(Sections 9-25)
A contract is an agreement upon consideration to do or not to do a particular thing, if the person on whom this contractual obligation rests, fails to discharge it, other party has a right either to insist on the literal and actual performance of the contract or to obtain compensation for the non-performance of it. The former is called "specific performance."
In the words of Fry: "The specific performance" of a contract is its actual execution according to its stipulation and terms, and is contrasted with damages or compensation for the non-execution of the contract.
Specific performance as consists in the contracting party, exact fulfilments of obligation which he has assumed in his doing or omitting the very act which he has undertaken to do or omit.
"Specific performance" as an equitable relief given by the court in cases of breach of contract in the forms of a judgment that the defendant do actually perform the contract according to its terms and stipulation.
A contract; according to the Indian Contract Act, is an agreement enforceable by law. From every contract there immediately and directly results an obligation on each of the contracting part towards the other to perform such of the terms of the contract as he has undertaken to perform.
Ameer Mohd v. Barkat Ali, MANU/RH/0442/2002 : AIR 2002 Raj 406: If the person on whom this obligation rests, fails to discharge it, these results in morality to the other party a right at his election either to insist on the actual performance of the contract or to obtain satisfaction for the non-performance of it.
Except as otherwise provided herein, where any relief is claimed under this chapter in respect of a contract, the person against whom the relief is claimed may plead by way of defence any ground which is available to him under any law relating to contracts.
According to section 2(b) of Indian Contract Act, 1872, a contract is an agreement enforceable by law. If the agreement is not enforceable by law a suit for specific performance of the same cannot lie.
A valid contract has to satisfy the requirement of section 10 of the Contract Act. There has to be an agreement. It has to be between the parties competent to contract. There must be free consent of the parties it should be lawful consideration with lawful object and should not have been declared to be void.
The effect of section 10 of the Contract Act read with section 9, of the Specific Relief Act is to bar the enforcement of all void unlawful and imperfect agreements. Thus, there is merely moral religious or social obligation rather than a legal obligation specific enforcement of the same cannot be claimed. The bar to a suit for specific performance would cover on agreement by a minor as the same is void.
Section 9 is a new provision. There was no such provision in the Specific Relief Act, 1877. This new section makes it clear that in a case relating to a specific enforcement of contract, the defendant may take all those defences which are available to him under any law relating to contracts. For example, the defendant can take the defence provided under the Indian Contract Act, 1872 such as incapacity of the parties, fraud, mistake, under influence on coercion.
Bishandayal and Sons v. State of Orissa, (2001) 1 SCC 555: AIR 2001 SC 544: it has been held that even a Government contract which is concluded without fulfilling the requirement prescribed by article 299 of Constitution of Indian cannot be specifically enforced.
From the point of view of the specific performance of contracts under Specific Relief Act, 1963 contracts can be divided into two categories:
(i) contract which can be specifically enforced, and
(ii) contract which cannot be specifically enforced.
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 exist no standard for ascertaining actual damages caused by the non-performance of the act agreed to be done; or
(b) when the act agreed to be done is 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 the trustee of the plaintiff.
on the breach of contract. By one party the other has two alternatives.
(i) to bring an action for breach of contract
(ii) to sue for the specific performance of the contract.
In an action for specific performance, he can require actual execution of the contract in terms of the agreement between the parties.
Illustration
(a) A agrees to buy and, B agrees to sell, a picture by a dead painter and two rare china vases. A may compel B specifically to performance this contract, for there is no standard for ascertaining the actual damages which would be caused by its non-performance.
(b) A contracts with B to sell to him a horse for Rs. 1000 B is entitled to a decree directing A to convey the horse to him, he paying the purchase-money.
(c) A contract to sell and B contracts to buy, certain number of railway shares of a particular description. A refuses to complete the sale. B may compel A specifically to performance this agreement for the shares are limited in number and not always available in the market, and their possession carries with it the status of a shareholder which cannot otherwise be procured.
