This Article is written by Namra Chauhan, a Third Year Law Student of Department of Law , Punjabi University , Patiala

Introduction

Specific performance means the legal enforcement of the terms contained in a contract instead of just awarding damages. At times specific performance may also be ordered for a section of the contract. Specific Relief is a discretionary remedy, i.e. it is the discretionary power of the court to grant such relief of specific performance or not. The specific Relief Act, 1963 was enacted to provide for the remedies to persons whose civil or contractual rights have been violated. This Act contains 44 Sections, 8 chapters, 3 parts, and a schedule. This Act was enacted on 13th December 1963 and came into force on 1st March 1964.

The first Specific Relief Act was enacted in 1963 which finds its genesis in the Ninth Report of the Law Commission of India on the Specific Relief Act of 1877. Specific Relief can be granted only to enforce Individual civil rights and not for the mere purpose of enforcing a penal law.

In case one of the parties defaults, such a clause may be included in the agreement to safeguard both of their interests. It's most common when the breach causes injury that cannot be counted in money, but involves land or unique objects for example.

Specific Performance of Contract

Chapter: II of SRA. 1963

Specific performance has been recognized as a relief developed under the principles of equity. A person who has sustained damage as a result of a breach of a contract by the opposite party is entitled to institute a suit asking for them to be ordered to perform, which means to fulfill their side of the agreement. Nevertheless, before a court of equity enforces specific performance, the relevant contract must be capable of being performed to the fullest measure.

Specific performance is the exact fulfillment of the terms of the contract. Under it, the plaintiff claims for the specific thing to which he is entitled to, as per the terms of the Contract. Performance of contractual duties is expected from both the parties to a contract and if not performed they may be liable to be sued for the breach. When considered as an enforcement of action, Specific Performance would refer to any action that is taken and accomplished, however, it is most often enforced to finish a deal that had been previously made.

EXAMPLE:

If a person named A contracts with B to sell a limited number of B's shares of a certain company and after B pays for the shares, A refuses to sell any shares of B to him. Then B shall have the right to the return of those shares.

The Specific Relief Act, 1963 provides the following kinds of specific relief:-

1. Recovery of Possession of Property

2. Injunction

3. Cancellation of Instruments

4. Specific Performance of Contracts

5. Rescission of Contracts

6. Declaratory Decrees

7. Rectification of Instruments

Defences Respecting Suits For Relief Based on Contract

Section 9 of SRA, 1963 says that[1]:

Except as otherwise provided herein where any relief is claimed under this chapter in respect of a contract, the person against whom the Relief is claimed may plead by way of defence any ground which is available to him under any law relating to contracts.

Contracts which can be Specifically Enforced:

Section: 10[2] Specific performance in respect of Contracts

The specific performance of a contract shall be enforced by the court subject to the provisions contained in subsection (2) of Section 11, section 14, and section 16.

Case Law of Section 10:

• M. Ramalingam v. Subramanyam

AIR 2003 Mad. 305

In this case, part payment was paid by the plaintiff and the defendant admitted that he had handed over all documents and title of the property to the plaintiff. The Count held that when the sale price in the agreement was not law and the defendant had failed to establish that said document was only a loan transaction, the agreement was valid and the defendant was liable to perform his part.

Section: 11[3] Cases in which specific performance of contracts connected with trust enforceable:-

(1) Except as otherwise provided in this Act, 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 enforced or in breach of trust cannot be specifically enforced.

Specific Performance of Part of Contract

Section 12 of the Specific Relief Act, 1963 deals with the Specific Performance of the Part of the contract which is covered under Chapter II under the subheading of enforced Contracts which can be specifically enforced.

Section 12 in The Specific Relief Act, 1963[4]

12. Specific performance of part of a contract.—

(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 by 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 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 a case falling under clause (b), pays or had 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 rights 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 that, 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.

Explanation. For this section, a party to a contract shall be deemed to be unable to perform the whole of his part of it if a portion of its subject matter existing at the date of the contract has ceased to exist at the time of its performance.

Case Laws:

• B Santoshamma v. D. Sarala

AIR 2009 SC

The Supreme Court ruled that a court can direct a party to perform the part of a contract they can, as long as the other party pays the consideration for the whole contract minus the part that remains unperformed.

• Merchants Trading Co. v. Banner

In this case, Lord Romilly quoted that the Court cannot specifically perform the contact piecemeal, but it must be performed in its entirety if performed at all.

