SPECIFIC PERFORMANCE OF CONTRACT

WHEN SPECIFIC PERFORMANCE OF CONTRACT

SHOULD BE GRANTED AND WHEN SHOULD IT BE REFUSED.

EXTENT OF DISCRETION AND MANDATORY

PROVISIONS RELATING TO DAMAGES AND

COMPENSATION

Specific Relief Act was originally embodies in 1877. The Act of 1877 is not exhaustive. For many decades the Act of 1877 was subjected to judicial interpretation revealing in that process many deficiencies and lacunae and giving rise in several instances to divergencies and cleavages of judicial opinion. The Law Commission appointed by the President of India after the advert of the New Constitution addressed itself to his task at its very first meeting held on 17^th September, 1955. The recommendation of the commission were embodied in its Ninth Report which was forwarded to the Government of India on 19^th July, 1958. They culminated in the passing of the Specific Relief Act of 1963 which came into force from 1^st day of March, 1964.

As observed by Pollock and Mulla in “the Specific Relief Act” the law of Specific Relief in its essence part of the law of procedure, for specific relief is a form of judicial process. Such right is discretionary for a court to grant an interest in land to be recognised cannot be at the discretion of the court nor be taken away by it.

The basic principle embodied in the Specific Relief Act as regards grant and refusal of specific performance is a matter of discretion of the court. It is to be exercised on sound judicial principles.

Section 10 – Cases in which specific performance contract enforceable :- Except as otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the court, be enforced --

a when there exists no standard for ascertaining the actual damage caused by the non-performance of the act agreed, be done; or

b when the act agreed to be done in such that compensation in money for its non-performance would not afford adequate relief.

Explanation :- Unless and until the contrary is proved, the court shall presume -

(i) that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money; and

(ii) that the breach of a contract to transfer movable property can be so relieved except in the following cases :-

(a) where the property is not an ordinary article of commerce, or is of special value or interest to the plaintiff, or consists of goods which are not easily obtainable in the market;

(b) where the property is held by the defendant as the agent or trustee of the plaintiff.

The very foundation of the jurisdiction to decree specific performance of contracts is that an award of damages does not afford the aggrieved party a complete remedy and put his in a situation as beneficial as if the contract is specifically enforced. If in the opinion of the Court damages will be an adequate remedy, specific performance of the contract cannot be decreed.

Section 14 :- Contracts not specifically enforceable – (1) The following contracts cannot be specifically enforced, namely -

(a) a contract for the non-performance of which compensation in money is an adequate relief;

(b) a contract which runs into such minute or numerous details or which is so dependant on the personal qualifications or violation of the parties, or otherwise from its nature is such, that the court cannot enforce specific performance of its material terms;

(c) a contract which is in its nature determinable;

(d) a contract the performance of which involves the performance of a continuous duty which the court cannot supervise.

As per section 20 the jurisdiction to decree the specific performance is discretionary and the court is not bound grant such relief merely because it is lawful to do so; but the discretion but sound and reasonable guided by judicial principle and capable of correction by a court of appeal. Section 20 (2) contemplates the contingencies in which discretion not to decree a specific performance can be exercised.

Section 20 - Discretion as to decreeing specific performance -

(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or

(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff;

(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.

Hon'ble Supreme Court in case M.Meenaxi & others -versus- Metadin Agrawal (decased) by LR's reported in 2006 (8) SCJ 509, has held that,

“Section 20 of the Specific Relief Act, confers a discretionary jurisdiction upon the courts. Undoubtedly such discretion cannot be refused to be exercised on whims and caprice; but when the passage of time contract becomes frustrated or in some cases increase in the prices of land takes place, the same being relevant factors can be taken into consideration for the said purpose while refusing to exercise it's jurisdiction courts are not precluded from taking into consideration the subsequent events. Only because the plaintiff respondents ready and willing to perform their part of contract and even assuming that the defendant was not entirely vigilant in protecting their rights same cannot be ground for granting a specific performance”.

As per section 21 of the Specific Relief Act, the courts are empowered to award compensation in certain cases .

On plain reading of the section it appears that a compensation may be awarded only when following three conditions are satisfied.

1) The court must decide that specific performance ought not to be granted;

2) There must be a contract between the parties which must have been broken by the defendant against whom the compensation is to be granted; and

3) The plaintiff must have proved his right to the compensation to be awarded.

A claim for damages in lieu of specific performance is different from a claim to damages for breach of the contract. If it is in lieu of specific performance the plaintiff has to allege and prove readiness and willingness on his part to perform his part of the contract. This remedy cannot be granted if the remedy of specific performance is abandoned. The claim for damages for breach of contract is different and may be enforced even if the claim to specific performance is abandoned. The Court has jurisdiction to grant the relief of damages for breach of contract even if the plaintiff has abandoned the relief of specific performance. In addition to granting specific relief, court has power to grant some compensation. Where the claim to damages is based upon the breach of the contract and recession by the plaintiff, the plaint should make allegations appropriate to such an action.

CONCLUSION

Grant of specific performance by the court is purely discretionary relief and therefore court must adhered to the facts and circumstances of each case with sound judicial principles.