(d) A contracts with B to paint a picture for B who agrees to pay therefor Rs. 1000. The picture is painted. B is entitled to have it delivered to him on payment or tender of Rs. 1000.
Essentials
Specific performance of a contract is permitted when there exist no standard of ascertaining actual damages caused by the breach of contract. If the damage caused by the breach of contract is ascertainable, the remedy available is a claim for damages rather than specific performance of the contract.
For instance, if the article sold is such that it is available in the market, the loss is ascertainable on the basis of the difference between the contract price and the market price on the date of breach of contract. In such a situation, specific performance is not permitted.
Banwari Lal Agarwala v. Ram Swarup Agarwala, MANU/BH/0021/1998 : AIR 1998 Pat 88: It was held that the plaintiff tenant was entitled to a decree of specific performance contract under section 10 of Specific Relief Act. Hence, the tenant suit for specific performance is to be decreed. Where from some special or practical features or incidents of the contract either in its subject-matter or in its terms or in the relation of the parties, it is impossible to arrive at a legal measure of damages at all, or at least with sufficient degree of certainly so that so real compensation can be obtained by means of an action at law, the contract will be enforced in spice.
Specific performance of a contract is also permitted when the act agreed to be done in such that compensation in money for its non-performance would not afford adequate relief.
Ram Karan v. Govind Lal, MANU/RH/0222/1999 : AIR 1999 Raj 167: There was an agreement for the sale of agricultural land. The buyer had paid full sale consideration to the seller, but the seller even then avoided executing the sale deed as per the agreement. The buyer brought an action for the specific performance of the contract, viz., he prayed for a direction to the seller to execute the sale deed.
It was held that the case was covered by section 10(b) of the Specific Relief Act therefore, the seller was directed to specifically performs the contract by executing sale deed in favour of the buyer.
The insolvency of a defendant is generally a ground for granting specific relief to the plaintiff under the head. Where there is a probability that pecuniary compensation if awarded cannot be recovered, specific performance may be granted
Thus, insolvency of the defendant seems to be a ground for granting specific relief to the plaintiff. The contracts to pay money are normally not specifically enforceable because damages will usually be an adequate remedy. Courts are empowered to specifically enforce contracts in which the act agreed to be done in such that if it is not performed pecuniary compensation for its non-performance would not afford adequate relief. It follows that where compensation in money is an adequate relief to the plaintiff, a decree for specific performance of the contract should not be made.
A court of equity decrees specific performance of a contract for land not due to the real nature of land but because damages at law which must be calculated upon the general money value of the land may not be a complete remedy to the purchase to whom the land may have a peculiar and special value.
Brahmavati v. Ramesh Chand, MANU/UP/0232/1980 : AIR 1980 All 296: The Allahabad High Court has held that in a suit for a specific performance of a original contact, extension of the period for convenience given only by some heirs could not deprive the purchaser of his remedy for specific performance.
(1) Except as otherwise provided in this Act, specific performance of a contract may, in the discretion of the court, be enforced when the act agreed to be done is in the performance wholly or partly of a trust.
(2) A contract made by a trustee in excess of his powers or in breach of trust cannot be specifically enforced.
Illustrations
(a) A is trustee of land with power to lease it for seven years. He enters into a contract with B to grant a lease of the land for seven years, with a covenant to renew the lease at the expiry of the term. This contract cannot be specially enforced.
(b) The Directors of a company have power to sell the concern with the sanction of a general meeting of the shareholders. They contracted to sell it without any such sanction. This contract cannot be specifically enforced.
(c) Two trustees. A and B, empowered to sell trust property worth a lakh of rupees. Contract it to C for Rs. 30,000. The contract is so disadvantageous as to be a breach of trust. C can not enforce its specific performance.
(1) Except as otherwise hereinafter provided in this section the court shall not direct the specific performance of a part of a contract.