From Banner’s case it is clear that a part of a contract cannot be specifically performed but there provision under section 12 which states that a court can direct the specific performance of a part of a contract in certain circumstances.

• Small Proportion: - If a party is unable to perform the entire contract, but the portion that remains is small in value and can be compensated for in money, the court can order the performance of the remaining portion. The count can also award compensation to the other party for the remaining portion.

• Separate and Independent: - If a part of the contract can be performed separately from the rest, the court can order the performance of that part.

  
  

• Other party pays: - If the other party has paid or will pay the consideration for the entire contract, the Court can order the defaulting party to perform the portion they can. The consideration paid for the entire contract is reduced by the consideration for the portion that remains unperformed.

In the above-mentioned circumstances, the court can direct the specific performance of the part of the contract.

Contract having imperfect title:-

Section 13 of SRA, 1963[5] explains the rights of purchasers who have imperfect titles in movable property. The following are the rights of the purchaser:-

(1) When the landlord acquires any interest in the property.

(2) When concurrence or conveyance by another person(s) is necessary to validate the title.

(3) When mortgaged property is sold to a vendor or is left with encumbrances or charges whatsoever.

(4) When a suit is filed by a vendor for specific performance of the contract and is dismissed on grounds of the imperfect title to the property.

By whom Specific performance can be obtained:-

The specific performance of the contract can be obtained by any party to suit, its representatives-in-interest or the principal.

Section 15. Who may obtain specific performance?[6]

Except as otherwise provided by this Chapter, the specific performance of a contract may be obtained by—

(a)any party thereto;

(b)the representative in interest or the principal, of any party thereto:

Provided that where the learning, skill, solvency, or any personal quality of such party is a material ingredient in the contract, or where the contract provides that his interest shall not be assigned, his representative in interest or his principal shall not be entitled to specific performance of the contract, unless such party has already performed his part of the contract, or the performance thereof by his representative in interest, or his principal, has been accepted by the other party;

(c)where the contract is a settlement on marriage or a compromise of doubtful rights between members of the same family, any person beneficially entitled thereunder;

(d)where the contract has been entered into by a tenant for life in the due exercise of a power, the remainderman;

(e)a reversioner in possession, where the agreement is a covenant entered into with his predecessor in title, and the reversioner is entitled to the benefit of such covenant;

(f)a reversioner in the remainder, where the agreement is such a covenant, and the reversioner is entitled to the benefit thereof and will sustain material injury because of its breach;

(fa)when a limited liability partnership has entered into a contract and subsequently becomes amalgamated with another limited liability partnership, the new limited partnership arises out of the amalgamation.

(g)when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation;

(h)when the promoters of a company have, before its incorporation, entered into a contract for the company, and such contract is warranted by the terms of the incorporation, the company:

Provided that the company has accepted the contract and has communicated such acceptance to the other party to the contract.

Conclusion:

Where it is impossible to gauge the consequential harm incurred in any breach of the contract, courts endorse specific performance of a contract. In case actual damages caused due to breach of contract can be calculated, then the Specific performance of the contract is not available and the remedy in such cases is a claim for damages instead. For Section 12 of the SRA, 1963, a party to a contract shall be assumed to be incapable of fulfilling the whole of his part of the contract, if by the performance of a part of the subject matter that was available at the time of the making of the contract is no longer available. Generally, the Court cannot order the performance of a part of the contract subject to specific performance. However, there are some circumstances provided under Section 12 of SRA in which the court may order the specific performance of the contract.

Reference:

1. India Code, ‘ The Specific Relief Act, 1963’ https://www.indiacode.nic.in/bitstream/123456789/1583/7/A1963-47.pdf accessed 20 October 2024

2. Indian Kanoon, ‘Section 15 in the Specific Relief Act, 1963’ (2024) https://indiankanoon.org/doc/1999481/ accessed 20 October 2024

3. Ablinita Pradhan, ‘ Specific Performance under Contract Law’ (2023) https://blog.ipleaders.in/specific-performance-under-contract-law/ accessed 20 October 2024

4. Drishti Judiciary, ‘Specific Performance of Contract’ (2023) https://www.drishtijudiciary.com/ttp-specific-relief-act/specific-performance-of-contracts-1 accessed 20 October 2024

[1] The Specific Relief Act 1963 , s. 9

[2] The Specific Relief Act 1963, s. 10

[3] Ibid, s. 11

[4] Ibid, s. 12

[5] The Specific Relief Act 1963 , s. 13

[6] The Specific Relief Act 1963 , s. 15