lessee (subject to the other provisions of this Chapter), has
the following rights, namely:‐
7
Mohri Bibi v. Dharmodas ILR 30 Cal 539
8
Secretary, Communist Party of India V. Judhistra Patnaik, AIR 2004 Ori. 67
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1) if the vendor or lessor has subsequently to the contract acquired any interest in the
property, the purchaser or lessee may compel him to make good the contract out of
such interest;
2) where the concurrence of other persons is necessary for validating the title, and they
are bound to concur at the request of the vendor or lessor, the purchaser or lessee may
compel him to procure such concurrence, and when a conveyance by other persons is
necessary to validate the title and they are bound to convey at the request of the
vendor or lessor, the purchaser or lessee may compel him to procure such
conveyance;
3) where the vendor professes to sell unencumbered property, but the property is
mortgaged for an amount not exceeding the purchase money and the vendor has in
fact only a right to redeem it, the purchaser may compel him to redeem the mortgage
and to obtain a valid discharge, and, where necessary, also a conveyance from the
mortgagee;
4) where the vendor or lessor sues for specific performance of the contract and the suit is
dismissed on the ground of his want of title or imperfect title, the defendant has a
right to a return of his deposit, if any, with interest thereon, to his costs of the suit, and
to a lien for such deposit, interest and costs on the interest, if any, of the vendor or
lessor in the property which is the subject‐matter of the contract.9
There are certain contracts which cannot be specifically enforced and these are: Where
compensation in cash is an appropriate relief: in this case, the court will not order the specific
performance of the contract as it is expected that the plaintiff will rely on the normal remedy
for breach of contract i.e. the remedy for damages. For example, a contract for the mortgage
on immovable property (Rambai v. Khimji)10, a contract for the sale of goods (Bharat v.
Nisarali), 11 a contract for the repair of premises, etc.
9
S.Madasamy V. A.M. Arjuna Raja, AIR 2000 Mad 465; it has been held that in a suit for declaration of title and
consequential injunction, the burden is on the plaintiff to prove his right and possession over property. If the
plaintiff fails to prove his clear title to he is no entitled to such declaration and consequential injunction.
10
AI.R. 1950 Kutch 86
11
20 Cal W.N. 1020
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12
Jawahar Sao V. Shatrughan Sonar It has been held that wher a contract of sale is
determinable at the option of the seller within a specified period on repayment of the
consideration, the other party cannot get decree of specific performance of the agreement.
Section 14(3) contains certain exception and the following kinds of contract are
specifically enforceable
A contract for the execution of a mortgage or the provision of other security for the
repayment of any loan which the borrower is not willing to repay at once would be granted
by the court for the performance of a mortgage or for any other security. A contract to take
over and pay for any debts of a company. A contract to execute a formal act of partnership at
will when the business has already begun. Contract for the construction of any building or for
the execution of any other work on the land, if applicable; The details or terms of the contract
have been sufficiently explained and the court can determine the exact nature of the
construction or work. The plaintiff has a substantial interest in the performance of the
contract and the compensation in cash is not an adequate relief. In accordance with the
contract, the defendant has acquired possession, in whole or in part, of the land on which the
building is to be constructed or other work is to be carried out.
Amendment: Section 14A of the Act-Where the court considers it necessary to obtain The
expert opinion may, in order to assist it on any specific issue involved in the suit, engage one
or More experts to provide evidence, including the production of documents on the subject
which shall be based on the relevant information and shall form part of the record.
It is a general rule that a contract cannot be got enforced except by a party to the contract.
This general rule is embodied in clause (a) of Section 15. But there are certain exceptions to
this general rule. These exceptions are contained in clause (b) to (h) of the section and
contain list of persons who although not a party to the contract, are entitled to obtain specific
performance of contract. These are:
12
AIR 1961 Pat 482
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Shyam Singh, v. Daryao Singh13 : Under the provisions of S. 15(b) specific performance of
the contract may be obtained by 'any party thereto' or their representative in interest.' This
expression clearly includes the transferees and assignees from the contracting party in whose
favour the right exists. Such right of seeking specific performance would, however, be not
available in terms of proviso below Cl. (b) where the contract provides that the 'interest shall
not be assigned
SECTION 16 IN THE SPECIFIC RELIEF ACT, 1963: Personal bars for the relief of
specific performance. Specific execution of the contract cannot be enforced for the benefit of
a person:
The contract is based on its true construction. In a recent judgement, the Hon'ble Supreme
Court of India set out requirements For the parties in their respective pleadings and proof in
accordance with the evidence Law in suit for specific performance in Kamal Kumar V
Premlata Joshi & Ors, Civil law Appeal No. 4453 Of 2009, No. 7. It was January 2019.