(2) Where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed by only a small proportion to the whole in value and admits of compensation in money, the court may, at the suit of either party, direct the specific performance of so much of the contract as can be performed, and award compensation in money for the deficiency.
(3) Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed either-
(a) forms a considerable part of the whole, though admitting of compensation in money; or
(b) does not admit of compensation in money,
he is not entitled to obtain a decree for specific performance; but the court may, at the suit of other party, direct the party in default to perform specifically so much of his part of the contract as he can perform, if the other party-
(i) in a case falling under clause (a), pays or has paid the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed and a case falling under clause (b), pays or had paid the consideration for the whole of the contract without any abatement; and
(ii) in either case, relinquishes all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant.
(4) When a part of a contract which, taken by itself, can and ought to be specifically enforced, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically enforced, the court may direct specific performance of the former part.
Explanation.-For the purpose of this section, a party to a contract shall be deemed to be unable to perform the whole of his part of it if a portion of its subject-matter existing at the date of the contract has ceased to exist at the time of its performance.
Kartar Singh v. Harjinder Singh, MANU/SC/0158/1990 : AIR 1990 SC 854: Section 12(1) propounds a general principle that ordinarily the court shall not direct the specific performance of a part of contract. But where the respondent and his sister are jointly the owner of a property and the respondent contracts to sell the entire property for Rs. 20,000 but the sister refuses to sell her property. This matter is not of the performance of a part of contract and in thus not covered by section 12.
Sardar Singh v. Krishna Devi, MANU/SC/0102/1995 : AIR 1995 SC 491: It is well-settled law that justice demands partial enforcement of contract instead of refusal of specific performance is its entirely.
Chattar Singh v. Arjun Singh, MANU/RH/0024/1995 : AIR 1995 Raj 73: Transfer by a person not authorised to dispose of the transferable properties not his own are void ab initio in law.
Kalyankur Lime Works v. State of Bihar, MANU/SC/0039/1954 : AIR 1954 SC 165: The purchaser may relinquish claim to further performance of the remaining part of the contract and the right to compensation at any stage of the proceedings.
(1) Where a person contracts to sell or let certain immovable property having no title or only an imperfect title, the purchaser or lessee (Subject to the other provisions of this Chapter), has the following rights, namely:-
(a) if the vendor or lessor has subsequently to the contract acquired any interest in the property, the purchaser or lessee may compel him to make good the contract out of such interest;
(b) where the concurrence of other persons is necessary for validating the title, and they are bound to concur at the request of the vendor or lessor, the purchaser or lessee may compel him to procure such concurrence, and when a conveyance by other persons is necessary to validate the title and they are bound to convey at the request of the vendor or lessor, the purchaser or lessee may compel him to procure such conveyance;
(c) where the vendor professes to sell unencumbered property, but the property is mortgaged for an amount not exceeding the purchase money and the vendor has in fact only a right to redeem it, the purchaser may compel him to redeem the mortgage and to obtain a valid discharge, and, where necessary, also a conveyance from the mortgagee;
(d) where the vendor or lessor sues for specific performance of the contract and the suit is dismissed on the ground of his want of title or imperfect title, the defendant has a right to a return of his deposit, if any, with interest thereon, to his costs of the suit, and to a lien for such deposits, interest and costs on the interest, if any, of the vendor or lessor in the property which is the subject-matter of the contract.
(2) The provisions of sub-section (1) shall also apply, as far as may be, to contracts for the sale or hire of movable property.
Section 13 of the Specific Relief Act is based on the "doctrine feeding the grant by estoppel:" Accordingly, where a person represents valid title and enters into contract to sell the property and subsequently acquires valid title cannot evade the performance of the contract but is obliged to perform the contract and cannot plead the prior defective or imperfect title to evade the contract.
Rajasara Ramjibhai Dahyabhai v. Jani Narotamdas Lallubhai, AIR 1986 SC 1912: Where a party to a contract has agreed to transfer agricultural land subject to the condition that he would obtain permission from the collector to convert the land for non-agricultural purposes, such a contract can be specifically enforced only when on account of passing of some Act.
