This Article is written by Parnika Basak, pursuing B.A. LL.B., from Shyambazar Law College, presently in 5th Year, during my internship at LeDroit India.
ABSTRACT
The law relating to the specific performance are enshrined in the Specific Relief Act, 1963. This Act is considered to play a pivotal role in the realms of civil law. The above act includes some major conceptions relating to performance of contracts and certain injunctive reliefs which can be secured alternatively. This article mostly focusses on the basic principles and vital aspects to keep in mind while securing specific performance of contracts relating to several immovable and movable properties. The specific performance of contract is also covered under the Indian Contract Act, 1872, which too focusses on the general principles of contact law. The law under Specific Relief Act, 1963 has a more holistic view of the term ‘specific performance’ than the law under Indian Contract Act of 1872. The law under Specific Relief Act presumes that breach of contract with respect to movable properties can be compensated by refusing the performance thereby.
Keywords: Assignment of contract, Breach of contract, Contribution among joint promisors, Doctrine of Specific Performance, period of limitation of contract, reciprocal promise, remissions, rescissions, tender.
INTRODUCTION
A contract is an agreement, both oral or written, that specifies rights that are legally enforceable and the obligations relating to two or more parties. A contract usually focusses on the consent between parties with respect to the transfer of goods, services, monetary values and contracts that are contingent in nature. A person must abide by the contractual obligations and must not fail in doing so. In case of failure to abide by, the other party to the contract will have the right to sue the party for the breach of contract. This is known as “Specific Performance”. Orders of specific performance are claimed when damages fails to serve as an adequate remedy, including matters relating to land sale. Section 10 of the Indian Contract Act, 1872, states that an agreement becomes a contract only if it is entered into with free consent of the parties to the contract, for a lawful consideration, and for a lawful object which must not be void. Such kind of orders are discretionary in nature, so it completely depends upon the circumstances of the specific cases. Specific performance is considered to be an extraordinary remedy, awarded by the courts when they perceive damages to be inadequate compensation1.
Essentials of a Valid Contract
(1) Offer- The first and foremost element of a contract is offer. Without offer, there can be no contract. It is given due importance on the part of the other party to make an offer to another party to enter into a contract. After the offer is being made by the party to the other party, the other party to the contract decides upon whether he wants to enter into the contract or not.
(2) Acceptance- After an offer is being made to the other party, the contract can be made only if the other party accepts it. Acceptance in the sense the other party must be of the knowledge about the regulations of the offer. It can be made verbally or in written form.
(3) Consideration- Consideration is considered to be a very vital element in a contract. This term basically means to want something in exchange or to abstain from doing something on the part of the other party.
(4) Legal Object- The other element of a contract is its legal objectives. The purpose of entering in a contract must be always legal or else the contract is considered as void.
1 Rukuvijay, ‘Specific Performance Of Contract’ (2024) Legal Service India – Law, Lawyers and Legal Resources <https://www.legalserviceindia.com/legal/article-8493-specific-performance-of-contract.html> accessed 7 September 2024
(5) Capacity to contract- Capacity to contract is considered as an important element of a contract. The capability of the parties must be legal for entering a contract. As per Section 11 of Indian Contract Act, 1872, the parties to the contract must be mentally sound, the majority age must be attained, is not disqualified from entering into a contract by law.
(6) Mutual obligations- Performance of all the obligations must be done on behalf of all the parties to the contract is what is mentioned in this element. Having one-sided arrangements are considered as void as there is no mutual obligations between the parties.2
Specific Performance of a Contract
Specific performance of a contract is a legal equitable remedy that requires a party to fulfil their obligations under a contract, in case the monetary compensation are inefficient. It is typically available in the sale of land, but otherwise not available in case damages are an alternative remedy. Specific performance is commonly sought in the form of an injunctive relief concerning real property information. Specific Performance of Contract is an extraordinary remedy/ relief that compels a party for executing the contract to the terms they previously agreed upon so that the justice can be done between the parties. It grants the plaintiff what he demands from the contract, and by compelling them to follow it thus granting more complete and crystallised form of justice by avoiding damages for breach of contract.
Limitation of Specific Performance of a Contract
Article 54 of the Limitation Act, 1963 deals with the limitation period of a suit for specific performance. It specifies that the suit for specific performance has to be filed within three years from the stipulated date in the contract or from the refusal date to perform the contract.
Doctrine of Specific Performance of a Contract- Doctrine of Delay and Laches
Laches doesn’t counts for limitation. Therefore mere lapse of time period doesn’t counts as laches. Whereas, delay is the short statutory period of limitation that can be fatal in case of circumstantial changes.3
2 Rukuvijay, ‘Specific Performance Of Contract’ (2024) Legal Service India – Law, Lawyers and Legal Resources <https://www.legalserviceindia.com/legal/article-8493-specific-performance-of-contract.html> accessed 7 September 2024
3 Kapoor N.D, Elements of Mercantile Law (39th ed, Sultan Chand & Sons (P) Ltd 2018).
Enforceability of Specific Performance of Contract
Under certain conditions a specific performance of the contract can be enforceable:
(a) When there is no medium to determine actual damage caused
It is a condition when the plaintiff fails to determine how much loss he/she has suffered. If the damage caused by breach of a contract is ascertainable, then there is no need of remedy to the plaintiff, of specific performance in that scenario. (b) When money compensation is believed as an inadequate relief
The following cases in which money is considered to be inadequate are: (i) When the subject- matter of the contract is an immovable property (ii) The nature of the article is so vague that it is rarely available in the market.4
Specific Performance of a contract can be obtained by:
Under Section 15 of the Specific Relief Act, 1963, a specific performance of a contract can be obtained by the following-
(a) Any party to a suit.
