This article is written by Monesh Mehndiratta, of Graphic Era Hill University, Dehradun. The article explains two important concepts related to the performance of contracts. These are the doctrine of part performance and the doctrine of specific performance of the contract. The article first explains the meaning, application, origin, and essentials of the doctrine of part performance along with recent case laws, and the concept of specific performance of a contract, its meaning, application, and other essentials along with related judgements. 

Table of Contents

Introduction

A, a person (promissory) promised B, another person (promisee) to deliver goods to him after payment of Rs. 50,000/- and entered into a contract with him. The payment was duly made, but the promisor failed to deliver the said goods, as a result of which he was sued by the other person, B. What do you think is the reason for suing the promisor?

Yes, it is the performance of the contract. The promisor failed to perform his duties, as a result of which he was sued for non-performance of the contract. 

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This clearly shows that the performance of a contract is one of its essential aspects. Once the parties enter into a contract, they are bound to perform their respective acts and fulfill their obligations. If any of them fails to do so, it amounts to a breach of contract. What if one of the parties partly performs the contract? Will it be considered a valid performance of the contract? What technicalities are involved while applying the doctrine?

These are some questions that are related to the performance of the contract. The present article deals with the doctrines of part performance and specific performance of contracts. It explains the two concepts separately. Firstly, it explains the doctrine of part performance, its evolution, meaning, essentials, application, and landmark judgements. Further, it explains another concept of specific performance in detail. 

Doctrine of part performance

Meaning of the doctrine of part performance

The doctrine of part performance in India is recognized under Section 53A of the Transfer of Property Act, 1882. The doctrine simply means that where two people enter into an agreement and one of the parties acts in consonance with the agreement, it creates equity, presuming that the other party will also perform its obligations. So, if the other party later denies or acts fraudulently by refusing to fulfil his duties as mentioned in the agreement, the doctrine of part performance is applied to safeguard the interest of the party who performed acts in furtherance of the agreement. Thus, the doctrine is embodied to protect the interests of transferees who take possession of the property but are not able to obtain the title after paying the consideration in part or whole and where the transferor later denies such an agreement or sues him for the possession. This doctrine prevents such instances and provides justice to genuine and innocent transferees. 

Illustration: X enters into a contract with Y regarding the transfer of a flat on payment of consideration. The contract also provided that on partial payment of consideration, Y could take possession, and so he did. Later, X denies transferring the title to the property, stating that he does not want to sell the flat. The doctrine of part performance will be applied here to protect the interest of Y, either by asking X to repay the consideration paid or by performing the contract and transferring the title of the property to Y. 

Objective of the doctrine of part performance 

Based on the maxim that one who seeks equity must do it, the doctrine has the following objectives:

  • It ensures that both parties to a contract, i.e., the transferor and transferee, perform their parts and fulfill their obligations as mentioned in the contract.
  • It preserves and protects the rights of the transferee towards ownership of the property. 
  • It prevents fraudulent acts by transferors who try to take advantage of innocent transferees.
  • By virtue of this doctrine, the transferor or any other person under his name is barred from enforcing any right on the said property against the transferee except those mentioned in the contract. 

Evolution of the doctrine of part performance

The concept of part performance can be said to have originated in English law with the Court of Equity, also known as the Court of Chancery. The Statute of Frauds, 1677, imposed certain restrictions on contracts and provided that any contract for the transfer of immovable property must be made in writing. This led to a situation where a genuine and innocent transferee could not obtain title to the property even after paying the consideration in part or whole and taking possession as a result of the agreement. Such people faced disadvantages and were harassed most of the time. The principle of equity was evolved to protect and help such people. It covered transfers based on oral agreements and where the transferee fulfilled their part. 

The case of Walsh v. Lonsdale (1882) helped in developing the jurisprudence of the doctrine of part performance. In this case, Lonsdale wanted to give Walsh a lease, wherein the rent must be paid in advance. This was, however, not embodied in the deed, and when Walsh took possession, arrears of rent were created, as a result of which an execution against the premises was issued by Lonsdale. The Court of Appeal in this case held that one who seeks equity must also do it and that equity is related to intent and not to form. It was further held that the rules of equity must prevail, and the lease was treated as if it were enforceable from the date of the agreement where it was granted. 