Maintained as under: "It is a well-established principle of law that the granting of special
performance relief is a Discretionary and fair relief. Material issues that need to be addressed
13
AIR 2004 SUPREME COURT 348 "Shyam Singh v. Daryao Singh"
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Be involved in granting relief for specific performance, are First, whether or not A valid and
concluded contract exists between the parties for sale/purchase. Property of the suit;
Second, whether the plaintiff was ready and willing to do so Perform his part of the contract
and whether he's still ready and willing to perform Its part, as indicated in the contract;
Third, whether, in fact, the plaintiff has, He carried out his part of the contract and, if so, how
and to what extent and to what extent and to what extent. The manner in which he performed
and whether such performance was consistent with The terms and conditions of the contract;
Fourth, whether the granting of relief will be equitable Specific performance of the plaintiff
against the defendant in relation to the suit Property or it is going to cause any kind of
hardship to the defendant and, if so, how and in what way and to what extent such relief is
eventually granted to the plaintiff; Finally, whether the applicant is entitled to any other
alternative relief, In other words, the refund of earnest money, etc. and, if so, on what
grounds. In our opinion, the questions referred to above are part of the statutory provisions.
Requirements (See Sections 16(c), 20, 21, 22, 23 of the Specific Relief Act, 1963
“Though, with the amendment of the Specific Relief Act, 1963 by Act 18 of 2018, the
expression “who fails to aver and prove” is substituted by the expression “who fails to prove”
and the expression “must aver” stands substituted by the expression “must prove” but
then, the position on all the material aspects remains the same that, specific performance of a
contract cannot be enforced in favor to the person who fails to prove that he has already
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 the terms of which, the performance
has been prevented or waived by the other party.”
The Hon'ble Supreme Court of India (1996) 4 SCC 526 in His Holiness Acharya Swami
Ganesh Dassji v. Sita Ram Thapar Held as "There is the distinction between the
willingness to perform the contract and the willingness to perform the contract. The capacity
of the plaintiff to perform the contract may be meant by readiness. This includes its financial
position to pay the purchase price? For the determination of his the willingness to perform its
14
2019 SCC OnLine SC 203
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part of the contract, the conduct must be carried out properly screened. Factum of readiness
and willingness to act on part of the plaintiff. The contract is to be judged by reference to the
conduct of the party and the attending party. Circumstance. The court may infer from the
facts and circumstances whether that is the case. The plaintiff was ready, and he was always
ready and willing to perform his part. The contract.'
Amendment: The amendment also provides for a timeline of 12 months from the date of the
amendment. Date of the summons to the defendant for the disposition of a specific suit
achievement. This period may be extended by a further six months by the court.
(1) A contract to sell or let any immovable property cannot be specifically enforced in favour
of a vendor or lessor‐
a. who, knowing himself not to have any title to the property, has contracted to
sell or let the property;
b. who, though he entered into the contract believing that he had a good title to
the property, cannot at the time fixed by the parties or by the court for the
completion of the sale or letting, give the purchaser or lessee a title free from
reasonable doubt.
(2) The provisions of sub‐section (1) shall also apply, as far as may be, to contracts for the
sale or hire of movable property.
(a) where by fraud, mistake of fact or mis‐representation, the written contract of which
performance is sought is in its terms or effect different from what the parties agreed to, or
does not contain all the terms agreed to between the parties on the basis of which the
defendant entered into the contract;
] Munyaraj V. Venkatapati, AIR 1955 A.P. 172; Prabhakar Adsude V. State of M.P., AIR 2004 SC 3557; B.S.
15
Ruta V. S.N. Ruta, AIR 2004 SC 2546; M.P. Mathur V. D.T.C., AIR 2007 SC 414
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(b) where the object of the parties was to produce a certain legal result which the contract as
framed is not calculated to produce;
where the parties have, subsequently to the execution of the contract, varied its terms. Section
18 deals with cases in which the contract entered into is valid contract. In other words, it is
one in respect of which the remedy of damages is available. Section 18 does not apply unless
there is complete contract. It sets out the cases in which contracts cannot be enforced except
with a variation and there are three particular cases set out in which a contract may be
enforced subject to variation, such a variation being in favour of the defendant. But he
remedy of specific performance is available when the plaintiff is prepared to accept the
variation pleaded by the defendant16
"K. Narendra v. Riviera Apartments (P) Ltd." 17When the defendant sets up a variation
then the plaintiff may have the contract specifically performed subject to the variation so set
up only in cases of fraud, mistake of fact or misrepresentation or where the contract has failed
to produce a certain legal result which the contract was intended to do or where the parties
have subsequent to the execution of the contract varied its terms
Kasturi V. Jyyamperumal 18
The apex Court held that third party or stranger to the contract cannot be added so as to
convert a suit of one character into another character.