(b) Representative of a group/ party to a contract.
(c) In case of doubt arises in a contract of marriage, the beneficiary entitled thereon. (d) In case of a tenant entering in a contract for life, the remainderman. (e) A reversioner in possession and remainder if there is a breach of contract contrary to the agreement made thereunder.
(f) In case of a company formed an amalgamation with another company through a contract, the new company which arises from such amalgamation.
(g) In case of the promoters of a company entering into contract before its incorporation.
Case law: V. Ramesh v. Smt. Bhavani (O.S. No. 178 of 2016)
This case was filed against the judgement given by the court of the Principal District Judge of Kancheepuram at Chengelpet. In this case the plaintiff is the appellant in the Appeal Suit who has instituted the suit for specific performance for the purchase of a plot of a land for his own house, which is being described in the plaint itself clearly. The parties thereby agreed for
selling the suit (the mentioned property) for a total consideration of value of Rs. 18 lakhs, out of which Rs. 7 lakhs was being paid as an advanced amount to the defendant by the plaintiff.
4 Sanjana Tripathy, ‘Specific performance of contract and its enforceability’ (2018) https://blog.ipleaders.in/specific performance-of-a-contract/ accessed 7 September 2024
On receiving the amount of Rs. 11 lakhs, the defendant had to execute the sale deed according to the agreement of the suit sale.
The Trial Court raised the issues of whether the suit agreement was valid and true and that whether the plaintiff had any entitlement of seeking any relief of specific performance, what relief might be sought.
Plaintiff’s Contentions: The plaintiff has contended that he had been always ready and wilful to perform on his part of the contract or agreement. He has made constant demands with the defendant, who evaded his part of that contract. This eventually resulted in notice issuance and a need for the suit of specific performance. The Learned Advocate on behalf of the plaintiff further stated that registration of a sale agreement to be a mandatory condition, and that in case of the sale agreement being unregistered, the Court can decide the case summary upon its merits.
Defendant’s Contentions: Denying the fact and allegations of what plaintiff stated, the defendant further contended that he borrowed a loan of amount Rs. 3 lakhs, and that the plaintiff has obtained signatures on a plain sheet of paper for the same subsequently. Henceforth, claimed that the agreement of the suit sale is falsified and the defendant was nowhere responsible of selling the property to the plaintiff. That the defendant had no intention of executing the sale, because of the blank paper signatures adduced by the plaintiff amounting the contract to be void to execute further and therefore liable of dismissal. The Learned Advocate disputing the statement said by the plaintiff’s Advocate, on behalf of the defendant stated that Trial Court hadn’t framed the case summary about readiness and willingness. They didn’t know about the specific nature of the contract. The defendant further took defence considering the agreement of suit sale to be falsified and non- enforceable.5
Court’s Judgement on the case: After thorough consideration on the both side arguments of the case, the Court opined that the Trial Court has wrongly committed an error by dismissing the suit on a mere ground of the sale agreement being not a registered document. Such a registration is considered to not be mandatory, hence the Trial Court should have considered the merits of the case along with its terms and conditions. The judgement was conveyed on the ground that the agreement of the sale suit is not a registered document and that the Trial
5 V. Ramesh v. Smt. Bhavani [2020] C.M.P. No. 27726 of 2019 <https://indiankanoon.org/doc/19626660/>
Court failed to frame any issues regarding the readiness and the willingness on the part of the plaintiff for the purpose of granting relief for specific performance.
Final Judgement remarks:
With reference to the issues, the Trial Court arrived at a conclusion that the suit sale agreement is an unregistered document and therefore the same cannot be enforceable. The Trial Court further opinionated that an unregistered sale agreement cannot be entertained for the purpose of enforcing the conditions stipulated and therefore, dismissed the suit and granted the alternate relief and refund of advance with interest. Further the Court considered the fact that the suit required re-trial and for that purpose it needs to be remanded. The case gets quashed and the original suit is sent back to the Trial Court for the re-consideration of the case. The parties to the suit had the liberty to put forward their pleadings whatsoever by following the prescribed procedures thereby. The Trial Court was being asked to conduct the trial without unnecessary adjournments and to ensure that the verdict is passed within the reasonable period of time. The same had been addressed to the parties concerned. Lastly, the court decides that the appeal suit stands as a chance, but the other related civil cases petitions were closed subsequently.6
CONCLUSION
It is accurate to say that specific performance is a crucial concept in contract law. This legal remedy allows courts to order a party to fulfil their contractual obligations exactly as agreed upon, rather than merely paying damages for breach of contract. Throughout this article, we have explored the various facets of specific performance, including its definition, elements of
contracts eligible for the remedies, and the criteria courts considers while granting specific performance.
In conclusion, specific performance is a vital tool for ensuring that parties uphold their contractual commitments, particularly in cases where monetary damages would be inadequate. By understanding the intricacies of specific performance, individuals and
6 6 V. Ramesh v. Smt. Bhavani [2020] C.M.P. No. 27726 of 2019 <https://indiankanoon.org/doc/19626660/>
organizations can better navigate the complexities of contract law, negotiate more effective agreements, and seek appropriate remedies when disputes arise. As the legal landscape continues to evolve, the concept of specific performance will remain a cornerstone of contract law, providing a vital safeguard for parties seeking to enforce their contractual rights. As the law of specific performance of contract is grounded on equity, considering the conduct of the plaintiff, determining the hardships the parties to the contract faces and the availability of adequate alternative remedies are sought by taking into consideration.