Another case that led to the development of the doctrine was Maddison v. Alderson (1883), wherein the plaintiff claimed the property of the defendant on the basis of an oral agreement where the defendant agreed to transfer his property to her in exchange for the plaintiff’s housekeeping services. The plaintiff, as a result of the oral agreement, performed her duties honestly. However, the will was alleged to be invalid because it was not attested. The English Court of Appeal, in this case, explained the significance of the doctrine and held that the defendant, in this case, is liable for the equities that arose from the acts done in the execution of the contract, and if such equities are neglected, it would result in injustice. 

Position of the doctrine of part performance in India

The application of the doctrine in India can be traced back to the case of Mahomed Musa v. Aghore Kumar Ganguly (1914), wherein the Privy Council held that the law of India and the Law of England is the same and follow the same rule and so the Indian Law is not inconsistent with the principles of part performance In this case, there was a written compromise deed that was not registered and stated that the land was to be divided among the parties. The deed was, however, challenged because it was not registered. The Privy Council applied the doctrine of part performance in this case and held that since the deed was made in writing, it is a legal document. 

However, in the case of G.F.C. Ariff v. Rai Jadunath Majumder Bahadur (1931), the Privy Council held the opposite of what was laid out in the above case. The Council doubted whether the doctrine be applied in cases that require registration of a document essential for the creation of a title. It was held that the doctrine could not be applied to the present case because the right of the respondent to sue was barred due to a verbal contract. This led to a controversy regarding the application of the doctrine in India, as a result of which a Special Committee was set up in 1927 to decide on the issue, as mentioned in the case of Mahadeo Nathuji Patil v. Surjabai Khushalchand Lakkad (1993). The Committee observed that the doctrine must be given statutory recognition, but the law of registration must not be forgotten or evaded. For the application of the doctrine, the Committee made the following recommendations:

  • The agreement must be written. 
  • The transferee must have taken possession of the property as a result of part performance or an act in furtherance. 
  • The transferee who wants to avail himself of the doctrine must be willing to perform his part. 
  • The rights and liabilities must be enforceable between the parties when the contract has been partly performed. 
  • The doctrine must not affect the rights of transferees. 

The Committee also suggested that the expiration of the limitation period must not affect the relationship between the transferor and transferee and that there should be no impact on the protection given by the doctrine. Based on its recommendations, Section 53A was inserted in the Transfer of Property Act, 1882. This Section recognises the doctrine of part performance, and in this way, the doctrine was made applicable to Indian scenarios. 

Essential elements of the doctrine of part performance

In order to take benefit of the doctrine mentioned in Section 53A of the Act, the following essential elements must be fulfilled:

Written contract for the transfer of immovable property

It is necessary that the contract for the transfer of immovable property be in writing. In the case of Smt. Kalawati Tripathi and Ors. v. Smt. Damyanti Devi and Anr. (1992), the Patna High Court held that the doctrine does not include oral agreement in its ambit. Further, the Supreme Court in the case of V.R. Sudhakara Rao and Ors. v. T.V. Kameswari (2007) held that Section 53A is inapplicable where the person is in possession of the property on the basis of an oral agreement. 

It is also necessary that the contract fulfill all the requirements of a valid contract and be signed by the parties. In the case of Smt. Hamida v. Smt. Humer and Ors. (1992), the Allahabad High Court held that the terms of a contract must not be vague or ambiguous but certain and expressed clearly. It must also be noted that Section 53A is not applicable to contracts that are void. This means that the contract must have a lawful purpose, there must be an offer and acceptance of that offer, free consent of the parties, lawful consideration, and intention to create legal relationships. 

A valid consideration

The contract for the transfer of immovable property must have a valid consideration. Consideration is also one of the essentials of a valid contract under Section 10 of the Indian Contract Act, 1872. This means that the doctrine in India is only applicable to those cases where the immovable property is transferred for consideration and not as a gift.

Possession of immovable property

The Section clearly provides that the transferee must have taken possession of the property as a result of part performance of a contract, continue to be in possession, or do an act in furtherance in order to claim the benefits mentioned therein. The same was reiterated in the case of A.M.A Sultan v. Seydu Zohra Beevi (1989). 

Part performance of the contract

For the application of Section 53A, one of the essential ingredients is that the contract must be partly performed or that the transferee is willing to perform its part. If the transferee is already in possession, it must be continued or an act in furtherance of such possession must be done. The court in the case of Chinnaraj v. Sheik Davood Nachiar (2002) observed that where a person refused to fulfil his obligations as given in the contract, no benefits of Section 53A could be claimed. 

