The Specific Relief Amendment -Katta Sujatha Reddy - Judgment, Review, And Riddle

I previously published a two-part analysis of the 2022 Judgment, examining the application of the Specific Relief Amendment Act, 2018 ("Amendment"). In particular, I analysed two key questions: (i) whether the Amendment operates prospectively or retrospectively, and (ii) if deemed prospective, what the relevant date of reckoning should be—the date of the transaction or the date of the cause of action arose? The earlier posts can be accessed here and here.

A. The Procedural History Leading Up To The Review Judgment

The series of judgments passed in the Katta Sujatha Reddy dispute finds its genesis in two 1997 sale agreements and the buyer's quest for specific performance. The Trial Court, in exercise of its discretion available under the unamended Section 10 of the unamended Specific Relief Act, 1963 (“Act”), declined specific performance only for it to be reversed by the High Court of Telangana (“High Court”) in its 2021 judgment (See: WP 13334 of 2020)

Notably, by the time the High Court heard the matter and pronounced its judgment, the Amendment had taken effect. One of the key questions involved in the High Court proceedings was whether the Amendment would apply prospectively or retrospectively. Since, if it did apply retrospectively, the appeal before it would have to be decided on the basis of the amended law and not as it existed when the cause of action arose or when the suit was filed. The High Court in a detailed discussion concluded that the Amendment applies retrospectively on the basis of two crucial findings – (i) that the Amendment was procedural in nature, which also underscores the inherent nature of specific performance itself; and (ii) that the amended Section 10 of the Act was a blanket substitution with no part of the erstwhile provision surviving. Thus, pursuant to this, the High Court overturned the Trial Court's judgment and granted specific performance of the sale agreement in question, as the room for discretion previously available under the earlier provision no longer applied.

The High Court's judgment was challenged in the Supreme Court, resulting in the 2022 Judgment. By this ruling, the Supreme Court reversed the High Court's judgment and held that (i) the Amendment is prospective; and (ii) the applicable date of reckoning is the date of transaction. Based on the specific facts of the dispute, the Supreme Court declined specific performance of the sale agreement in question primarily on the grounds that the suit was barred by limitation and that the plaintiff breached the contract by not performing the contract after entering into a time sensitive agreement.

A review petition was filed challenging the 2022 Judgment, which the Supreme Court allowed in Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy & Ors.,  2024 LiveLaw (SC) 870 (“Review Judgment”). In doing so, the Court overturned its earlier ruling and reinstated the High Court's judgment.

While the Review Judgment does not provide a clear answer on whether the Amendment Act applies prospectively or retrospectively, it unequivocally “recall[ed]” the 2022 Judgment due to “errors apparent on the face of the record identified [that] go to the root of the reasoning on both the issues of limitation and specific performance.” Additionally, the Court “restore[d]” the High Court's judgment.

On this basis, one may have interpreted the Review Judgment as an endorsement of the High Court's view that the Amendment Act is procedural in nature and therefore applies retrospectively. However, the Review Judgment proceeds entirely on the unamended Act. Not because it held the Amendment to be inapplicable but because “Even assuming that the grant of relief of specific performance continued to be discretionary to a suit instituted before the date of the amendment, [the Review Court was] of the opinion that [the 2022 Judgment] committed a grave error in its analysis…” on exercise of discretion. What then is the law today?

In this post, we revisit the High Court's judgment (since it engages in an analysis of the Amendment) and assess the basis on which the High Court concluded that the Amendment ought to apply retrospectively, the effect of the Review Judgment and implications for cases that are currently pending.

B. The Telangana High Court's Judgment

Simple repeal v. amendment by substitution – Does the amended Section 10 destroy the pre-amendment Section 10?

One of the key considerations in the High Court's judgment was the manner in which Section 10 of the Act had been amended – i.e. repeal by substitution. Section 3 of the Amendment Act reads – “3. Substitution of new section for section 10. – For section 10 of the principal Act, the following section shall be substituted, namely:- “10. Specific performance in respect of contracts. – The specific performance of a contract shall be enforced by the Court subject to provisions contained in sub-section (2) of section 11, section 14 and section 16.”