In this case, the suit for specific performance was filed within three years of the date when the said permission was given. Therefore, the Supreme Court held that the suit was not barred by limitation.
(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 qualification or volition 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.
(2) Save as provided by the Arbitration Act, 1940 (10 of 1940), no contract to refer present or future differences to arbitration shall be specifically enforced, but if any person who has made such a contract (other than an arbitration agreement to which the provisions of the said Act apply) and has refused to perform it, sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit.
(3) Notwithstanding anything contained in clause (a) or clause (c) or clause (d) of sub-section (1), the court may enforce specific perform once in the following cases-
(a) where the suit is for the enforcement of a contract-
(i) to execute a mortgage or furnish any other security for securing the repayment of any loan which the borrower is not willing to repay at once:
Provided that where only a part of the loan has been advanced the lender is willing to advance the remaining part of the loan in terms of the contract, or
(ii) to take up and pay for any debenture of a company.
(b) where the suit is for-
(i) the execution of a formal deed of partnership, the parties having commenced to carry on the business of the partnership, or
(ii) the purchase of a share of a partner in a firm.
(c) where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land:
Provided that the following conditions are fulfilled, namely-
(i) the building or other work is described in the contract in terms sufficiently precise to enable the court to determine the exact nature of the building or work.
(ii) the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contract is not an adequate relief, and
(iii) the defendant has, in pursuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed.
According to section 14 following contracts cannot be specifically enforced-
1. Where compensation in money is an adequate relief [section 14(1)(a)].-
Courts will not order specific performance of a contract where the aggrieved party can be adequately compensated in terms of money. An ordinary contract to lend or borrow money whether with or without security is an example of a contract which cannot be specifically enforced, though where a loan has been already advanced on the understanding that a security would be provided against it, this can be specifically enforced.
Illustrations
(a) A contracts to sell, and B contracts to buy, a lakh of rupees in the four per cent loan of the Central Govt.
(b) A contracts to sell, and B contracts to buy, 40 chests of indigo at Rs. 1000 per chest.
Ashok Kumar Srivastava v. National Insurance Co. Ltd., AIR 1988 SC 2046: In case of contract for the sale of something which has its special value and is not an ordinary article of commerce, such as rare coins, the contract can be specifically enforced, because compensation in money will not constitute an adequate relief in such a case.
2. Contracts which runs into minute or numerous details section 14(1)(b).-
The following kinds of contracts cannot be specifically enforced-
(i) A contracts which run into such minute or numerous details, or
(ii) Which is so dependent on the personal qualification or volition of the parties, or
(iii) otherwise from its nature is such, that the court cannot enforce specific performance of its material terms.
Illustrations
(i) A contracts to render personal service to B.
(ii) A contract to employ B on personal service.
(iii) A, an author, contracts with B, a publisher, to complete a literary work.
B cannot enforce specific performance of these contracts.
Executive Committee, State Warehousing Corporation v. Chandra Kiran Tyagi, MANU/SC/0499/1969 : AIR 1970 SC 1244: The Supreme Court had that ordinarily, the contracts for personal services cannot be specifically enforced. But this rule is subject to following three exceptions:
(i) where a public servant has been dismissed from service in violation of Article 311 of the Constitution,
(ii) where a worker has been dismissed from service under industrial law,
(iii) where a legal body acts in violation of the provisions of the statute.
3. Contracts which are determinable by their nature.-According to section 14(1)(c) contracts which are determinable by their nature cannot be specifically enforced. For example A and B contract to become partners in a certain business, the contract not specifying the duration of the proposed partnership. This contract cannot be specifically enforced, for if it were so performed, either A or B might at once dissolve the partnership.
