Specific Relief Act 1963 Notes

Chapter 9 – Law Relating to Specific Relief

9.1 Introduction

• The law is defined and amended in the Specific Relief Act of 1963.

Specific Relief and Defense

Recovery of Specific Immovable Property

• Section 5: Outlines that a person entitled to the possession of specific immovable property may recover it as per the Code of Civil Procedure, 1908.

• The plaintiff must prove they have a better title in such suits.

Suit by Person Dispossessed of Immovable Property

• Section 6: If a person is dispossessed without consent from immovable property, not in due course of law, they may recover possession via suit.

• This can be done by:

  • Themselves.

  • Any person through whom they have been in possession.

  • Any person claiming through them.

• Limitations:

  • A suit under section 6 must be brought within six months from dispossession.

  • No suit can be brought against the Government.

• No appeal or review is allowed from any order or decree passed in a suit instituted under section 6.

9.2 Recovery of Specific Movable Property

• Sections 7 & 8: Address the recovery of specific movable properties.

• Section 7: A person entitled to the possession of specific movable property may recover it as per the Code of Civil Procedure, 1908.

• Section 8: Addresses the liability of a person in possession, not as owner, to deliver to persons entitled to immediate possession.

  • Any person with possession or control of a movable property, of which they are not the owner, may be compelled to deliver it to the person entitled to immediate possession if:

    • They hold the item as an agent or trustee of the plaintiff.

    • Monetary compensation would not be an adequate relief for the loss.

    • Ascertaining the actual damage caused by the loss would be extremely difficult.

    • The possession of the item was wrongfully transferred from the plaintiff.

Specific Performance of Contracts and Defense

• Specific performance is an equitable remedy where a court orders a party to perform a specific act to complete the contract.

Defenses Respecting Suits for Relief Based on Contract

• Section 9: When relief is claimed for a contract, the defendant can plead any ground available to them under contract law.

9.3 Specific Performance in Respect of Contracts

• Section 10: The specific performance of a contract shall be enforced by the court subject to the Specific Relief Act, 1963.

• Section 12: Deals with specific performance of a part of a contract.

  • The court shall not direct the specific performance of a part of a contract, with exceptions:

    1. Small Portion Unperformed:

       • If a party cannot perform the whole contract, but the unperformed part is a small proportion and admits monetary compensation, the court may direct specific performance of the performable part and award compensation for the deficiency.

       • Example: A contracts to sell B a piece of land of $100$ bighas, but $2$ bighas belong to a stranger. If those $2$ bighas aren't crucial for the use of the $98$ bighas, A may be directed to convey the $98$ bighas to B and compensate for the missing $2$ bighas.

    2. Considerable Portion Unperformed:

       • If the unperformed part is a considerable part of the whole and:

         • Admits monetary compensation, OR

         • Does not admit monetary compensation,

       • Then the party in default is not entitled to a decree for specific performance.

       • However, the court may direct the party to perform what they can if the other party:

         • Pays the agreed consideration reduced by the consideration for the unperformed part (if it admits compensation), OR

         • Pays the full consideration without any abatement (if it doesn't admit compensation), AND

         • Relinquishes all claims to the remaining part and rights to compensation.

    3. Separate and Independent Parts:

       • When a part of a contract can be specifically performed separately from another part that cannot, the court may direct specific performance of the former part.

       • Example: A contracts to sell B $100$ bighas for $Rs. 1,00,000$. Only $50$ bighas belong to A. A cannot demand specific performance, but B can demand specific performance to get the $50$ bighas by paying the full $Rs. 1,00,000$.

• Katta Sujatha Reddy and Ors. vs. Siddamsetty Infra Projects Pvt. Ltd. and Ors.:

  • Supreme Court decided that the amendment made to Section 10 of the Specific Relief Act in 2018 is prospective, not retrospective.

  • The 2018 amendment cannot apply to transactions that occurred prior to its enactment.

  • Under the earlier law, granting specific performance was discretionary but had to be principled.

9.5 Rights of Purchaser or Lessee Against Person with No Title or Imperfect Title

• Section 13: Outlines the rights of a purchaser/lessee against a seller/lessor with no title or imperfect title.

  • If the vendor/lessor acquires any interest in the property after the contract, the purchaser/lessee can compel them to make good the contract.

  • If acceptance of another person is required to validate the title, the purchaser/lessee can compel the vendor to procure such acceptance.

  • If the vendor sells unencumbered property but it's mortgaged for an amount not exceeding the purchase money, the purchaser can compel the vendor to redeem the mortgage.

  • If the vendor/lessor sues for specific performance and the suit is dismissed due to lack of or imperfect title, the defendant is entitled to a return of their deposit with interest.

  • These provisions also apply to contracts for the sale or hire of movable property.