The High Court, while endorsing the Allahabad High Court's judgment in Mukesh Singh v. Saurabh Chaudhary, [2019:AHC:76855], opined that since parliament repealed the old section 10 of the Act by a blanket substitution of the provision the implications of Section 6 of the General Clauses Act, 1897 must be assessed to check for the applicability of the “different intention” clause. Section 6 of the General Clauses provides that “Where any […] Central Act or Regulation […] was amended by the express omission, insertion or substitution of any matter, then, unless a different intention appears, the repeal shall not affect the continuance of any such amendment made by the enactment so repealed and in operation at the time of such repeal.” [Emphasis supplied]

So far as Section 6 of the General Clauses Act is concerned, the Supreme Court in State of Punjab v. Mohar Singh [(1955) 1 SCR 893] when deciding whether offences committed under the ordinance that preceded the enactment of the East Pakistan Refugees (Registration of Land Claims) Act, 1948, could be prosecuted once the ordinance had lapsed, held that:

“… Whenever there is a repeal of an enactment, the consequences laid down in Section 6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears. In the case of a simple repeal there is scarcely any room for expression of a contrary opinion. But when the repeal is followed by fresh legislation on the same subject we would undoubtedly have to look to the provisions of the new Act, but only for the purpose of determining whether they indicate a different intention. The line of enquiry would be, not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them.”

Thus, the question as regards the Amendment Act is – whether the repeal should not affect the continuance of the enactment so repealed or whether a “different intention appears”?

The High Court's analysis is poised on the import of amendment by substitution, as done via Section 3 of the Amendment Act. The High Court applied the 'scored off by pen' rationale as explained by the Supreme Court in Gottumukkala Venkata Krishamraju v. Union of India, [(2019) 17 SCC 590] while dealing with amendments to Section 6 of the Recovery of Debts & Bankruptcy, Act, 1993 which increased the tenure of the president of the DRT to 5 years or until attaining the age of 65 years (instead of the earlier retirement of age of 62 years). In Gottumukkala the Supreme Court ruled that the change in tenure would inure to the benefit of the presidents in office and in the context of an amendment by substitution observed as follows:

“…The rule is that when a subsequent Act amends an earlier one in such a way as to incorporate itself, or a part of itself, into the earlier, then the earlier Act must thereafter be read and construed as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that thereafter there is no need to refer to the amending Act at all…..”

Thus, in the context of the amended Section 10 of the Act, the High Court endorsed the view of the Allahabad High Court in Mukesh Singh & Ors. v. Saurabh Chaudhary & Anr. [2019 SCC OnLine ALL 5523] on the consequences of Section 6 of the General Clauses Act as regards the amended Section 10. The High Court expressed its approval of the Allahabad High Court's view and held that – “… perusal of the Amendment Act of 2018 evinces the clear intention with which the parliament has given an effect to this amendment. The amendment to SRA by way of Amendment Act of 2018 can be grouped into two parts. There are provisions which have been simply amended such as Section 6, 11, 15, 16, 19, 21, 25 and 41, whereas Sections 10, 14 and 20 have been substituted thereby replacing the pre-amended provisions with the new ones. Had the parliament intended otherwise, these three provisions too would have been amended simply instead of by way of substitution. Replacing the provisions by substitution, the legislature has made it clear that the law would operate as retrospectively and not prospectively. Therefore, we find ourselves in agreement with the opinion of rendered by Allahabad High Court.”

Rooted in this fundamental distinction between the amendment by substitution and amendment simpliciter, the High Court concluded that the nature of the repeal (by substitution) was such that - (i) the existing rule was made to cease; and (ii) the new rule is brought in its place. Thus, signifying an intention to obliterate the old rule, and for the new rule to operate, as if it always existed.