Application of the doctrine of part performance

The primary objective of the doctrine contained in Section 53A of the Act is to protect the rights and interests of transferees. The Section is only applicable where:

  • There is a written contract to transfer the immovable property. 
  • The transferee has-
    • taken possession of the property as a result of part performance or, 
    • Continued to be in possession if he was already in possession,
    • Does an act in furtherance of the said contract. 
  • The transferee wilfully performs his part or is willing to do so. 
  • The transfer has not been completed by the transferor according to the contract.

In the case of Balaraja and Anr. v. Syed Masood Rowther and Anr. (1998), the Madras High Court held that for the application of the doctrine or to enforce the rights of transferees as mentioned under Section 53A, the necessary conditions must be fulfilled. The conditions are:

  • The doctrine can only be applied to a legally valid and enforceable contract. 
  • The contract must be registered in order to reap the benefits of Section 53A. 
  • The Section is inapplicable to oral agreements. 
  • For the application of the section, it is necessary that possession has been taken by the transferee as a result of part performance. 
  • The transferee must also be willing to perform his part of the contract or do an act in furtherance of it. 

Exception to the doctrine of part performance 

It is clearly known that Section 53A applies to contracts where the transferee has performed his part of the contract and taken possession of the property as a consequence of the performance. However, there is an exception that provides that the doctrine will not be applied to subsequent transferees who have no idea regarding the contract or its part performance. This means that the provision will not be applicable to bona fide transferees who, after entering into a contract, are unaware of the terms of the contract and its part performance by the transferor. 

The Supreme Court in the case of Hemraj v. Rustomji (1952) held that the exception to the Section given in the proviso protects the interests of bona fide transferees who have no knowledge regarding the part performance of the contract done by the transferor. It is thus necessary that the party who tries to take the defence under Section 53A prove that the subsequent transferee was aware of the part performance of the contract and received a notice regarding the same. 

Consequences of amendment to Section 53A of the Transfer of Property Act, 1882 

Before the amendment, the benefits of Section 53A and the doctrine recognition therein could be claimed on the basis of unregistered documents as well. However, after the enactment of the Registration and Other Related Laws (Amendment) Act, 2001, the unregistered documents were not accepted to claim the benefits of the doctrine of part performance contained in the Section. In the case of Wg. Cdr. (Retd.) Sh. Yeshvir Singh v. Dr. O.P. Kohli & Ors. (2015), the Delhi High Court, while dealing with the issue of declaration of title in a suit, held that due to the 2001 amendment, an agreement to sell is not valid and cannot create any rights until it is registered and stamped at 90% of the value of the deed according to Article 23A of Schedule 1 of the Indian Stamp Act, 1899. 

Further, in the case of Suhrid Singh v. Randhir Singh (2010), the Supreme Court observed that if an executant of a sale deed wants the deed to be annulled, he has to seek its cancellation, but if a non-executant seeks it, he has to show the deed is invalid, illegal, or non-binding on him and will also have to pay an ad-valorem court fee according to Article 17(iii) of the Second Schedule of the Court Fees Act, 1870. However, if the non-executant seeking to do so is not in possession of the property, he will have to pay the court fee according to Section 7(iv)(c) of the Court Fees Act, 1870. The Supreme Court in the case of Shiv Kumar Saxena v. Manishchand Sinha (2004) laid down certain principles regarding the payment of stamp duty. These are:

  • Stamp duty can be levied only on the instrument and not on any transaction. 
  • The substance of the transaction mentioned in the instrument determines how much stamp duty is to be paid. 
  • In order to find out the true character of an instrument, the whole document has to be read and taken into consideration.

In another case, Ameer Minhaj v. Dierdre Elizabeth (Wright) Issar (2017), the Supreme Court observed that if a party wants to use a contract made for transferring rights, title, or interest in immovable property for some consideration for the purpose of Section 53A of the Transfer of Property Act, 1882, it has to be registered, and if not registered, the document or contract cannot be used for the said purpose according to Section 17(1A) of the Registration Act, 1908. 

Position with respect to lease deeds

The lease is governed by Section 105 of the Transfer of Property Act, 1882. In the case of Prasad Technology Park Pvt. Ltd. v. Sub Registrar & Ors. (2005), there was a dispute related to a lease. It was held that the execution of an instrument for which stamp duty is to be paid must involve the transfer of property, a right, or a liability. Once it is declared that the supplementary agreement is neither a lease nor a sale deed, no such stamp duty is to be paid. The Supreme Court further held that the High Court was incorrect in holding that the supplementary lease agreement was not an instrument and that stamp duty was to be paid. 