19
R.K. Mohammaed Abidullah V. Haji C. Abul wahab The plaintiff who was in
possession of certain property as a tenant and purchased the same property brought an action
for specific performance. Subsequent purchaser contended that he was buyer in good faith
and for consideration without notice and therefore he had a better title. It was found that the
defendants i.e. subsequent purchasers, were aware of the fact that the plaintiff was in
occupation of the property as tenant for several years. The defendants could not be said to be
16
Padmini Chandrasekharan V. R. Rajagopal Reddy, (1996) 8 SCC 632; Sowrashtra Vipra Sabha V. Namakal
Municipality, (1996) 11 SCC 584; Prabhakar Adsule V. State of M.P., AIR 2004 SC 3557; Niranjan Singh V. Bant
Singh, AIR 2004 P & H 334
17
AIR 1999 SUPREME COURT 2309
18
AIR 2005 SC 2813
19
Air 2001 SC 1658
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bonafide subsequent purchasers without notice of the suit property. Hence the plaintiff was
held entitled to the relief of specific performance.
The section gives to the Court discretion in the matter of decreeing specific performance.
This discretion is not arbitrary, but sound and reasonable, guided by the judicial principles.
Under no circumstances, the court should exercise its discretion, where it would be improper.
Mere on the ground that the contract is unenforceable court can’t refuse relief to any party.
The discretion of the court is to decide whether enforcement of the contract in the present
circumstances is fair and if the contract is fair and reasonable character of the plaintiff has
been good then the discretion of the court has no application. 20
1. Specific performance will not be granted where damages are an adequate remedy.
2. To grant a specific performance of a contract is at the discretion of the court.
3. The plaintiff must prove the following:
a. That there was concluded and valid contract between him and the defendant.
b. That he performed or is ready and willing to perform the terms of contract on
his part
c. That he was ready and willing to do all matters and things on his part
thereafter to be done.
Noble Resources Ltd. v. State of Orissa" 21A specific performance of contract would not be
enforced by issuing a writ of or in the nature of mandamus, particularly when keeping in
view the provisions of the Specific Relief Act, 1963 damages may be an adequate remedy for
breach of contract.
The plaintiff in a suit for specific performance of contract, under Section 21 may also ask for
compensation in case of the breach of the contract, either in addition to or in substitution for
such performance but if the plaintiff in a suit for specific performance omits to ask for
20
Rajkumari V. Lachman Ram 14 CLJ 627
21
AIR 2007 SUPREME COURT 119
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compensatory relief and his suit for specific performance is dismissed them his subsequent
suit for compensatin will be barred by the provisions of Section 24. In Jagdish Singh V.
22
Nathu Singh the Supreme Court has held that when the plaintiff has made specific
performance impossible, Section21 doesnot entitle him to seek damages. In Jaya Sen V.
Sujit Kumar Sarkar 23 it has been held that the parties are bound by their pleadings and they
can be awarded only such relief as is claimed in the plaint.
In P.C. Verghese V. Devaki Amma 24he apex court held that in view of Section 22 (1)(a) of
the Specific Relief Act a decree of partition and separate possession of the property can be
granted in addition to a decree for specific performance. In Satya Narayana V. Yelloji Rao
25
the Supreme Court has observed that discretion referred in Section 22 of the Specific Relief
Act cannot be defined as it is not possible or desirable to lay down the circumstances under
which the court will exercise discretion against the plaintiff, but at the same time the said
discretion shall not be arbitrary and must be in accordance with sound and reasonable judicial
principles.
22
AIR 1992 SC 1604
23
Air 1998 Cal,288
24
AIR 2006 SC 145
25
AIR 1965 SC 1045; Matadeen Agarwal V. Syed Abdul Razzak, AIR 1997 AP 103
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The dismissal of a suit for specific performance of a contract or part thereof shall bar the
plaintiff's right to sue for compensation for the breach of such contract or part, as the case
may be, but shall not bar his right to sue for any other relief to which he may be entitled, by
reason of such breach. It is open for the party to a contract to sue for its specific performance
and for compensation for its breach in addition to or in substitution for such performance by
the defendant. In those cases the plaintiff does not treat the contract to be at an end and
asserts that he has been all along willing to performance his part of the contract. If the court
grants him the specific performance, he will discharge his obligation. But in an action for
damages only for breach of the contract, that cannot be the position there, the contract is
taken to be no longer subsisting to be enforced
The provisions of this Chapter as to contracts shall apply to awards to which the Arbitration
Act, 1940 (10 of 1940), does not apply and to directions in a will or codicil to execute a
particular settlement.
CONCLUSION
From the above discussion it can be concluded that the Specific Relief Act, 1963 provides for
specific reliefs. Specific relief means relief of certain species, i.e. an exact or particular, a
named, fixed or determined relief. The term is generally understood and providing relief of a
specific kind rather than a general relief or damages or compensation. It is a remedy which
aims at the exact fulfillment of an obligation or specific performance of the contract. 26
Specific Relief, as a form of judicial redress, belongs to the law of procedure, and in a body
of written law arranged according to natural affinities of the subject matter would find its
place as a distinct part or other division of Civil Procedure Code. It is in essence is adjective
law and the substantial law.
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REFERENCE
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F Kessler, "Contracts of Adhesion—Some Thoughts About Freedom of Contract"
(1943) 43(5) Columbia Law Review 629
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Books Referred
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