Ergo, on this count, the High Court reasoned that Sections 10, 14 and 20 of the Amendment Act would apply retrospectively.

Substantive Law v. Procedural Law

I have addressed the substantive law versus procedural law conundrum in Part I of my earlier posts. Analysing the 2022 Judgment (now withdrawn) and the Amendment Act, I had argued that:

i. the modification to Section 10 and the deletion of the earlier Section 20 via the Amendment relate to the scope of the court's powers, narrowing their discretion and replacing subjective criteria with objective standards.

ii. This change, while significant from a public policy standpoint, may not directly alter the rights or obligations of the contracting parties.

iii. Therefore, these provisions, which have no onerous impact on the parties' contractual rights, are better classified as procedural amendments that can be applied to pending disputes.

On the amendment to Section 14, even though the removal of the adequacy of damages criterion represents a substantive policy alteration it does not impact the rights or obligations of the parties. The deletion of the adequacy of damages defence, if at all, only alters the weight given to the evidence of a fact and thus ought to be treated procedural.

The High Court however proceeded on two premises –

i. that specific relief is a specie of the law of procedure; and

ii. that no litigant has a vested right in procedural law.

In making good these two propositions the High Court borrowed from Holland's - On Jurisprudence to hold that “the purpose of the procedure is to select a competent jurisdiction having the cognizance of the lis, and ascertainment of a proper forum for the decision, setting in motion the machinery for the procurement of the decision and then setting in motion the physical force for the execution of the procured decision.”

The High Court also relied on the Calcutta High Court's decision in Radheshyam Kamila v. Kiran Bala Dasi., [AIR 1971 Calcutta 341] and noted that “specific relief, as a form of judicial process, belongs to law of procedure, and, is a body of written law arranged according to the natural affinities of the subject-matter, would find its place as a distinct Part or other division of the civil procedure code.”

Lastly, quoting from the Supreme Court's judgement in Adhunik Steels Ltd v. Orissa Manganese and Mineral Pvt Ltd., (2007) 7 SCC 125, the High Court adopted the view that “the law of specific relief is said to be, in its essence, a part of the law of procedure, for, specific relief is a form of judicial redress.”

Based on these three authorities the High Court, without necessarily analyzing each provision of the Amendment, on a theoretical footing, concludes that specific relief forms a part of procedural law.

So far as its second premise is concerned the High Court relying on the judgement in Hitendra Vishnu Thakur v. State of Maharashtra, (1994) 4 SCC 602 held that while “every litigant has a vested right in substantive law no such right exists in procedural law”.

The High Court reasoned that if a new act affects only matters of procedure, prima facie, it applies to all actions pending, as well as future. This principle applies to:

i. the forms of procedure;

ii. the admissibility of evidence; and

iii. the effect which the courts give to evidence of a particular category.

The High Court however noted with caution “that a procedural statue should not, generally speaking, be applied retrospectively, where the result would be to create new disabilities or obligations, or to impose new duties in respect of transactions already completed.”

Finally, the High Court ruled that “the Amendment Act of 2018 does not confer any right on litigants neither it abrogates any right or privilege so vested in parties before the amendment. What the amendment did is it took away the discretion of the Court, making an equitable relief a statutory one. A perusing, in absence of specifics of specific saving clause would reveal that amendment is in itself procedural in nature”

Thus, both in view of the manner in which the Amendment Act was introduced, i.e., by substitution; and that the Amendment Act constituted procedural law the High Court held that the Amendment Act would operate retrospectively.

The Riddle – Will the amendment apply to pending proceedings?

The High Court ruled that since the Amendment Act applies retrospectively, it will apply to pending matters including appeals.