Further, in the case of Egon Zhender International Pvt. v. M/S Namgyal Institute (2013), the Delhi High Court observed that an unregistered document can only be used to demonstrate the nature of possession rather than create any right in favour of the lessee. It was also observed that the creation of a lease is not collateral and cannot be called so within the meaning of Section 49 of the Registration Act, 1908. 

Difference between English law and Indian Law of the doctrine of part performance 

Basis of difference  English law  Indian law
Essential elements of the doctrine Under English law, the doctrine can be applied even if there is an oral contract between the parties.  Under Indian law, it is necessary that the contract must be in writing in order to take the benefit of the doctrine.  
Scope of the doctrine The scope of the doctrine in English law is wider than in Indian law. It is both an action and a defence there.  The doctrine can only be taken as a defence in Indian law and hence, the scope is limited. 
Applicability of the doctrine Any conduct in furtherance of contract is sufficient for the application of this doctrine in English Law.  For the application of the doctrine in India, the property or any part of it must be in possession of a transferee. 
Statute mentioning the doctrine Unlike Indian law, the doctrine is not mentioned in any statute but provides equitable rights to the parties.  The doctrine provides a statutory right under Indian Law as it is mentioned under Section 53A of the Transfer of Property Act, 1882. 

Landmark judgments on the doctrine of part performance

Shrimant Shamrao Suryawanshi v. Pralhad Bhairoba Suryanvanshi (2002)

Facts of the case

In the present case there was an agreement for the sale of agricultural land between the respondent and appellant. The appellant took possession of the property as a result of the agreement but later found that the respondent was negotiating the sale agreement for the same land with another person. The appellant filed a suit for injunction against the respondent and was granted the same, but the respondent still sold the property to another person. The other person to whom the land was sold filed suit for its possession, which was opposed by the appellant. However, the trial court dismissed the suit, stating that the appellant’s title had not been proven. In the Letter Patent Appeal by the respondent, the court observed that the appellant is not entitled to possession as the suit for performance of the sale agreement is barred by limitation. 

Issues involved in the case

Whether the appellant is entitled to take advantage of the doctrine of part performance in the present case if the suit for specific performance is barred by limitation.

Judgement of the court 

The court in this case observed that the appellant was willing to perform his part of the contract and was prepared for the same. The court further stated that even if the suit is barred by limitation, the appellant can still defend his rights only if he is able to prove he did an act in furtherance of the agreement or is willing to do so. Thus, the court in this case held that the appellant is entitled to take benefits of the doctrine of part performance given in Section 53A of the Act. 

Union of India v. M/S K.C. Sharma and Co. (2020)

Facts of the case

In this case, the government acquired certain land from the respondents that was leased to them. The respondents contended that they must be compensated for the same as the land was in their possession. The civil court held that the government must compensate them 87% of the amount and give the remaining to the Panchayat of the village. A writ petition was filed by some of the aggrieved villagers against the order of the civil court, and the petitioners argued that those who filed the petition were not the lessees. The High Court asked the Additional District Magistrate to be a part of the proceedings. 

The appellant filed an appeal in the Delhi High Court on the ground that the order of the Civil Court was obtained by fraud because there was no lease agreement regarding the land. This was transferred to the trial court, where the judgement was passed in favour of the appellant. Aggrieved by the judgement, the respondents went to the High Court, where the judgement of the trial court was reversed. The case was finally appealed to the Supreme Court. 

Issues involved in the case

Whether the doctrine of part performance be applied in this case where the lease agreement is not registered.

Judgement of the court 

In this case the respondents argued that they are entitled to benefits given under Section 53A of the Act even though there was no registered lease agreement. The Supreme Court in this case observed that the respondents were given possession of the land as a result of a lease, so in this situation, a lease agreement is not necessary. This is because the intentions of the parties are clear, and the lease was also approved by the board of directors. Further, the Court held that where there is a genuine contract but no registered document, the parties can still seek the benefits of Section 53A of the Act. 

Joginder Tuli v. State of NCT of Delhi (2022)

Facts of the case

In this case, the petitioner signed a Memorandum of Understanding (MoU) with the deceased respondent regarding the sale of a shop for consideration. However, the MoU was not registered. He contended that he was not given possession because the family of the deceased contracted a builder for construction on the said property. Due to a dispute between the parties, the police asked the petitioner to present the necessary documents. Despite showing the MoU, the property was sealed. After some time, the builder started negotiating with the petitioner for the sale of the said property and threatened him for the same, as a result of which the petitioner filed a writ petition in the Delhi High Court. 