4. Contracts regarding continuous duty requiring to supervision by court.-Section 14(1)(d) provides that a contract the performance of which involving continuing duty which the court cannot supervise cannot be specifically enforced.
Arbitration.-Section 14 provides in sub-section (2) that, except as provided by the Arbitration Act, 1940 (Now Arbitration and Conciliation Act, 1996) a contract to refer a present or future dispute to arbitration shall not be specifically enforced. An arbitration agreement operates as a bar to the filing of a suit.
Except as otherwise provided by this chapter, the specific performance of a contract may be obtained by-
(a) any party thereto.
(b) the representative in interest or the principal of any party thereto:
Provided that where the learning, skill, solvency or any personal quality of such party is a material ingredient in the contract, or where the contract provides that his interest shall not be assigned, his representative in interest or his principal shall not be entitled to specific performance of the contract, unless such party has already performed his part of the contract, or the performance thereof by his representative in interest, or his principal, has been accepted by the other party,
(c) where the contract is a settlement on marriage or a compromise of doubtful rights between members of the same family, any person beneficially entitled thereunder,
(d) where the contract has been entered into by a tenant for life in due exercise of power, the reminderman,
(e) a revisioner is possession, where the agreement is such a covenant, and the revisioner is entitled to the benefit thereof and will sustain material injury by reason of its breach,
(f) a revisioner is remainder, where the agreement is such a covenant, and the reversioner is entitled to the benefit thereof and will sustain material injury by reason of its breach,
(g) when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation,
(h) 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 has communicated such acceptance to the other party to the contract.
Section 15 enumerates the possible classes of persons who can file a suit for specific performance similarly. Section 19 mentions the possible classes of defendants i.e., against whom specific performance can be claimed. Both these sections are exhaustive defining that by whom and against whom specific performance can be obtained in a civil suit.
V.X. Joseph v. Pasupati, MANU/TN/0028/1994 : AIR 1994 Mad 193 (201): Where the father as Karta enters into a contract for the sale of ancestral property and at the time of the execution of the sale deed prospective purchases demands that the minor son be also joined in the sale deed because he has benefited by the contract, the demand cannot be said to be unreasonable because Life Insurance Corporation has obtained a decree against the father and he had paid from the earnest money to avoid that decree. In such circumstances, the vendee will be entitled to get the decree of specific performance and the claim for alternative relief of payment of advance amount will not affect adversely the relief of specific performance.
Mukesh Kumar v. Col. Harbans Waratch, (1999) 2 SCC 380: In order to obtain a relief of specific performance, allco-contractees must be before the court but all of them need not to be on the same side others can be joined as co-defendants. Where there is a single indivisible contract to convey land to several persons, some of them only cannot seek specific performance if the others do not want it.
T.M. Balkrishna Mudaliar v. M. Satyanarayan Rao, MANU/SC/0424/1993 : AIR 1993 SC 2449: A contract of right to repurchase was not personal but it is assignable. An assignee fall within the meaning of representative in interest as contemplated under clause (6) of section 15 acquired a valid title to claim specific performance.
"Specific performance of a contract cannot be enforced in favour of a person-
(a) who would not be entitled to recover compensation for its breach,
or
(b) who has become incapable of performing or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or willfully acts at variance with, or in subversion of, the relation intended to be established by the contract, or
(c) who fails to over and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant,
Explanation.-For the purpose of clause (c)-
(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposits in court any money except when so directed by the court;
(ii) the plaintiff must ever performance of, or readiness and willingness to perform, the contract according to its true construction."
Illustrations
(1) A in the character of agent for B enters into an agreement with C to buy C's house A is in reality acting not as agent for B but on his account. A cannot enforce specific performance of the contract.
(2) A contracts to sell B a house and to become tenant thereof for a term of fourteen years from the date of the sale at a specified yearly rent. A becomes insolvent neither he nor his assignee can enforce specific performance of the contract.
