Debenture Trustees
Image Source: https://bit.ly/2u4RsRs

This article is written by Ashwin Jain. In this article, the author explains whether specific performance be extracted from joint promisors for a joint promise.

Introduction

Specific relief has always been an exceptional remedy in all common law jurisdictions. Usually, it was granted only in circumstances when monetary damages are not considered as adequate remedy. This article is written for evaluating the feasibility of enforcing specific performance over a promise with multiple joint promisors.

Requirements of creating a Joint Promise

Section 42 of the Indian Contract Act states two requirements for creating a joint promise which binds all joint promisors. Firstly, the promisors should be part of a single contract. Secondly, there should not be an intention to not be jointly responsible for the performance of the contract. After reading the two requirements together, it is presumed that all promisors shall be jointly required to perform their obligations under the contract. 

For e.g. If M, N, O are borrowing from A under a single loan, M, N, O are jointly responsible for paying the loan back to A. It will not be a joint obligation among the borrowers if they divide the loan obligation equally and is written into the loan, then each borrower is liable to pay only his share. 

It is critical for parties to establish their extent of obligation and have it entered into the contract so that they are not liable to pay for other joint promisors breach.

Will all the promisors have to be made party to the dispute to compel performance?

Section 43 of the Indian Contract Act states that a promisee may compel a promisor or more than one promisor to perform the joint promise. It is completely upon the discretion of the promisee as to whom he chooses to perform the whole promise. It makes all liabilities under section 43 joint and several as observed in Motilal Beehardass v. Ghellabhai Hariram.

Can a single promisor compel the other promisors to perform part of the contract?

According to Section 43 of the Contract Act, unless there is a different intention under the contract, any promisor may compel other joint promisors to contribute in equal shares towards the performance of the promise. In case, a promisor defaults or declares bankruptcy when the claim for his contribution is asked for, the other joint promisors shall contribute equally towards paying for the share of the bankrupt promisor. 

Although as described in Section 43 of the Act and as described in Muhammad Askari v. Radhe Ram Singh And Ors. that a promisor cannot compel the promisee to include the other joint promisors in the same suit. However, this does not prevent the promisor to join the other joint promisors to be joined in the same suit under Order 1 Rule 3 of the Code of Civil Procedure, 1908.    

Can contribution for specific performance be compelled from the legal heirs of a joint promisor?

Section 19(b) of the Specific Relief Act states that a decree of specific performance can be enforced against a person who claims under a title which arises after the execution of the contract. However, the specific performance cannot be enforced against the legal heirs because of the reasons specified in Section 14. Contracts of personal services are always voided with the death of the party.

This leaves the promisee with an award for damages. Section 43 of the Contract Act allows the promisor to sue any one or more of the joint promisors to compel performance of the contract. In Mathuradas Canji Matani v. Ebrahim Fazalbhoy, it was held that, if one of the promisors is deceased and the plaintiff wants to claim on the estate of the deceased promisor, the plaintiff must join the legal representatives of the deceased as parties to the suit. 

https://lawsikho.com/course/diploma-advanced-contract-drafting-negotiation-dispute-resolution
       Click Above

Enforcing Specific Performance

The rule with regards to specific performance has been changed recently in the Specific Relief (Amendment) Act, 2018. The rule earlier which was also the position of the law in England was that damages are the norm and specific performance is the exception for breach of contract. Section 10 of the Amendment Act allows specific performance for breach of contracts as a primary remedy. This means that granting specific performance to a contract is no longer at the discretion of the court

When it comes to the specific performance of the contract, it becomes much more difficult to compel specific performance from the parties. This is because, the Amendment Act states that, any performance which is dependent upon the personal qualification of the party, if the contract is determinable in nature or supervision of a continuous duty is barred from getting specific performance. 

In Percept D’Markr (India) Pvt. Ltd v. Zaheer Khan it was stated that specific performance cannot be granted on a contract dependent upon the personal qualifications of a person, because it will mean that a person will be compelled to enter into a relationship involving mutual trust and confidence against his will.

 In Indian Oil Corporation Ltd v. Amritsar Gas Service And Ors., it was held that since the agreement is revocable, the only remedy which is applicable is an award for damages and not specific performance.

In Her Highness Maharani Shantidevi v. Savjibhai Haribhai Patel & Ors, which is a case about the construction of residences for the weaker sections of the society, it was held that the construction and allotment of the houses would be a continuous duty which it cannot supervise.

In addition to the above three reasons, the lawmakers introduced the concept of substituted performance, wherein the law allows the aggrieved party to obtain performance of the contract from a third party or from its own agency. It allows the aggrieved party to recover the costs and expenses paid by him from the party committing breach of contract.

Along with the above, the promisee also has to establish that, conditions under section 16 of the Specific Relief Act have been complied with. These include: (i) not obtaining substituted performance, (ii) has to not act in a way which makes the contract impossible to perform; and (iii) he has to prove that he is ready and willing to perform his part of the contract or has performed his part of the contract.

The second obligation mentioned in Section 14(b) of the Specific Relief Act is stated as “who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in subversion of, the relation intended to be established by the contract.”

For example, If the promisee has to approve the materials for the construction of a house by the promisor contractor and the promisee fails to do so; he cannot enforce specific performance against the promisor.

To comply with the third condition which is mentioned in Section14(c) of the Specific Relief Act, he must prove that he is ready and willing to perform his part of the contract or has performed his obligations. This condition applies to all obligations which have not been waived by the promisor or its performance has been prevented by the actions or omissions of the promisor.

In C.S.Venkatesh v. A.S.C.Murthy (D) By Lrs it was observed that, although it is not necessary to produce ready money, it is mandatory on the part of the party claiming specific performance, to prove that he has the means to generate the consideration amount. Merely a plea claiming that he is ready to pay the consideration, without any material which substantiates the same cannot be accepted. 

In Manjunath Anandappa Urf. … v. Tammanasa & Ors it was observed that “Only in certain exceptional situation where although in letter and spirit, the exact words had not been used but readiness and willingness can be culled out from reading all the averments made in the Plaintiff as a whole coupled with the materials brought on record at the trial of the suit, to the said effect, the statutory requirement of Section 16(c) of the Specific Relief Act may be held to have been complied with.”

The first and second conditions are self-explanatory and leave nothing for the judiciary to substantiate upon. The third condition has been expounded upon by the judiciary in many judgments. The judgments also express that, the readiness and willingness of the party seeking specific performance will have to be asserted by its actions and the state of preparedness the party is in to satisfactorily perform their part of the obligations under the contract. 

Conclusion

From the paragraphs above it has been established that the promisee can call upon any one of the joint promisors to perform the contract. It is still unclear whether a joint promisor can be compelled to specifically perform that part of the contract which he has no apparent expertise or qualifications. Also will such specific performance be satisfactory to the promisee? The remedy of substituted performance has not been widely enforced since its inception in the Amendment Act. Adding substituted performance and removing the discretion of the court from specific performance has improved the quantity and the quality of the choices the aggrieved party has when it comes to compensation for the breach of contract. Choice of route for enforcing remedy will be heavily dependent upon the economic circumstances, behaviour of the parties under the contract and the objective of the aggrieved party.


LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

Did you find this blog post helpful? Subscribe so that you never miss another post! Just complete this form…

LEAVE A REPLY