The High Court drew from the decision of the Calcutta High Court in Church of North India v. Tt. Reverend Ashoke Biswas, [2019 SCC Online Cal 3842], which in interpreting Section 14 of the Act noted that since the provision sets out contracts that are not specifically “enforceable”, and since the determination of enforceability is as on the date of decree of a suit (and not earlier), the Amendment Act would apply to suits yet to be decreed – i.e. pending suits. The Calcutta High Court reasoned that: “The question of enforcement comes only on the date of passing of the decree and not the institution of the suit. If the date of filing of the suit was the relevant date, the language of Section 14(1) would be something akin to: 'no suit can be filed for specific performance of the following contracts…' Hence, the relevant date is the date […] of the decree. As such, the 2018 Amendment becomes applicable to the present lis, since he amendment came into force during pendency of the suit.”

Further, by the same yardstick, since appeals too have been held to be a continuation of the suit, relying on the judgment in Lakshmi Narayan Guin vs. Niranjan Modak (1985) 1 SCC 270, where the Apex Court observed that “if a new law […] applies to pending proceedings, it must govern the rights of the parties, even if the change occurs after the trial court's judgement” the High Court ruled the Amendment Act applicable to pending appeals as well.

C. The Review Judgment

In the Review Judgement, the Supreme Court does not offer an unequivocal ruling on the law, but nonetheless overturns the 2022 Judgement by holding that “Even assuming that the grant of relief of specific performance continued to be discretionary to a suit instituted before the date of the amendment, […] this Court committed a grave error in its analysis of whether the Court ought to use its discretionary power in this matter.” The Review judgment, based on an analysis of the facts and evidence, concluded that “On an application of the facts to the principles in [the unamended] Sections 10 and 16 of the Specific Relief Act, we are of the considered opinion that this is a fit case for this Court to exercise its discretion to direct specific performance.” Undoubtedly, the Review Judgment applied the unamended Act in its analysis of the evidence to conclude that its 2022 Judgment suffered from errors apparent on the face of the record.

The Review Judgment's concluding paragraph reads “Having concluded that the errors apparent on the face of the record identified above go to the root of the reasoning on both the issues of limitation and specific performance, we recall the judgment of this Court... The judgment of the High Court dated 23 April 2021 is restored.”

What then is the fate of the Amendment, at least so far as its application to actions pending as on 1 October 2018 is concerned?

While recalling the 2022 Judgment no part of it is saved. While restoring the High Court's judgment no part of it is excluded. The Review Judgment does not expressly endorse the High Court's judgment on the principles applied, all the same it does not detract from it, and does not offer an independent analysis on the application of the Amendment. In its own analysis of the evidence, the Review Judgment reapplied the pre-amendment provisions (possibly due to the limitations of the review jurisdiction) to find that discretion to direct specific performance ought to be exercised.

There is little in the Review Judgment to conclude that the 2022 Judgment's holding on the prospective application of the Amendment has been upheld. All the same, though the High Court's judgment has been restored, there is no express or implied endorsement of the High Court's conclusion that the Amendment applies retrospectively. The best hint we have in favour of retrospective application is in the Review Judgment's choice of words - “Even assuming that the grant of relief of specific performance continued to be discretionary to a suit instituted before the date of the amendment” The 'Even-if' unfortunately does not yield towards a settled finding, and the Apex Court perhaps restrained itself from returning a specific finding on the issue in view of the limitations of the review jurisdiction.

It has been long settled and authoritatively reiterated in The State of Orissa v. Sudhanshu Misra, AIR 1968 SC 647, that a judgment is an authority on only what it decides. Also, as acknowledged in Govt. of NCT v. KL Rathi, [2023] 6 SCR 209, once the original judgment is either reversed, confirmed or modified by a review judgment, the review judgment supersedes the original judgment. Thus, so far as the Amendment goes, the Review Judgment is all we have to go by, with no specific ruling on whether the Amendment applies prospectively or retrospectively.

One would have hoped for a more definitive ruling on the issue. But for now, until there is a new ruling, we do not have a settled answer to this avoidable riddle, and the resulting vacuum.

The author is an Advocate at High Court of Karnataka & Supreme Court of India. Views are personal.