(3) A contracts to sell B a house and garden in which there are ornamental trees, a material element in the value of the property as a residence. A without B's consent, fells the trees. A cannot enforce specific performance of the contract.
Trimbak Shankar Tidke and Co. v. Tivrani Shankar Tidke, MANU/MH/0266/1985 : AIR 1985 Bom 128: According to section 16 specific performance of a contract cannot be enforced in favour of a person who fails to over and prove that he is 'ready and willing' to perform the essential terms of the contract. The averment that the plaintiff is ready and willing to perform the essential terms of the contract is necessary only in those cases. Where the plaintiff has already performed his part of the contract.
Syed Dastagir v. T.R. Gopalkrishna Shetty, MANU/SC/0471/1999 : AIR 1999 SC 3029: The readiness and willingness to perform the contract as required by Explanation (i) to section 16(c) means compliance is spirit and substance and not in letter and form.
A person who makes himself a party to an illegal contract cannot enforce his right under this section.
Rakha Singh v. Babu Singh, AIR 2002 P&H 270: Where the plaintiff showed that he was ready and willing to pay the purchase price and continued to be so, the failure to plead that he had money in the bank and had not withdrawn it, was immaterial because their was a matter of evidence and had not to be pleaded.
Pushparani S. Sundaram v. Pauline Manomani James, MANU/SC/2493/2000 : (2002) 9 SCC 582: When the purchaser had not sent any communication to the vendor regarding his readiness and willingness, had paid only an insignificant amount as advance, had not obtained permission from Ceiling Authorities had taken no steps towards the valuation of the superstructure on the land or required under the sale agreement, neither led evidence nor entered the witness box in support of his willingness, the Supreme Court held that the High Court had rightly upheld the dismissal of his suit for specific performance.
Maniklal Mukherjee v. Commissioner of Sanchaita Investment Calcutta, MANU/SC/0251/1993 : AIR 1993 SC 1571: A right to recover loan amount against an unattached property is not sustainable.
Chand Rani v. Kamla Rani, MANU/SC/0285/1993 : AIR 1993 SC 1742: In the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not being the essence of the contract the court may infer that it is to be performed in a reasonable time.
(1) A contract to sell or let any immovable property cannot be specifically enforced in favour of a vendor or lessor-
(a) who, knowing not to have any title to the property, has contracted to sell or let the property,
(b) who, though he entered into the contract believing that he had a good title to the property, cannot at the time fixed by the parties or by the court for the completion of the sale or letting give the purchaser or lessee a title free from reasonable doubt.
(2) The provisions of sub-section (1) shall also apply, as far as may be, to contracts for the sale or hire of movable property.
Illustrations
(1) A without C's authority, contracts to sell to B an estate which A knows to belong to C. A cannot enforce specific performance of this contract, even though C is willing to confirm it.
(2) A bequeaths his land to trustee, declaring that they may sell it with the consent in writing of B. B gives a general prospective assent in writing to any sale which the trustee may make. The trustees then enter into a contract with C to sell him the land. C refuses to carry out the contract. The trustee cannot specifically enforce this contract. As, in the absence of B's consent to the particular sale to C, the title which they can give is, as the law stands, not free from reasonable doubt.
(3) A, being in possession of certain land, contracts to sell it to Z on enquiry it terms out that A claims the land as heir of B who left the country several years before, and is generally believed to be dead, but of whose death there is no sufficient proof A cannot compel Z specifically to perform the contract.
Where a plaintiff seeks specific performance of a contract in writing, to which the defendant sets up a variation, the plaintiff cannot obtain the performance sought, except with the variation so set up, in the following cases, namely-
(a) Where by fraud, mistake of fact or misrepresentation, the written contract of which performance is sought is in its terms or effect different from what the parties agreed to, or does not contain all the terms agreed to between the parties on the basis of which the defendant entered into the contract.
(b) Where the object of the parties was to produce a certain legal result which the contract as framed is not calculated to produce,
(c) where the parties have, subsequently to the execution of the contract, varied its terms.
