The Specific Relief Act, 1963

What it does

The Indian Contract Act, 1872 says when a promise binds and what breaking it costs. This Act says what a court can order when money is not the answer. It covers recovery of possession of property, specific performance of a contract, rectification and rescission of an instrument, cancellation of an instrument, a declaration of right, and injunctions both temporary and perpetual. It is procedural in feel and substantive in effect: the right comes from elsewhere, and what the right is worth depends on which of these remedies is available.

The Act is confined to civil relief. It does not create a cause of action, it does not provide for punitive relief, and it does not displace the ordinary measure of damages. Where a remedy under this Act is refused, the claimant is left with compensation, which is why the question of which remedy is available is usually the first question in a dispute about an unperformed contract rather than a later one.

The 2018 change, and why it matters

Until 2018 specific performance was discretionary. A court could decline it even where the contract was proved and the claimant was blameless, and in practice Indian courts declined it often, treating damages as the normal remedy and specific performance as the exception for the case where damages would not do.

The amending Act of 2018, in force from 1 October 2018, inverted that. Specific performance is now to be enforced, subject to the exceptions the Act itself states. The court no longer asks whether damages are an adequate remedy; it asks whether the contract falls within one of the defined bars. For a party holding a contract it wants performed, that is a different negotiating position than the one before 2018, and for a party that has decided not to perform it removes the assumption that the price of walking away is a sum of money.

Two further changes came in the same amendment and are less often used than they should be. Substituted performance lets the aggrieved party, after notice, have the work done by a third party and recover the cost from the party in breach, which converts a construction or supply default into a quantified claim without waiting for a decree. And a separate regime applies to contracts relating to notified infrastructure projects: an injunction is not to be granted where it would impede progress or completion of such a project, special courts hear the suits, and a suit is to be disposed of within twelve months of service, extendable by six.

Where relief is still refused

The bars are the operative part of the Act now that the discretion has gone, and they are of two kinds.

The first is about the contract. Specific performance is not granted where the aggrieved party has already obtained substituted performance, where performance would involve a continuous duty the court cannot supervise, where the contract is so dependent on the personal qualifications of a party that the court cannot enforce its material terms, or where the contract is by its nature determinable. The last of these does a great deal of work in commercial matters: a contract either side may terminate at will is not specifically enforced, so a termination clause drafted for flexibility also decides the remedy.

The second is about the claimant. A person who has become incapable of performing, or who violates an essential term and stands in a position that makes it inequitable to enforce the contract against the other side, or who has not pleaded and proved readiness and willingness to perform their own part, does not get the decree. Readiness and willingness is a pleading requirement as much as a factual one, and a plaint that does not set it out is vulnerable before the evidence begins.

An injunction has its own list. It is refused to restrain a person from prosecuting a pending judicial proceeding, to restrain a legislative or administrative act done under statutory authority in defined cases, to prevent a breach of contract the performance of which would not itself be specifically enforced, and where the claimant has no personal interest in the matter. The third of those is the rule that links the two halves of the Act: a negative covenant is enforceable by injunction only so far as the positive obligation is enforceable at all.

What turns on it in practice

The commonest case is an agreement to sell immovable property. The agreement creates no interest in the property under the Transfer of Property Act, 1882, so the buyer's right is a right to sue for performance and nothing more, and the suit is on this Act. Four things decide it, and three of them are fixed before the dispute. Whether the agreement is proved, which brings in whether it was duly stamped under the Indian Stamp Act, 1899 and whether it required registration under the Registration Act, 1908. Whether the buyer was ready and willing, which is a matter of the correspondence at the time rather than the pleading afterwards. Whether the contract is determinable on its own terms. And when the cause of action arose, because the limitation period runs from the date fixed for performance or, where none is fixed, from when the claimant has notice that performance is refused, and it is three years, not twelve.

For commercial contracts the question is usually framed earlier, at drafting. A clause that makes the contract terminable at convenience, a clause that leaves performance to a named individual, and a clause that fixes liquidated damages as the sole remedy each push the matter away from specific performance and towards a sum of money. That may be what the parties want. It is rarely what they discussed.