Specific Performance of the Contract

1. Introduction

The Specific Relief Act, 1877 codified the law of specific relief in India. The Law Commission considered this provision in its Ninth Report, which was later replaced by the current act of 1963. The Specific Relief Act of 1963 addresses remedies granted at the discretion of the court to enforce individual civil rights. In the event of a breach of contract, the aggrieved party’s general remedy is compensation or damages for loss suffered. Under the statutory provisions of Sections 73-75 of the Indian Contract Act 1872, a civil suit is filed against the guilty party who failed to perform its duty or obligation under the terms of the contract.

However, if monetary compensation is insufficient to satisfy the plaintiff, he may seek specific relief. For example, if a person is unlawfully evicted from his property without his consent, specific relief may allow him to regain possession of the property instead of claiming monetary compensation.

1. Specific Performance of Contract

Specific performance refers to enforcing the contract’s terms precisely. According to it, the plaintiff demands a specified item to which he is legally entitled under the terms of the contract. By way of exception, the remedy of specific performance is granted. The plaintiff seeking this remedy must first satisfy the court that the standard remedy of damages is insufficient, with the presumption being that damages will not be adequate in cases of contracts for the transfer of immovable property. Even in these cases, because specific performance is a discretionary remedy, it is not always granted. The relief must be requested specifically. When a plaintiff seeks specific performance of a specific agreement, the suit may be decreed for specific performance of that agreement only and not others.

The prescribed limitation period for a suit for specific performance is three years from the date of performance, or three years if no such date is fixed.

Specific performance of the contract is enforceable under the following circumstances, per Section 10 of the Specific Relief Act of 1963:

When there is no accepted method for calculating actual harm: the plaintiff is unable to calculate the amount of loss he has experienced. The plaintiff is not entitled to specific performance where the harm brought on by the breach of contract is determinable.

When monetary compensation is insufficient: In the following cases, monetary compensation would be insufficient to provide adequate relief:

• When the contract’s subject matter is immovable property.
• Where the contract’s subject matter is the movable property and such property or goods are not an ordinary article of commerce, that is, they cannot be sold or purchased in the market.
• The plaintiff values or is interested in the article.
• The article is unique in that it is not widely available in the market.
• The defendant’s property or goods are held as the plaintiff’s agent or trustee.

In the case of Ram Karan v. Govind Lal[i], the seller refused to execute the sale deed in accordance with the agreement despite the buyer has paid the seller the full sale consideration. The seller was ordered to prepare a sale deed in the buyer’s favor after the buyer filed a lawsuit for the particular execution of the contract and the court determined that monetary damages would not provide sufficient relief.

Contracts that cannot be explicitly enforced

Certain contracts, according to Section 14 of the Specific Relief Act of 1963, cannot be specifically enforced, and these are:

• Where monetary compensation is an adequate remedy: In this case, the court will not order a specific performance of the contract because it is expected that the plaintiff will rely on the standard remedy for breach of contract, namely monetary compensation. Contract of mortgage of immovable property (Rambai v. Khimji)[ii] contract of sale of goods (Bharat v. Nisarali)[iii], contract of repair of premises, and so on.
• When a contract includes multiple details or minutes: These agreements include those that are subject to the personal qualifications of the parties, which are violated, or which are of such a nature that the court cannot order the precise performance of their essential provisions.
• Contracts that can be determined: A contract that can be resolved, revoked, or terminated by one of the parties is said to be determinable. For instance, in a partnership that is at will, any partner may resign and dissolve the business by giving written notice to the other partners.
• Contracts that include ongoing fulfillment of duties that a court cannot oversee: Before the Specific Relief Act of 1963, which deleted the 3-year time limit, continual duties that a court cannot supervise were evaluated for a continuous period under the Specific Relief Act of 1877. These include agreements to designate workers for an ongoing period or to complete a sale deed annually.
• Arbitration contract: A contract to refer present or future differences to arbitration is not specifically enforceable under Section 14(2).

Section 14(3), on the other hand, contains specific exceptions, and the following types of contracts are specifically enforceable:

1. In a contract to execute a mortgage or furnish other security for repayment of any loan that the borrower is unwilling to repay immediately, the court would grant specific performance to execute a mortgage or furnish other security.
2. A contract to purchase and pay for a company’s debentures.
3. When the business has already begun, a contract to execute a formal deed of partnership at will.
4. A contract for the construction of any building or the execution of any other work on the land is valid if the terms of the contract are detailed and the court can determine the exact nature of the building or work.
5. The plaintiff has a substantial interest in the contract’s performance, and monetary compensation is insufficient.
6. The defendant has obtained possession of all or part of the land on which the building or other work is to be built in accordance with the contract.

References

[i] A.I.R. 1999 Raj. 167

[ii] AI.R. 1950 Kutch 86

[iii] 20 Cal W.N. 1020

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