‘Specific Performance To Be Compulsorily Ordered By Courts’- Know About Changes Proposed By Specific Relief Amendment Bill [Read The Bill]

The Lok Sabha recently passed the Specific Relief (Amendment) Bill 2018, proposing to bring significant amendments to Specific Relief Act 1963.

One of the major features of the amendment is that it makes the grant of specific performance of contracts compulsory, by taking away the discretionary power of courts. As per Section 10 of the Act (as it stands now), specific performance of contract ‘may’ be enforced by the court in its discretion.  As a result of wide discretionary powers, the courts often award damages as a general rule and grant specific performance as an exception.

The amendment proposes to change this by stating that specific performance of a contract shall be enforced by the court. Similar discretionary power of courts as per Section 11 in granting specific performance in relation to trusts is also proposed to be taken away by the amendment, by making it compulsory even for trusts. Section 20 of the Bill, which deals with the guidelines for exercising discretion for granting specific performance, is sought to be substituted wholly with another provision which deals with ‘substituted performance’.

The other noteworthy features of the amendment Bill are given below:

Substituted performance

The amendment introduces the concept of ‘substituted performance’. As per this, a party who is affected by the breach of contract can choose to get the contract performed by a third party, or by its own agency, at the cost of the contracting party at default. The affected party has to give prior notice of thirty days to the other party expressing his intention to seek substituted performance.  This concept is sought to be introduced in the Act by substituted Section 20.  It is also clarified that a party by obtaining substituted performance forfeits his right to get specific performance of the contract through court.

No need to plead readiness and willingness to perform contractual obligations

As per Section 16(c) of the Act, a party has to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him. The Explanation to the Section states that the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.

Courts have been very strict regarding this requirement of S.16(c) of the Specific Relief Act, which provision has been couched in negative terms. The judicial decisions state that S.16(c) is not an empty formality and readiness and willingness are to be proved right from the date of the contract till the date of the decree. Even if it is established in evidence that the plaintiff has always been ready and willing to perform his part, in the absence of a plea in the plaint regarding readiness and willingness, no court will grant decree for specific performance to the plaintiff. Several cases have got dismissed solely because of the failure to make such a plea in the plaint.

The amendment Bill proposes to relax this stringent condition by stating that the party need only prove readiness and willingness. The specific requirement to ‘aver’ is sought to be removed by the amendment. The words “who fails to aver and prove” in Section 16(c) have been substituted by the words “who fails to prove”.

Infrastructure projects

The amendment introduces a special categorization of ‘infrastructure projects’.  The new Schedule introduced by the amendment contains the list of activities which will be treated as ‘infrastructure projects’.  Such activities are in the sectors of transportation, energy, water & sanitation, communication and social & commercial infrastructure.

The Department of Economic Affairs is the nodal agency for specifying various categories of projects and infrastructure sub-sectors, which is provided as Schedule to the Bill and it is proposed that the said Department may amend the Schedule relating to any such category or sub-sectors

No injunction to be granted against infrastructure projects

Section 20A proposed to be introduced by the amendment restrains courts from granting an injunction in a suit involving contract relating to an infrastructure project, where granting the injunction would cause impediment or delay in the progress or completion of such infrastructure project.

Special courts for infrastructure projects

Special courts are proposed for determination of suits relating to infrastructure projects.

Fixing time limit of 12 months for case disposal

The amendment seeks to fix a time limit of twelve months for disposal of cases under the Act, through the newly proposed Section 20C.

Power of court to engage experts

The newly proposed Section 14A confers power on the courts to engage experts to seek opinion on any issues in the suit.

As per the Statement of Objects and Reasons of the Amendment Bill, the Act is not in tune with the rapid economic growth happening in our country and the expansion of infrastructure activities that are needed for the overall development of the country. The Bill, which was passed by the Lok Sabha on 15^th March, now awaits passing by the Rajya Sabha.