Issues involved in the case

Is it necessary to present the registered documents to seek the benefits of Section 53A of the Transfer of Property Act, 1882?

Judgement of the court

In this case it was held that in the absence of registered documents or evidence regarding the possession of property, the benefits of Section 53A of the Act cannot be claimed. Section 17(e)(1A) and Section 49 of the Registration Act also provide that only registered documents can be accepted as evidence. Thus, the petitioner was not entitled to any benefits given under Section 53A because no registered document regarding the possession of the property was produced by him. 

Doctrine of specific performance of contracts

Meaning of the doctrine of specific performance of contracts

Whenever either party to a contract fails to perform their obligations, it leads to a breach of contract. In this situation, the party who suffered a loss due to a breach of contract can either ask for damages or a specific performance of the contract. Thus, the doctrine of specific performance of a contract simply means to perform the contractual obligations as they are. 

Illustration: A agreed to sell goods to B at a 50% discount if B paid the whole amount at once. B paid the entire amount at once, but A refused to give him the goods. Now, B can file a suit against A for specific performance of the contract for the delivery of said goods. 

This remedy of specific performance of the contract is contained in Chapter 2, Section 9-19 of the Specific Relief Act, 1963. This law was initially codified under the Specific Relief Act, 1877 which was further taken into consideration by the Law Commission. The commission recommended enacting the existing Act of 1963 in its Ninth report. Like the doctrine of part performance, the doctrine of Specific performance of the contract is also an equitable doctrine used to grant relief to the party suffering loss due to a breach of contract or where the other party failed to perform its contractual obligations. 

Features of the Specific Relief Act, 1963

The Act has been enacted to provide specific remedies to the genuine and innocent parties to a contract who suffer a loss due to the other party’s failure to fulfill its contractual obligations. The Act has the following peculiar features:

  • It provides the following kinds of remedies:
    • Possession of immovable property.
    • Specific performance of contracts.
    • Rectify the instructions. 
    • Rescind the contract.
    • Cancel the instruments.
    • Decrees declaring the rights or status of a person. 
    • Preventive reliefs like injunctions, perpetual injunctions, etc. 
  • The Act also provides that the relief contained therein can only be enforced for individual rights. 
  • The Act empowers the person who has been thrown out of possession of an immovable property to file a suit for recovery of its possession.
  • The Act further enlists the persons who can seek relief under the Act under Section 15. 
  • It also deals with the enforcement of awards. 
  • The Act also provides for the substituted performance of contracts under Section 20. 
  • It also empowers the High Court to establish special courts under this Act to try suits related to infrastructure project contracts. 

Applicability of the doctrine of specific performance of contracts

In order to seek specific performance of a contract, it is necessary that the conditions laid down under Section 10 are fulfilled. The Section provides that the remedy of the specific performance of a contract can be claimed according to the provisions of Sections 11, 14, and 16 of the Act. Section 11 provides that when the act agreed upon by the parties is to be performed by a trust, it can be enforced by the specific performance. However, if a contract is made by a trustee who exercised his powers excessively, it cannot be enforced by specific performance. Sections 14 and 16 have been explained in detail further in the article. 

The court in the case of Ram Karan v. Govind Lal (1999), held that compensation in money is not enough remedy where the seller refuses to execute the sale deed after the buyer has paid the whole consideration and is thus ordered to specifically perform his part.

Circumstances where a contract cannot be performed specifically

Section 14 of the Act provides circumstances where a contract cannot be performed specifically, and thus, the doctrine of specific performance cannot be applied:

  • A party to a contract sought substituted performance of the contract and obtained the same.
  • Cases involving contracts related to performing a continuous duty that cannot be supervised by the court.
  • Cases involving contracts depend on the personal qualifications of the parties. 
  • Cases where a contract can be determined or revoked by the parties to a contract. 

Section 14(3) provides certain exceptions where the specific performance of a contract can be enforced:

  • Suits relating to the execution of mortgages.
  • Suits relating to furnishing security for repayment of a loan where the borrower is not interested in repaying it all at once. 
  • Suits for debentures of a company.
  • Suit for the execution of the formal deed of partnership.
  • Suit for purchasing shares from a partner. 
  • Suit for construction of buildings or any other work on any property, but where the following conditions are satisfied:
    • The work is properly described in the contract so as to determine its nature. 
    • The plaintiff must have a substantial interest in the contract. 
    • Compensation in money must not be adequate.
    • Defendants must take possession of the land where the construction is to be done. 