Illustrations
(a) A, B, C sign a writing by which they purport to contract each to enter into a bond to D for Rs. 1000. In a suit by D to make A, B, and C separately liable each to the extent of Rs. 1000 they prove that the word 'each' was inserted by mistake; that the intention was they should give a joint bond for Rs. 1000. C can obtain the performance sought only with the variation thus set up.
(b) A sues B to compel specific performance of a contract is writing to buy a dwelling house. B proves that he assumes that the contract included an adjoining yard and the contract was so framed as to leave it doubtful whether the yard was so included or not. The court will refuse to enforce the contract, except with the variation so set up by B.
(c) A contracts in writing to let B a wharf, together with a strip of A's land delineated in a map before signing the contract. B proposed orally that he should be at liberty to substitute for the strip mentioned in the contract another strip A's land of the same dimensions, and to this A expressly assented. B then signed a written contract. A cannot obtain specific performance of the written contract except with the variation set up by B.
(d) A contracts in writing to let a house to B for a certain term, at the rent of Rs. 100 per month, putting it first into tenable repair. The house turns out to be not worth repairing, so with B's consent, A pulls it down and erects a new house in its place: B contracting orally to pay rent at Rs. 120 per mensem. B then sues to enforce specific performance of the contract in writing. He cannot enforce it except with the variations made by the subsequent oral contract.
(e) A and B enter into negotiations for the purpose of securing land for B for his life, with remainder to her issue. They execute a contract, the terms of which are found to confer an absolute ownership on B. The contract so framed cannot be specifically enforced.
Except as otherwise provided by this chapter, specific performance of a contract may be enforced against-
(a) either party thereto,
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract,
(c) any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant.
(d) where a company has entered into a contract and subsequently become amalgamated with another company, the new company which arises out of the amalgamation.
(e) when the promoters of a company have, before its incorporation, entered into a contract for the purpose 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.
Illustrations
(a) A contracts to convey certain land to B by a particular day. A dies intestate before that day without having conveyed the land B may compel A's heir or other representatives in interest to perform the contract specifically.
(b) A contracts to sell certain lands to B for Rs. 5000 A afterwards convey the land for Rs. 6000 to C who has notice of the original contract. B may enforce specific performance of the contract as against 'C'.
(c) A contracts to sell land to B for Rs. 5000. B takes possession of the land. Afterwards A sells it to C for Rs. 6000. C makes no enquiry of B relating to his interest in the land B's possession is sufficient to affect C with notice of his interest, and he may enforce specific performance of the contract against C.
(d) A contracts, in consideration of Rs. 1000 to bequeath certain of his land to B. Immediately after the contract A dies intestate, and C takes out administration to his estate. B may enforce specific performance of the contract against C.
(e) A contracts to sell certain land to B. Before the completion of the contract. A becomes a lunatic and C is appointed his guardian. B may specifically enforce the contract against C.
(f) A, the tenant for life of an estate, with remainder to B, in due exercise of a power conferred by the settlement under which he is tenant for life, contracts to sell the estate to C, who has notice of the settlement. Before the sale is completed A dies, C may enforce specific performance of the contract against B.
(g) A and B are joint tenants of lands, his undivided moiety of which either may alienate in his life-time, but which, subject to that right, devolves on the survivor. A contract to sell his moiety to C and dies. C may enforce specific performance of the contract against B.
R.K. Mohammed Abidullah v. Haji C. Abul Wahab, MANU/SC/0433/2000 : AIR 2001 SC 1658: The plaintiff who was in possession of certain property as a tenant and purchased the same property brought an action for specific performance. Subsequent purchases contended that he was buyer in good faith and for consideration without notice and therefore he had a better title.
(1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so, but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal.
(2) The following are cases in which the court may properly exercise discretion not to decree specific performance,-
(a) where the terms of the contract or the conduct of the parties at the times of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though or 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 for see, whereas its non-performance would involve no such hardship on the plaintiff, or
(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.
