Specific Relief Act - Compensation In Lieu Of Specific Performance Can't Be Granted Unless Specifically Claimed In Plaint : Supreme Court

In a recent judgement, the Supreme Court disallowed the claim for damages raised in lieu of specific performance of contract citing the reason that the plaintiff had not specifically sought the relief of compensation in the plaint.

The Court referred to Section 21(5) of the Specific Relief Act which says :

"No compensation shall be awarded under this section unless the plaintiff has claimed such compensation in his plaint:

Provided that where the plaintiff has not claimed any such compensation in the plaint, the court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation".

A bench comprising Justice L Nageswara Rao and BR Gavai was considering the case Universal Petro Chemicals Ltd vs BP PLC and others, which was an appeal from the judgment of the Calcutta High Court. The issue related to contractual disputes between the appellant and the respondent. The appellant had filed a plaint seeking specific performance of the the agreement with the respondent and sought a perpetual injunction against the termination notice issued by the respondent. Though the High Court granted the relief of injunction, the relief of specific performance was denied citing the bar in Section 14 (1) (b) of the Specific Relief Act, 1963. The High Court observed that the contract involves performance of future unspecified obligations and duties and it would not be possible for the Court to enforce specific performance of the material terms of the contract. The High Court further held that it was an open-ended agreement involving continuous flow of technology for innovating and overhauling the products which are upgraded from time to time to meet world class standards. Therefore, though the termination agreement was found to be not in accordance with law but the specific performance of the contract was not granted.

Before the Supreme Court, the appellant sought for compensation as the period of the agreement had expired on 31.12.2009. Damages for the period from 24.08.2005 till 31.12.2009 was therefore sought.

Senior Advocate Mr.Rakesh Dwivedi, appearing for the appellant, relied on judgments in Jagdish Singh v. Natthu Singh (1992) 1 SCC 647, Urmila Devi & Ors. v. Deity, Mandir Shree Chamunda Devi (2018) 2 SCC 284 and Sukhbir v. Ajit Singh (2021) 6 SCC 54 to argue that the appellant is entitled to damages even if such a relief was not specifically claimed.

Ms.Debolina Roy, appearing for the respondents, relied on the Supreme Court judgment in Shamsu Suhara Beevi v. G. Alex and Another (2004) 8 SCC 569 to contend that damages cannot be awarded unless specifically sought for in the plaint.

The Supreme Court noted that the judgments relied on by the appellant were distinguishable on facts. The Court held :

"The scope of Section 21 (4) and (5) was examined by this Court in Shamsu Suhara Beevi v. G. Alex and Another (supra). This Court referred to the Law Commission of India's recommendation that in no case the compensation should be decreed, unless it is claimed by a proper pleading. However, the Law Commission was of the opinion that it should be open to the plaintiff to seek an amendment to the plaint, at any stage of the proceedings in order to introduce a prayer for compensation, whether in lieu or in addition to specific performance. In the said case no claim for compensation for breach of agreement of sale was claimed either in addition to or in substitution of the performance of the agreement. Admittedly, there was no amendment to the plaint asking for compensation either in addition or in substitution of the performance of an agreement of sale".

The Apex Court noted that the appellant had not claimed damages in the plaint. Even in the appellate stage, such a relief was not claimed. In this backdrop, the Court disallowed the claim for damages.

Case Title : Universal Petro Chemicals Ltd vs BP PLC and others

Citation : 2022 LiveLaw (SC) 185

Headnotes

Specific Relief Act, 1963- Section 21(5) - Whether compensation can be granted in lieu of specific performance unless claimed in the plaint -Supreme Court disallows claim for compensation as it was not specifically claimed in the plaint 

The scope of Section 21 (4) and (5) was examined by this Court in Shamsu Suhara Beevi v. G. Alex and Another (supra). This Court referred to the Law Commission of India's recommendation that in no case the compensation should be decreed, unless it is claimed by a proper pleading. However, the Law Commission was of the opinion that it should be open to the plaintiff to seek an amendment to the plaint, at any stage of the proceedings in order to introduce a prayer for compensation, whether in lieu or in addition to specific performance. In the said case no claim for compensation for breach of agreement of sale was claimed either in addition to or in substitution of the performance of the agreement. Admittedly, there was no amendment to the plaint asking for compensation either in addition or in substitution of the performance of an agreement of sale (para 21)

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