However, after the 2018 Amendment to the Act, clauses 2 and 3 of Section 14 have been removed from the Act, and further, Section 14A has been inserted, which empowers the court to engage experts in a suit under the Act. 

Persons who can obtain enforcement of specific performance of contract  

The Act, under Section 15, enlists the persons who can seek or obtain specific performance of a contract. These are:

  • Either of the parties to a contract. 
  • Person who is the representative in interest or principal. However, where a contract provides for any learning skill or quality as its ingredient, the representative in interest or principal will not seek specific performance of the contract unless the party has performed his contractual obligations. 
  • Any person as a beneficiary where the contract is related to the settlement of marriage or compromise between the family members.
  • The reminder man where the contract is related to tenancy and the tenant has entered into it for life. 
  • Revisioner who is in possession and entitled to seek the benefits of the covenant. 
  • Revisioner in the remainder. 
  • A limited liability partnership arising out of an amalgamation of two limited liability partnerships. 
  • A company arising out of amalgamation.
  • Company where its promoters entered into a contract before its incorporation. In this situation, it is necessary that the company has accepted the contract and that the same has been communicated to the other party to a contract. 

However, Section 16 acts as an exception to Section 15 and provides a list of persons in whose favour specific performance cannot be enforced. These are:

  • Any person who cannot seek compensation for breach of contract.
  • A person who is not capable of performing the contract, violates it or commits fraud with respect to the contract.
  • A person who fails to prove that he performed or is willing to perform the contract In this situation, the person must prove that he is ready and willing to perform the contractual obligations. In cases where a contract is related to the payment of money, the plaintiff is not required to pay the money to the defendant or deposit the same in court unless asked to do so. 

According to Section 19 of the Act, the relief of specific performance can be enforced against the following:

  • Either party to contract.
  • Any person who claimed under him a title subsequent to the contract except for a transferee who paid money in good faith.
  • Any other person who claimed under a title that had been displaced by the defendant prior to the contract. 
  • A limited liability partnership arising out of amalgamation between two limited liability partnerships. 
  • A company arising out of amalgamation.
  • Company where its promoters entered into a contract before its incorporation. In this situation, it is necessary that the company has accepted the contract and that the same has been communicated to the other party to the contract. 

Substituted performance of contract

The remedy of substituted performance of contract has been added to the Act by virtue of the Specific Relief (Amendment) Act, 2018. It is mentioned under Section 20 of the Act. It provides that where a party to a contract suffers due to breach of contract or its non-performance by the other party because of which the contract is broken, he can ask for the remedy of substituted performance of contract through any third person or by his own agency and can recover the losses or costs suffered due to such breach or non-performance. 

However, no such remedy can be sought unless the party who suffered a loss due to breach of contract or its non-performance by another party, has served notice of not less than 30 days to the other party asking him to fulfil the obligations mentioned in the contract within the time specified in the notice. If the other party refuses or fails to do so, the same can be performed by a third party or his own agency, but if the contract is performed by them, the party suffering loss cannot claim relief of specific performance against the party who breached the contract. Also, he cannot recover the loss or expenses unless the contract is performed by a third party or his own agency. The section further provides that the party who suffered due to a breach of contract by others can claim compensation from such a party. 

Recent judgments on specific performance of contract

Gobind Ram v. Gian Chand (2000)

Facts of the case

In this case, there was an agreement to sell between the appellant and respondent, as a result of which the respondent paid the earnest money to the appellant. However, a suit for specific performance was filed against the appellant when there was a failure to execute the sale deed. The appellant, however, appealed for an award of compensation instead of specific performance of the sale deed. 

Issues involved in the case

Whether the decree of specific performance can be granted in this case.

Judgement of the court 

The Hon’ble Supreme Court in this case observed that it is a settled principle of law that specific performance of a contract is not mandatory and depends on the discretion of the court. While granting a decree for specific performance, the court has to look into the question of whether it is fair, just, and equitable to do so. Further, it was held that the respondent has not taken any undue advantage of the appellant and has paid the consideration in the lower courts as directed. Thus, it would be unfair to deny the decree of specific performance, and so the decree was passed in favour of the respondent. 

