CS Deepak Pratap Singh

CS Deepak Pratap SinghAs we have discussed in my earlier article, Specific Relief Act, 1963 provides relief in case of Primary Right. Suppose in a case Court order for payment of compensation for damages not Specific Performance of breach of contract. The compensation in this case is Secondary Right of the plaintiff. But if Court Order for specific performance of the contract, then it is enforcement of Primary Right.

Let us consider an example Mr. A enters into a contract to sale of his land to Mr. B and Mr. B according to the terms of contract tender him Ernest money. But after some time or few days a government scheme is floated and Mr. A has been denied to complete the contract. In this case “ if court directs Mr. A to complete the contract according to the terms and conditions , then it is Specific Performance of Contract and Primary Right of Mr. B and if Court directs to pay damages to Mr. B , then is will be enformenect of Secondary Right.

It will be noted that Provisions of Specific Performance are not applicable in case of Criminal Offences.

Section 9 of the Specific Relief Act, 1963, the underlying principal is that unless there is a valid contract, specific performance cannot be obtained.

Madras High Court as observed that an agreement, which in not a contract cannot be enforced for specific performance. The terms and conditions of the contract must be precise and certain, and parties there to must intend to create legal relations between them.

There should be a complete and concluded contract between parties before demanding Specific Performance of contract in court of Law.

WHEN CONTRACT  MAY BE SPECIFICALLY ENFORCED; (SECTION 10 & 14)

These are the cases when Specific Performance is allowed by the court;

1.      Where there exists no standard for ascertaining the actual damage cause by the non performance of the act agreed to be done.

2.      Where the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief to the plaintiff.

3.      Where the suit is for the enforcement of a contract to execute a mortgage or furnish any other security for the repayment of any loan, which the borrower is not willing to repay at once.

Note: in this case it will be considered that if lender is willing to tender remaining part of the loan or not, if a part of loan has been advanced to the debtor.

4.      Where the suit is for enforcement of a contract to take, and pay for, any debentures of the company.

5.      Where the suit is for the execution of a formal deed of partnership, in cases where parties have already started partnership business.

6.      Where the suit for the purpose of a share in the partnership business.

7.      Where the suit is for the enforcement of a contract for the construction of any building or execution of any work on any land.

Note: in this case the building contract in the contract should be specifically defined in a precise manner so as to enable the court to determine the exact nature of the building. The plaintiff should have substantial interest in the performance of the contract and the defendant has taken possession of the land according to the terms of the contract for construction of building specified in the contract.

Note: it is to be noted that the Specific Performance being equitable remedy is always at the discretion of the Court. The discretion of Court while granting Specific Performance should be based on sound and reasonable principals of justice. The Court is not bound to give Specific Performance on the basis that the case falls any of the provisions of Specific Performance Act, 1963. The Specific Performance will not be granted when damage will be calculated and by awarding compensation the Court satisfied that it will be adequate remedy to the plaintiff.

FOLLOWING CONTRACTS CANNOT BE SPECIFICALLY ENFORCED (SECTION 14)

The following contracts cannot be Specifically Enforced;

1.      A contract for the non-performance of which compensation in money is an adequate relief and the damages will be appropriately estimated or measured;

2.      A contract which dependent on personal qualification of parties under contract or otherwise that the Court cannot enforce Specific Performance of the contract;

3.      A contract which is in nature is determinable;

4.      A contract the performance of which involve continuous supervision by the Court and the Court cannot or not able to give time for the same;

5.      A contract in which a provision already exist that in case of dispute the same will be decided through provisions of arbitration.

`WHO CAN OBTAIN SPECIFIC PERFORMANCE (SECTION 15)

Following categories of person are entitled to get Specific Performance;

1.      Parties to a valid enforceable contract;

2.       The representative in interest or the principal of a party to the contract in the following cases;

I)                   Where the learning, skill, solvency or any personal quality of the party is a material ingredient of the contract and;

II)                Where the contract itself provides that the party’s interest shall not be assigned unless such party has already performed his part in the contract or the performance by his representative in interest or principal is accepted by the other party to the contract.

3.      Where the contract is a marriage settlement or a compromise of doubtful rights between members of the same family.

4.      Where contract is entered into by a tenant for life in due exercise of a power.

5.      When the agreement is a covenant entered into with the predecessor in title of a reversionary in possession, and the reversionary is entitled to the benefit of such a covenant.

6.      A reversionary in reminder can also claim Specific Performance, if the Agreement is a covenant referred to in clause 5 and the reversionary is entitled to the benefit thereof, and would sustain material injury by reason of its breach.

7.      When a company is entered into a contract and subsequently amalgamated with another company-the new company can sue for Specific Performance of contract.

8.      Promoters of a UN incorporated company after its incorporation can sue for Specific Performance of contract, provided that the company has accepted the contract and has communicated the acceptance the same.

Section 24 of Specific Relief Act, 1963 provides that if a suit for Specific Performance of a contract is dismissed, the plaintiff cannot sue for compensation for breach of that contract (or part thereof as the case may be). In this case also he cannot lose his right to sue for any other relief to which he may be entitled, by reason of such breach.

Let’s us consider an example suppose Mr. A sold some goods to Mr. B and Mr. B tendered advance deposit of Rs. 5,00,000. Now the agreement to the transition provides that if Mr. A defaults then Mr. B will be entitled to Specific Performance of the contract or if Mr. B fails he will entitled to refund the deposit. Now in this case if the Court denies Specific Performance in favor of Mr. A can order refund of advance received against the order to Mr. B for stopping of further litigation.

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