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The Specific Relief Act was enacted in 1963 with the main purpose to define and amend the laws relating to certain kinds of specific relief. In certain cases where no legal remedy or any amount of compensation can lessen the losses of the suffering party, such a party can seek relief by requiring the performance of certain obligations mentioned in the original agreement between the parties. Specific relief is granted not for enforcing penal laws instead for enforcing individual civil rights.
For example, A offers to buy B’s house and B accepts to sell her house and after the contract has been finalised B decides not to sell the property. Real estate being unique, it would be difficult for A to find another property like B’s and she would like to buy the property from B instead of receiving her money back. In such a case since there won’t be another piece of property identical to B’s hence A will be entitled to specific performance of the contract. Under specific performance, B would be compelled to go through with the sale of the house.
On 1st August, 2018 an act to amend the Specific Relief Act, 1963 received the assent of the President and came to be known as the Specific Relief (Amendment) Act, 2018. This Amendment was the first ever amendment to be made in the Act and it has made changes in quite a few sections of the original act. The amendment act has made a substantive change in the primary essence of the Act since the 1963 Act states that the grant of the remedy of specific relief is not a right and is subject to the discretion of the court but the amendment act has proposed that the courts must enforce specific performance of a contract as a rule except under certain circumstances.
Salient features of the Amendment
- Amendment to Section 6 of the 1963 Act
Section 6 of the original act states that if a person has been dispossessed of his immovable property without his consent and not in accordance with the appropriate course of law being followed then the person being dispossessed or any other person claiming through him can recover the possession.
The amendment specifically enumerates the persons who can file a suit for recovery. It says that a suit for recovery can be filed by the person being dispossessed of his property or a person through whom he has been in possession of the property or any person claiming through him. The amendment makes it clear that the term ‘other person’ includes a person through whom the person being dispossessed of his property has come to have the possession of the property
- Specific performance will be a general rule rather than a specific right
Under Section 10 of the original act, specific performance of a contract was a discretionary remedy which could be granted only when the monetary compensation was not adequate as a means of relief for the non-performance of a contract and when the damages due to non-performance cannot be ascertained.
By means of the amendment act, specific performance of a contract is not based on the discretion of the courts but it is a valid remedy available to an aggrieved party if his contract has been breached with a few exceptions mentioned under Sections 11(2), 14 and 16 of the Act. The amendment Act also permits the aggrieved party to seek compensation for the breach of contract in addition to seeking specific performance of such contract whereas prior to amendment, a claim for compensation was either in addition to or in substitution of seeking specific performance.
- No injunction against infrastructure projects
The Specific relief amendment act states that the Courts cannot grant an injunction in suits relating to infrastructure projects where the injunction will hamper the completion of the project or cause a delay in the completion of the work. Projects under the following sectors come under the ambit of the amendment: (i) transport, (ii) energy, (iii) water and sanitation, (iv) communication, such as telecommunication and (v) social and commercial infrastructure, such as affordable housing. The Courts have made this amendment keeping in mind the larger public interest so that due to an injunction the public interest attached to such projects is not affected by court proceedings.
- Introduction of special courts and a pre-defined timeline for case disposal
The Amendment act makes provisions for certain civil courts to be designated as special courts, which will deal with suits filed under the Specific Relief Act in respect of contracts relating to infrastructure projects. The Amendment Act also introduces a timeline of 12 months for the disposal of all cases filed under the Act which has to be calculated from the date of the receipt of summons by the defendant. The said period can be extended by the courts up to a maximum of 6 months, after recording valid reasons in writing for such an extension.
- Insertion of Section 14A in the Act
The Amendment inserts a new section in the Act namely section 14A for granting permission to technical experts in suits where the court considers it necessary to get an expert opinion to assist the court on any specific issue involved in the suit. It will also be left upto the courts to determine the terms of payment of such experts and the payment will be borne by the parties to the suit in whatever proportion and time as decided by the court.
- Insertion of Section 15(fa) in the Act
The amendment inserted Section 15(fa) in the Act which included Limited Liability Partnerships to the list of parties that can seek the relief of specific performance.