Contracts Not Specifically Enforceable

• Section 14: Lists contracts that cannot be specifically enforced:

  • Contracts where a party has obtained substituted performance.

  • Contracts involving continuous duty which the court cannot supervise.

  • Contracts dependent on personal qualifications of the parties.

  • Contracts that are determinable in nature.

9.6 Who May Obtain Specific Performance

• Section 15: Specifies who may obtain specific performance of a contract:

  • Any party to the contract.

  • The representative in interest.

  • Beneficiaries in marriage settlements or family compromises.

  • Remainder man, where tenant for life entered into contract in due exercise of a power

  • A reversioner.

  • New limited liability partnership after amalgamation.

  • New company after amalgamation.

  • A company, when the promoters of a company have, before its incorporation, entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation, the company.

Unenforceable Contracts

• Section 16: Specific performance cannot be enforced in favor of a person:

  • Who has obtained substituted performance of the contract.

  • Who is incapable of performing or acts in fraud of the contract.

  • Who fails to prove they have performed or were ready and willing to perform essential terms.

Relief Against Parties and Persons Claiming Under Them by Subsequent Title

• Section 19: Specific performance may be enforced against:

  • Either party.

  • Any person claiming under them, except a transferee for value who has paid in good faith without notice.

  • New limited liability partnership after amalgamation.

  • New company after amalgamation.

  • A company, when the promoters of a company have, before its incorporation, entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation, the company provided that the company has accepted the contract and communicated such acceptance to the other party to the contract.

9.7 Substituted Performance of Contracts

• If a contract is breached, the suffering party can opt for substituted performance via a third party or their own agency and recover expenses from the breaching party.

• Substituted performance requires a written notice of not less than thirty days to the breaching party, calling for performance.

• The suffering party cannot recover expenses unless the contract is performed through a third party or their own agency.

• Section 20 doesn't prevent the suffering party from claiming compensation.

Special Provisions for Contract Relating to Infrastructure Project

• No injunction shall be granted if it would cause delay in the progress or completion of such infrastructure project.

9.8 Expeditious Disposal of Suits

• Suits filed under this Act should be disposed of within twelve months from the date of service of summons to the defendant.

• This period can be extended by up to six months.

Power to Award Compensation in Certain Cases

• The court can award compensation in suits for specific performance:

  1. Plaintiff can claim compensation for breach in a suit for specific performance.

  2. If specific performance isn't granted but a contract was breached, the plaintiff is entitled to compensation.

  3. Even if specific performance is granted, additional compensation can be awarded if it's insufficient to satisfy justice.

  4. Compensation can only be awarded if claimed in the plaint, but the court may allow amendment of the plaint.

Special Courts

• Section 20B: Empowers the State Government to designate Civil Courts as Special Courts to try suits under this Act related to infrastructure projects.

9.9 Liquidation of Damages Not a Bar to Specific Performance

• Section 23: A contract may be specifically enforced even if it names a sum to be paid in case of breach if the sum was intended to secure performance, not to provide an option to pay money instead of performing.

Rectification of Instruments

• Rectification means correcting an error in an instrument to reflect the parties' real intention.

• When fraud or mutual mistake causes a contract or instrument to not express the real intention:

  • Either party may sue for rectification.

  • The plaintiff may claim rectification in any suit where a right under the instrument is in issue.

  • The defendant may ask for rectification.

• The court may direct rectification if it finds the instrument doesn't express the parties' real intention due to fraud or mistake, without prejudice to rights acquired by third parties in good faith and for value.

• A contract may first be rectified and then specifically enforced if the party has prayed for it.

• Relief for rectification must be specifically claimed.

9.10 Rescission of Contracts (Sections 27-30)

• “Rescission” means terminating a contract that is still operative, making it null and void from the beginning. It doesn't apply to void contracts.

• Any person interested in a contract may sue to have it rescinded if:

  • The contract is voidable or terminable by the plaintiff.

  • The contract is unlawful for reasons not apparent on its face, and the defendant is more to blame.

• The court may refuse to rescind if:

  • The plaintiff has ratified the contract.

  • Circumstances have changed, preventing restoration to the original position.

  • Third parties have acquired rights in good faith without notice.

  • Only part of the contract is sought to be rescinded and is not severable.

Rescission in Certain Circumstances of Contracts for the Sale or Lease of Immovable Property, the Specific Performance of Which Has Been Decreed

• If a decree for specific performance of a sale or lease has been made, and the purchaser/lessee doesn't pay within the allowed period, the vendor/lessor can apply to rescind the contract.

• The court may then rescind the contract.

9.11

• In a contract that is rescinded, the Court shall:

  • Direct the purchaser/lessee, if they have obtained possession of the property under the contract, to restore such possession to the vendor/lessor; and

  • Direct payment to the vendor/lessor of all the rents and profits which have accrued in respect of the property from the date on which possession was so obtained by the purchaser or lessee.

