SPECIFIC PERFORMANCE OF CONTRACT

Specific performance means fulfilling a promise made under a contract as agreed, A Detailed Analysis Under the Provision of Specific Relief Act, 1877 :

The Law of Specific Relief in India was originally codified by Specific Relief Act, 1877. The provision of this enactment was considered by the Law Commission in its Ninth Report which was later replaced by the present act of 1963. The Specific Relief Act, 1963 deals with the remedies granted at the discretion of the court for the enforcement of individual civil rights. In case of breach of contract, the general remedy available to the aggrieved party is compensation or damages of loss suffered. For this, a civil suit is filed against the guilty party who had made the default in performance of its duty or obligation as per the terms of contract under the statutory provision of Section 73-75 of Indian Contract Act 1872. However, sometimes pecuniary compensation does not satisfy the plaintiff so he may ask for specific relief. For example if somebody unlawfully dispossess a person without his consent having peaceful possession over the property then specific relief may enable him to have the possession of same property instead of claiming pecuniary compensation.

The act provides the following kinds of Specific Relief

• Recovery of possession of property
• Specific performance of contracts
• Rectification of instruments
• Rescission of contracts
• Cancellation of Instruments
• Declaratory decrees
• Injunction

Specific performance of Contract- 

Specific performance means enforcement of exact terms of the contract. Under it the plaintiff claims for the specific thing of which he is entitled as per the terms of contract. For example, if A agrees to sell certain shares to B of a specific company which are limited in number and after the payment made by B, if A refuses to sell the shares then B is entitled to recovery of those shares. Specific performance refers to fulfilling of contract as agreed by both parties. 

The plaintiff seeking this remedy must first satisfy the court that the normal remedy of damages is inadequate, the presumption being that in cases of contracts for transfer of immovable property , damages will not be adequate. Even in these cases specific performance is not always granted, as it is a discretionary remedy. The relief must be specifically claimed. When the plaintiff claims specific performance of a particular agreement, the suit could be decreed for specific performance of only that agreement, and not any other.

The prescribed period of limitation for a suit of specific performance is three years from the date fixed for performance, or, if no such date is fixed, when the plaintiff has noticed that performance has been refused.

Section 10 of the Specific Relief Act, 1963 , states “ Cases in which specific performance of contract enforceable.

i. Any party who has suffered a loss because of a breach of contract or non-performance of a contract on part of another party can file a suit for specific performance. 

ii. Equity courts provide the relief of specific performance which was affected because of non-performance of a contract as agreed. The court does not consider this as a right of the plaintiff but an alternative to awarding damages. The court provides a specific performance order at its discretion. 

iii. Section 16(c) of the Specific Relief Act puts the burden on the plaintiff to prove that he had performed his part or will perform as agreed by both parties in the contract. This clause emphasizes the ‘readiness and willing’ of the plaintiff and is the most important part of suing for specific performance. In simple words, the person seeking specific performance from the court must prove the court that he has performed or will perform his part as agreed in the contract.

iv. In India, most suits of specific performance are associated with the sale of immovable assets and transferring shares. 

v. When a party files suit of specific performance, they must approach the court being guiltless and from the start of hearing till the judgment must be ready to prove they had performed or will perform their part of the contract. The court takes into consideration the conduct of the plaintiff before and after filing a suit. 

vi. In the sale of immovable assets, the court does not consider time as an essence of the contract. 

vii. Suit for specific performance of the contract has to be filed within a reasonable time and depends upon facts and circumstances of the case. If the parties intend to exclude the remedy, they can do so by mentioning it to the court and in such case, the court will provide liquidated damages as mentioned in the contract. 

vii. Section 19 of the Specific Relief Act specifies that specific performances of a contract can be enforced against either party or any person claiming the same. 

The Court grants specific performance in the following situations: 

a. If there is no standard to determine the compensation to be awarded i.e. where it is impossible to fix compensation due to non-performances of contract. In such cases, the court directs the defendant to perform his part as agreed by both parties during the making of a contract. 

b. The court awards relief for specific performance when there is no exact substitute or alternative to the subject of matter of the contract. 

c. The court awards relief of specific performance in case of contracts related to land, buildings, rare articles, unique goods whose value cannot be easily determined as they have a special value for the plaintiff. 

In all the above contracts, monetary compensation is not enough as the party suffering the loss cannot get an exact substitute in the market. 

Please note:

i.  It is at the sole discretion of the court to award remedy of specific performance. 

ii.  There are some circumstances when granting specific performance is impossible: 

a.The contract is too vague to be enforced. 

b.When the element of consensus-ad-idem is missing from the contract. 

c.The contract was made with no consideration. 

d.The contract is void or unenforceable in the court of law. 

iii. The Supreme Court of India has listed the following requirements to be met in a specific performance suit: 

a. Whether a valid, concluded and an enforceable contract exists between both parties. 

b. Whether the plaintiff has performed or is ready to perform his part as agreed in the contract. 

c.How and to what extent the plaintiff has performed his part of the contract and whether it is under the terms and conditions of the contract. 

d.Whether it is fair to grant the relief of specific performance or it will cause any hardship to the defendant. 

e. Whether the plaintiff is entitled to the grant of any alternate relief. If so, on what grounds. 

iv. There are lots of ongoing debates in the legal society regarding the desirability of specific performance as it is costly to administer and may deter parties from engaging in efficient breach.    

Moreover, Orders of specific performance are granted when damages are not an adequate remedy, and in some specific cases such as land sale. Such orders are discretionary, as with all equitable remedies, so the availability of this remedy will depend on whether it is appropriate in the circumstances of the case. Under current law, courts grant specific performance when they  perceive that damages will be inadequate compensation. Specific performance is deemed an extraordinary remedy, awarded at the court’s discretion.

Thank you,

Sandigdha Mishra, Advocate

advocate.sandigdhamishra@gmail.com

adv.sandigdha@paydirtprofessionals.com