Parveen Garg v. Satpal Singh and another (2018) 

Facts of the case

In this case, the appellant, who is a government contractor, was looking for a property and entered into an agreement for sale with the respondent. The appellant also paid the earnest money. The transaction, according to the agreement, was to be completed by 1.11.2003. The appellant contended that during the whole time, he was not shown the title deeds of the property or other relevant documents. The respondent did not give the certificate of conversion of property from leasehold to freehold, and when asked by the appellant, the respondent said that permission for conversion could not be obtained due to unavoidable circumstances. The appellant thus filed a suit for specific performance of the agreement. 

Issues involved in the case

Whether the decree of specific performance can be granted in this case.

Judgement of the court 

The court in this case observed that the appellant could not be granted a decree of specific performance as he failed to prove that he was ready and willing to perform the contract obligations until the suit was disposed of. Thus, the remedy of specific performance, which is based on the discretion of the court, was not granted in this case. 

Surinder Kaur (D) Tr.Lr. v. Bahadur Singh (D) Tr. Lrs. (2019)

Facts of the case

There was an agreement to sell in this case between the appellant and respondent. The possession was given to the vendee, but since there is a pending appeal regarding the said property, both parties agreed that the sale deed would be executed a month after the decision was passed in the appeal. However, the appeal was decided after 13 years from the date when the parties entered into an agreement to sell. The respondent filed a suit for specific performance, but the appellant filed an appeal stating that no such remedy must be granted to the respondent as he failed to pay the rent. 

Issues involved in the case

Whether the respondent is entitled to specific performance in this case.

Judgement of the court 

The Supreme Court in this case observed that the respondent had not paid any rent till the date of the suit and also denied doing so. It was noted that payment of rent was an essential element of the contract and the respondent failed to pay the rent. It was further observed that Section 16 (c) of the Specific Relief Act, 1963, clearly provides that a person must prove readiness and willingness to perform contractual obligations in order to be eligible for specific performance of the contract. 

The court held that no such relief can be granted to the respondent merely because he is legally right but failed to prove that he is ready and willing to perform the contractual obligations. It was also observed that according to Section 20 of the Act, the court can refuse the remedy of specific performance if it becomes inequitable, and in the present case, equity is against the respondent and so he is not entitled to specific performance. 

Shenbagam v. KK Rathinavel (2022)

Facts of the case

The appellants in this case who are the defendants to the suit of specific performance, entered into an agreement with the respondent to sell the property in suit for Rs. 1,25,000. The respondent who is the plaintiff paid an advance of Rs. 25,000 and agreed to pay the remaining balance within 6 months. The appellants were also asked to execute the sale deed on payment of remaining balance. The agreement also stated that the amount paid will be forfeited if the sale is not completed. It was also disclosed that the property was subject to mortgage to which the respondent agreed to discharge the same from the sale consideration. Further, the respondent paid the amount of Rs. 10,000/-. The appellants sent a legal notice to the respondent to fulfil his obligations as per the agreement. 

The appellants also rescinded the contract alleging that the respondent was not ready and willing to perform his obligations. The respondent on the other hand, instituted a suit before the Principal District Munsif, Coimbatore to seek injunction against the the appellants restraining them from creating any encumbrances over the property. He also filed a suit for specific performance which was decreed in his favour. The appellants filed an appeal against the decree before the trial court which was dismissed and then preferred a second appeal in the High Court of Madras. The High Court upheld the decision of the trial court against which the present appeal was filed in the Hon’ble Supreme Court. 

Issues involved in the case

Whether the respondent was ready and willing to perform his obligations mentioned in the agreement?

Judgement of the court

The Supreme Court in this case observed that it is a settled law that it is mandatory for the plaintiff to comply with the provisions of Section 16 of the Specific Relief Act, 1963 even if the opposite party has not made any specific plea. Moreover, readiness and willingness to perform has to be determined from the acts or conduct of the parties. Further, the court observed that in order to decide whether a party was ready and willing to perform his part of the contract, it is necessary to determine and evaluate his conduct throughout the transaction and not only his financial capacity to perform his part. Apart from this, the other factors that must be considered are the price of property in suit and whether one party will be benefited unfairly if the decree is passed in favour of the other party. 