• If the purchase or lessee pays the purchase money or other sum which he is ordered to pay under the decree within the period referred the court may, on application made in the same suit, award the purchaser or lessee such further relief as he may be entitled to, including in appropriate cases all or any of the following reliefs, namely:

  • The execution of a proper conveyance or lease by the vendor or lessor.

  • The delivery of possession, or partition and separate possession, of the property on the execution of such conveyance or lease.

Cancellation of Instruments

• Any person against whom a written instrument is void or voidable and who fears it may cause serious injury if left outstanding may sue to have it adjudged void or voidable.

• The court may order it to be delivered up and cancelled.

• If the instrument is registered, the court sends a copy of its decree to the registration officer, who notes the cancellation on the instrument in his books.

What Instruments May Be Partially Cancelled

• Where an instrument is evidence of different rights or different obligations, the court may cancel it in part and allow it to stand for the residue.

9.12 Declaratory Decrees (Sections 34-35)

• A declaratory decree judicially ascertains a right relating to property or the legal character of a person.

Discretion of Court as to Declaration of Status or Right

• Any person entitled to a legal character or property right may sue someone denying their title, and the court may declare their entitlement.

• The plaintiff need not seek further relief.

• No declaration will be made if the plaintiff omits to seek further relief when able to do so.

Effect of Declaration

• A declaration binds only the parties to the suit, those claiming through them, and, where any of the parties are trustees, on the persons for whom they would be trustees if in existence at the date of the declaration.

Preventive Relief (Sections 36-41)

• Preventive Relief means preventing a party from doing that which he is under an obligation not to do.

• Preventive relief is granted at the discretion of the court by way of an injunction.

• The Supreme Court in State of Madhya Pradesh v. Mangilal Sharma, held that a declaratory decree merely declares the right of the decree holder vis-a-vis the judgement debtor and does not in terms direct the judgement debtor to do or refrain from doing any particular act or thing. It cannot be executed as it only declares the rights of the decree-holder.

9.13

• Lord Halsbury defines an injunction as “a judicial process whereby a party is ordered to refrain from doing or to do a particular act or thing”.

• The main difference between an injunction and specific performance is that the remedy in case of an injunction is generally directed to prevent the violation of a negative act and therefore deals not only with contracts but also with torts and many other subjects of purely equitable one, whereas specific performance is directed to compelling performance of an active duty.

• It is known as a “judicial process by which one, is restrained from continuing or commencing such wrongful act. Injunction is the most ordinary form of preventive relief.

Temporary and Perpetual Injunctions

1. Temporary injunctions continue until a specific time or further order of the court.

2. A perpetual injunction is granted by a decree made at the hearing and upon the merits of the suit. The defendant is perpetually restrained from asserting a right or committing an act contrary to the plaintiff's rights.

Perpetual Injunction When Granted

• A perpetual injunction may be granted to prevent the breach of an obligation existing in the plaintiff's favor in the following cases:

  • Where the defendant is trustee of the property for the plaintiff.

  • Where there exists no standard for ascertaining the actual damage caused.

  • Where the invasion is such that compensation in money would not afford adequate relief.

  • Where the injunction is necessary to prevent a multiplicity of judicial proceedings.

Characteristics of an Injunction

• It is a judicial process.

• The object of this judicial process is to restrain or to prevent.

• The act restrained or prevented is a wrongful act.

9.14 Mandatory Injunctions

• When, to prevent the breach of an obligation, it is necessary to compel the performance of certain acts which the court is capable of enforcing, the court may in its discretion grant an injunction to prevent the breach complained of, and also to compel performance of the requisite acts.

Damages in Lieu of, or in Addition to, Injunction

• The plaintiff in a suit for perpetual injunction under section 38, or mandatory injunction under section 39, may claim damages either in addition to, or in substitution for, such injunction and the court may, if it thinks fit, award such damages.

• Relief for damages shall not be granted unless the plaintiff has claimed such relief in his plaint.

Injunction When Refused

• Section 41: Lists cases where an injunction cannot be granted:

  • To restrain a pending judicial proceeding.

  • To restrain proceedings in a court not subordinate to the one seeking the injunction.

  • To restrain applying to a legislative body.

  • To restrain criminal proceedings.

  • To prevent breach of a contract not specifically enforced.

  • To prevent an act not clearly a nuisance.

  • When equally efficacious relief can be obtained.

  • If it would impede or delay an infrastructure project.

  • When the plaintiff has no personal interest in the matter.

9.15 Injunction to Perform Negative Agreement

• If a contract includes an affirmative agreement and a negative agreement, the court can grant an injunction to perform the negative agreement even if it can't enforce the affirmative agreement.

• It is important that the plaintiff has not failed to perform the contract so far as it is binding on him. Note that the plaintiff hasn't failed to perform their part of the binding contract.