- Insertion of Section 20(4) – Substituted Performance in the Act
Section 20(4) includes a new concept called Substituted Performance in the Act which means that when a breach of contract occurs then the aggrieved party can arrange for the performance of the contract by a third party or by his own agency and the aggrieved party can recover the costs and expenses incurred. However before the appointment of a third party, the aggrieved party has to give a notice in writing of not less than 30 days to the defaulting party to perform the contract within the time specified in the notice and in case of a failure to perform within that time, the aggrieved party may get the same performed by third party or his own agency. This furthermore does not prevent the aggrieved party from claiming compensation from the defaulting party. Once the aggrieved party has availed of substituted performance then it automatically nullifies the option of specific performance. It is a logical concept since, once such substituted performance is pursued, the aggrieved party would not be entitled to seek specific performance of the contract from the defaulting party.
- Exceptions to specific performance
Section 5 of the Amendment Act, which amends Section 14 of the 1963 Act, states the following situations as exceptions to the specific performance:
- a contract, the performance of which involves the performance of a continuous duty which the court cannot supervise
- a contract, which, by its nature, is determinable
- a contract which is so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms
- a contract where a party has obtained substituted performance of the contract in accordance with the provisions of Section 20 of the Act.
Why was it introduced?
Behind every action taken, there lies a reason and similarly the Specific Relief Amendment Act was introduced due to the following reasons:
Firstly, the World Bank placed India on the 100th rank out of 190 countries in its Doing Business 2018 report. The report highlighted India’s deficiency in the fields of Enforcement of Contracts and its associated Legal systems and procedures that are being followed. Subsequently, India’s Economic Survey 2018 highlighted that India is still lacking in the enforcement of contracts in our country and steps needed to be taken to ensure speedy justice and the need for a well-defined law. The National Judicial Data Grid has estimated the number of pending cases in India to be at 26.5 million as of April 2018.
Secondly, the ministry of Law and Justice had constituted an expert committee in 2016 led by Mr. Anand Desai to examine the Specific Relief Act, 1963 and to make suggestions for an amendment keeping in mind the point of view of enforceability of contract and other relief provided under the act since the act was framed in 1963 and many changes have taken place in our country since that time. The committee also had to pay special attention to see that specific performance is granted as a general rule, a grant of compensation or damages for non-performance remains as an exception and discretionary relief is done away with. The committee on proper inspection concluded that changes needed to be made in the Specific Relief Act, 1963 in alignment with the agenda for which the committee was set up. Hence the amendment act was introduced.
The Specific Relief Act was introduced in 1963 and since then it hasn’t undergone any amendments and hence each and every piece of legislations needs to be reviewed after certain periods of time. Similarly, the Specific Relief Amendment Act plays the role of an update to the original act so as to include various provisions that will ensure speedy justice and bring more clarity while dealing with such cases in the Courts.
Overall, the Amendment Act has helped in filling out the gaps present in the original legislation and has provided for a system though which the cases filed under the Act can be settled expeditiously. However, the Amendment Act intends to prevent contracting parties from avoiding performance of their contracts since it continues to maintain its original position that contracts whose nature can be determined prima facie cannot be specifically enforced. Over the years, Indian courts have interpreted that the mere presence of a termination clause in a contract can imply that such a contract is one whose nature can be determined and hence does not come under the ambit of specific performance.
Most importantly, the Amendment aims at providing speedy relief in a timely manner of redressal along with the ability to choose their preferred method of remedy instead of depending on the remedy being provided at the discretion of the courts.
Since every coin has two sides the Specific Relief Amendment Act too has both its pros and cons. It is usually seen that a proper analysis of the pros and cons of a piece of legislation takes at least 5-10 years so that both its short term as well as long term effects can be taken into consideration. The Specific Relief Act was amended after 55 years and this amendment has filled all the gaps that existed in the legislation and which came to be found over the years as and when cases were filed under this Act. The Amendment Act takes care of the pre-existing loopholes in the Act and it has inserted new provisions in the original act too and it is only a matter of time before these new provisions turn out as a boon or bane in solving the problems existing in the disposal of cases.
Author: Simone Fernandes from NMIMS, Kirit P. Mehta School of Law.
Editor: Arya Mittal from Hidayatullah National Law University, Raipur.