The court held that in the present case there is total inaction on the part of the plaintiff which violated the terms of agreement. Moreover, there is a substantial rise in the prices three times between the date of agreement and date of  suit. This delay resulted in a situation where it is inequitable to grant relief of specific performance to the plaintiff. The court further held that the remedy of specific performance must not be granted in a situation where it causes injustice to a party who is not at fault. Keeping in mind the conduct of the respondent (plaintiff), the court refused to grant relief of specific performance in his favour but ordered a refund of the consideration. 

C. Haridasan v. Anappath Parakkattu (2023)

Facts of the case

The appellant and the respondent in this case, entered into an agreement to sell, whereby the appellant also paid the consideration amount partially. The remaining amount was to be paid within six months from the date when the document of title along with the purchase certificate was made available by the respondent. The appellant served a legal notice to respond to execute the sale deed, which the respondent refused to do and cancelled the agreement. In return, the appellant filed a suit for specific performance, wherein the trial court passed the decree in favour of the appellant but asked him to pay 25% more towards the consideration amount. Aggrieved by the order, the respondent appealed to the High Court, where the order of the trial court was set aside. Thus, the present appeal was filed by the appellant in the Supreme Court. 

Issues involved in the case

Whether the specific performance can be allowed in this case.

Judgement of the court 

It was argued by the respondent that the appellant was not ready and willing to perform his part and fulfil contractual obligations as no further payments were made and when asked, he was not ready to do so. The Hon’ble Supreme Court clarified that it is clear that the appellant in the present case did not prove his readiness and willingness to perform his part. 

Moreover, if the suit is decreed in favour of the appellant, he would have an unfair advantage over the respondent and cause him hardships, which is against the very purpose of the remedy based on equity. This is one of the essential elements to be considered while granting specific performance of the contract. Thus, in lieu of this, the judgement of the High Court setting aside the decree of specific performance granted by the trial court was affirmed, and the appellant was not given the benefits of specific performance of the contract. 

Conclusion

The doctrines of part performance and specific performance both provide remedies to innocent parties to a contract who suffer a loss due to the non-performance of the contract by the other party. The doctrine of part performance has its origins in English Law. However, unlike in India, where it is a statutory right under Section 53A of the Transfer of Property Act, 1882, the doctrine provides equitable rights in English Law. Moreover, in order to apply the doctrine in India, it is necessary that the contracts be made in writing, but it is applicable to oral agreements as well in English law. 

The doctrine of specific performance, on the other hand, provides a remedy for a party to a contract who is ready and willing to perform the contractual obligations but suffers a loss due to the other party who fails or refuses to perform any duties contained in the contract. This remedy of specific performance is contained in the Specific Relief Act, 1963, which provides the conditions under which such a remedy can be granted. In order to seek the benefits of this remedy, the plaintiff must prove that he is ready and willing to perform his part of the contract even if the other party fails or refuses to do the same. Once this is proven in court, only a decree of specific performance is granted. However, it must be noted that such a remedy is not mandatory but is discretionary in nature and depends on the discretion of the court. 

Frequently Asked Questions (FAQs)

Is the doctrine of part performance based on equitable principle?

Yes, the doctrine of part performance is based on an equitable principle based on the maxim “he who seeks equity must do equity”. 

Can a person claim the benefits of the doctrine of part performance on the basis of unregistered documents? 

No, the person cannot claim the application of the doctrine on the basis of unregistered documents. Before the amendment of 2001, such documents were acceptable to apply the doctrine but after the amendment, the doctrine cannot not be applied on the basis of unregistered documents. 

Can the remedy of specific performance be granted for penal laws or public rights?

No, the remedy of specific performance can not be granted in the case of penal laws. It can only be available for enforcement of individual rights as given under Section 4 of the Specific Relief Act, 1963. 

What is the limitation period for specific performance?

The limitation period for the suit of specific performance is 3 years from the date fixed for performance and where no such date is fixed then the date when the plaintiff received the notice that performance is refused. This is given in Article 54 of Schedule 1 of the Limitation Act, 1963. 

What is the difference between the specific performance of a contract and an injunction?

Specific performance is a remedy available to a party to a contract who suffers damages due to the other party breaching the contract. The party who breaches the contract is asked to comply with the terms and conditions of the contract and fulfil the obligation mentioned therein. Injunction on the other hand is another remedy wherein a party is prohibited from doing an act. It may be temporary or permanent. 

References 

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  1. […] 53A gives statutory recognition to what had hitherto been regarded as the Doctrine of Part Performance and applied by the Indian Courts to cases where the transfer was not affected by a registered […]

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