specific

In this article, Yash Kansal discusses Enforceability of Specific Performance of Contract.

Introduction

The Law of Specific Relief in India was originally codified by Specific Relief Act, 1877. The provision of this enactment was considered by the Law Commission in its Ninth Report which was later replaced by the present act of 1963. The Specific Relief Act, 1963 deals with the remedies granted at the discretion of the court for the enforcement of individual civil rights. In case of breach of contract, the general remedy available to the aggrieved party is compensation or damages of loss suffered. For this, a civil suit is filed against the guilty party who had made the default in performance of its duty or obligation as per the terms of contract under the statutory provision of Section 73-75 of Indian Contract Act 1872. However, sometimes pecuniary compensation does not satisfy the plaintiff so he may ask for specific relief. For example if somebody unlawfully dispossess a person without his consent having peaceful possession over the property then specific relief may enable him to have the possession of same property instead of claiming pecuniary compensation.

The act provides the following kinds of Specific Relief

  • Recovery of possession of property
  • Specific performance of contracts
  • Rectification of instruments
  • Rescission of contracts
  • Cancellation of Instruments
  • Declaratory decrees
  • Injunction

Specific Performance of Contracts

Specific performance means enforcement of exact terms of the contract. Under it the plaintiff claims for the specific thing of which he is entitled as per the terms of contract. For example, if A agrees to sell certain shares to B of a specific company which are limited in number and after the payment made by B, if A refuses to sell the shares then B is entitled to recovery of those shares.

According to Section 10 of Specific Relief Act 1963 in the following conditions specific performance of the contract is enforceable:

  • When there exist no standard for ascertaining actual damage: It is the situation in which the plaintiff is unable to determine the amount of loss suffered by him. Where the damage caused by the breach of contract is ascertainable then the remedy of specific performance is not available to the plaintiff. For example, a person enters into a contract for the purchase of a painting of dead painter which is only one in the market and its value is unascertainable then he is entitled to the same.
  • When compensation of money is not adequate relief: In following cases compensation of money would not provide adequate relief:
  1. Where the subject matter of the contract is an immovable property.
  2. Where the subject matter of the contract is movable property and,
  3. Such property or goods are not an ordinary article of commerce i.e. which could be sold or purchased in the market.
  4. The article is of special value or interest to the plaintiff.
  5. The article is of such nature that is not easily available in the market.
  6. The property or goods held by the defendant as an agent or trustee of the plaintiff.

In Case of Ram Karan v. Govind Lal [1], an agreement for sale of agricultural land was made & buyer had paid full sale consideration to the seller, but the seller refuses to execute sale deed as per the agreement. The buyer brought an action for the specific performance of contract and it was held by the court that the compensation of money would not afford adequate relief and seller was directed to execute sale deed in favour of buyer.

Similarly, it was held by the court where the part payment was paid by plaintiff and defendant admitted that he had handed over all documents of title of property to the plaintiff. Sale price in an agreement is not low and defendant had failed to establish that said document was only a loan transaction then the agreement is valid and defendant is liable to perform his part (M. Ramalingam v. V. Subramanyam)[2].

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Contracts which cannot be specifically enforced

According to Section 14 of Specific Relief Act 1963, there are certain contracts which cannot be specifically enforced and these are:

  • Where compensation in money is an adequate relief: Here the court will not order specific performance of contract as it is expected that the plaintiff will bank upon the normal remedy for breach of contract i.e. remedy of compensation. For example contract of mortgage of immovable property (Rambai v. Khimji)[3], contract of sale of goods (Bharat v. Nisarali) [4], contract of repair of premises etc.
  • Where a contract runs into minutes or numerous detail: These contracts includes contract which depends upon the personal qualification or the violation of the parties or is of such nature that the court cannot enforce specific performance of its material terms. In Robinson Davison [5], it was held by the court that the contract to perform in concert depends upon the personal kill of defendant’s wife, and the contract cannot be specifically enforced due to her illness. The other example is construction contract where the detailed terms of contract are not explained.
  • Contracts of determinable nature: Determinable contract means a contract which can be determined or revoked or put to an end by a party to the contract. For example in case of partnership at will any partner can retire by giving notice in writing to other partners and can dissolve the firm.
  • Contracts which involve the performance of continuous duty which court cannot supervise: Earlier under Specific Relief act, 1877 the continuous duty which court cannot supervise is considered over a period of 3 years which was omitted under Specific Relief Act, 1963 and no time limit restricted for the performance of a continuous duty. These include contract of appointment of employees for continuous service or contract to execute sale deed every year. In Central Bank v. Vyankatesh [6], the defendant was required to execute deed every year for the period of 25 years and contract is held to be specifically unenforceable.
  • Contract of arbitration: According to Section 14(2), a contract to refer present or future differences to arbitration shall not be specifically enforceable.

However, Section 14(3) contains certain exception and the following kinds of contract are specifically enforceable

  1. A contract to execute a mortgage or furnish other security for repayment of any loan which the borrower is not willing to repay at once, the court would grant specific performance to execute mortgage or to give any other security.
  2. A contract to take up and pay for any debentures of a company.
  3. A contract to execute a formal deed of partnership at will when the business has already commenced.
  4. A contract for the construction of any building or the execution of any other work on land if;
  5. Detailed or the terms of the contract has been sufficiently explained & the court can determine the exact nature of building or work.
  6. The plaintiff has a substantial interest in performance of the contract and compensation in money is not an adequate relief.
  7. The defendant has in accordance with the contract, obtained possession of whole or part of the land on which the building is to be constructed or other work is to be executed.

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References

[1] A.I.R. 1999 Raj. 167

[2] A.I.R. 2003 Mad. 305

[3] AI.R. 1950 Kutch 86

[4] 20 Cal W.N. 1020

[5] (1871) L.R. Ex. 269

[6] A.I.R. 1949 Nag 286

{ [1-6] with ref. to Law of Contract & Specific relief act 1963 by R.K. Bangia}

 

 

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