Written by- Himanshu Agarwal
Vivekanand Law College, Vastral, Ahmedabad, Gujarat
The Indian Contract Act of 1872 provides the necessary framework that governs the formation, enforcement and termination of contracts. One vital statute of the act is the doctrine of specific performance, the statute comes into the picture when there is a breach or non-performance by one of the parties in the contract. This statute holds paramount importance because the aggrieved party can mandate the other party to perform pursuant to the contractual obligations.
This article is all about comprehending the specific performance statute in the Indian Contract Act of 1872. The article will cover the limitations and ambit of the statute. The article aims to observe certain real-time judgments to comprehend the statute in depth.
Keywords: specific performance, breach of contract, Indian contract act 1872.
Specific Performance
In common parlance, when two parties execute an agreement, they are bound by the agreement. If one of the parties fails to perform or doesn’t perform pursuant to the agreement, then the aggrieved party can claim damages. Damages are of several types: liquidated damages, unliquidated damages, ordinary damages etc. However, there are certain circumstances wherein damages are not enough to compensate the position of the aggrieved party, then they can seek specific performance. Pursuant to specific performance the other party must perform the task pursuant to the agreement in order to compensate the aggrieved party. To seek a specific performance or claim for the specific performance the aggrieved party must prove that the damage is not enough and the other party must perform pursuant to the agreement. During the case of immovable property specific performance remedy is observed. However, Court observes the circumstances and the type of contract before arriving at the decision.
In a nutshell, it can be concluded that specific performance will not come into the picture when the compensation is sufficient enough.
Pursuant to Section 10 of the Specific Relief Act of 1963 outlines the pre-requisite conditions which are mandatory for the specific performance. These conditions have been mentioned in Sections 11 (2), Section 14 and Section 13.
Cases where the contract cannot be specifically be enforced
Pursuant to section 14 of the Specific Relief Act, cases where the contract can be specifically be enforced are as follows:
The cases where it is difficult to ascertain the loss, then the concept of specific performance is enforceable. If the plaintiff is able to validate their argument that loss cannot be ascertained then the option of the specific performance is open to him. For example, a person enters into a contract, to buy the painting of a deceased painter. If there exists only one such painting then it is difficult to ascertain the loss or harm he has suffered. In this scenario the concept of specific performance is applicable.
Some of the circumstances where compensation is not sufficient relief are as followings:
The landmark Judgement pertaining to Specific performance statutes are:
1. Ram Karan v Govind lal : the case is pertaining to sell of a land parcel between the parties hereto. All the consideration price fixed pursuant to the contract was paid to the seller. However, the seller refused to perform the duty on his part. This case was heard in court. The court held that monetary compensation will not suffice for the purpose, hence, the seller needs to complete the contractual obligations and sell the land to the buyer.
2. Parag Engineering Works vs Union of India : This case was heard in the court of Gauhatihigh court. The court held that the contract was not specifically enforceable, pursuant to Section 14 of the Specific Relief Act of 1963. The issue aroused due to a constant malfunctioning of the telephone whenever the plaintiff was about to use it. The Telephone Department cited that such a problem persists because of a faulty cable that can be reduced by replacing the indicator of the apparatus with a new one. The petitioner filed a writ complaint with the court and seeking remedy for several demands and focusing on the gross negligence of the Telephone department. The court held that pursuant to Section 14 of the SRA of 1963 this performance requires constant supervision from the Court, hence specific performance is not possible. It is very difficult for the Court to monitor the performance physically.
3. Praveen Garg vs Satpal Singh & Anr : While imparting judgment, Delhi High Court considered Section 20 and Section 16(c) of the SRA of 1963. The focal point of the case is around a government contractor, also the plaintiff, who was engaged in the construction business and seeking a property. The plaintiff signed the contract with the seller for his property. Part consideration amount was transferred to the seller although documents pertaining to the transfer of title of property were not disclosed. There was a reasonable time-lapse on the part of the seller/ respondent to disclose the aforesaid title documents. In the meantime, the plaintiff started facing a financial crunch and was not in a position to complete the transaction. The respondent approached the court seeking a decree of specific performance for non-performance on the part of the plaintiff.
The case was heard in the trial court, and held that decree cannot be awarded as the respondent failed to disclose the title documents to the plaintiff. Furthermore, the case was challenged in the high court and the High Court upheld the decision of the Trial Court. It was further highlighted that the plaintiff’s willingness to perform under the contract was there, however, the delay was on the end of the respondent.
4. N.P. Thirugnanam v.Dr. R.J. Mohan Rao : it was held that a decree of the Specific Performance shall be granted if there is non-performance on the part of the plaintiff or signifies his willingness for the non-performance. In such a scenario decree shall be awarded.
5. Sukhjeet Singh v. Sirajunnisa : in this case, the landlord of the property got the possession of the property from the tenant, for carrying out his son’s wedding. Even after the event was over, the tenant didn’t receive possession of the property. The court held that the tenant was deceived by the landlord, however, the tenant gave up his possession of the property by free will, hence he is not entitled to receive it back. The case of the specific performance is not possible.
6. Ratan Pal Singh v. Kunwar Pal Singh: the case revolves around the sale of land. The agreement between the two parties was signed for the outright purchase of a piece of land. It was held that the seller can’t refuse to sell the land and offer the return of earnest money as compensation. The seller needs to perform pursuant to the agreement signed.
Conclusion:
The doctrine of specific performance, plays a pivotal role in the Indian Contract 1872, for the execution of contractual obligation by defaulting party. The statute brings justice to the aggrieved party and ensures the ultimate object of the agreement has been obtained. Ambit and limitation of the specific performance have been highlighted in the aforesaid article using various scenarios and legal judgement.
Specific performance provides an equitable remedy where monetary compensation fails to compensate for the damage. However, this remedy is not available automatically, while imparting specific performance court observes certain points into consideration, i.e. party willingness to perform, reasons for non-performance and circumstances of both parties. This was highlighted in the case of N.P. Thirugnanam v. Dr. R.J. Mohan Rao, wherein party willingness to perform was there.
Moreover, as mentioned above court observes the circumstances of the parties, this was observed in the case of Sukhjeet Singh v Sirajunnisa, wherein the tenant was not awarded a decree of specific performance.
Comprehending these cases and legal principles, it is apparent that specific performance is a great statute for enforcing contractual obligations. However, its ambit should be carefully observed considering the various aspects mentioned in the article.