Explanation 1.-Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b).
Explanation 2.-The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.
(3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequences of a contract capable of specific performance.
(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the party.
The section 20 provides that the court has an absolute discretion to refuse specific performance even where the contract is otherwise enforceable and is lawful. However, the enforcement of a contract depends on a sound judicial discretion.
Sardar Singh v. Krishna Devi, MANU/SC/0102/1995 : AIR 1995 SC 491: It is something more that what is provided by section 14 where rigours are enumerated which, if available, the specific performance cannot be granted. As all contingency of non-performa cement are difficult to conceive so this section is not exhaustive but is illustrative.
Section 20 of the Specific Relief Act, 1963 preserves judicial discretion to courts as to decreeing specific performance. The court should meticulously consider all facts and circumstances of the case. The court is not bound to grant specific performance merely because it is lawful to do so.
Prakash Chandra Angadlal, MANU/SC/0022/1979 : AIR 1979 SC 1241: The motive behind the litigation should also enter into the judicial verdict. The court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff.
Ganesh Shet v. Dr. C.S.G.K. Shetty, MANU/SC/0383/1998 : (1998) 5 SCC 381: The Supreme Court stated that the circumstances referred to in sub-sections (2) to (4) of section 20 with regard to exercise of discretion in granting relief of specific performance are not exhaustive and such relief will not be granted if injustice is caused.
(1) In a suit for specific performance of a contract, the plaintiff may also claim compensation for its breach, either in addition to, or in substitution of, such performance.
(2) If, in any such suit, the court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the plaintiff is entitled to compensation for that breach, it shall award him such compensation accordingly.
(3) If, in any such suit, the court decides that specific performance ought to be granted, but that is not sufficient to satisfy the justice of the case, and that some compensation for breach of the contract should also be made to the plaintiff, it shall award him such compensation accordingly.
(4) In determining the amount of any compensation awarded under this section, the court shall be guided by the principles specified in section 73 of the Indian Contract Act, 1872 (9 of 1872).
(5) 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 proceedings, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation.
Explanation.-The circumstances that the contract has become incapable of specific performance does not preclude the court from exercising the jurisdiction conferred by this section.
Illustrations
1. A contracts to sell a hundred maunds of rice to B. B brings a suit to compel A to perform the contract or to pay compensation. The court is of opinion that A has made a valid contract and has broken it, without excuse to the injury of B, but that specific performance is not the proper remedy. It shall award to B such compensation as it deems just.
2. A, a purchaser, sues B, his vendor, for specific performance of a contract for the sale of a patent. Before the hearing of the suit the patent expires. The court may award a compensation for the non-performance of the contract, and may, if necessary, amend the plaint for that purpose.
3. A sues for the specific performance of a resolution passed by the Director of a public company under which he was entitled to have certain share allotted to him, and for compensation for the non-performance of the resolution. All the shares had been allotted before the institution of the suit. The court may, under this section, award A compensation for the non-performance.
Jagdish Singh v. Nather Singh, MANU/SC/0313/1992 : AIR 1992 SC 1604: Section 21 comes into operation in two types of cases. Firstly, where the defaulting party commits the breach of contract against which wronged party is otherwise entitled to compensation and court decides that specific performance ought not to be granted. Secondly the decision of court is in favour of specific performance but the same is insufficient to satisfy the demand of justice, hence some compensation in addition is considered proper to render full justice.
(1) Notwithstanding anything to the contrary contained in the Code of Civil Procedure, 1908 (5 of 1908), any person suing for the specific performance of a contract for the transfer of immovable property may, in an appropriate case, ask for-
(a) possession, or partition and separate possession, of the property, in addition to such performance; or
(b) any other relief to which he may be entitled, including the refund of any earnest money or deposit paid or made by him, in case his claim for specific performance is refused.
(2) No relief under clause (a) or clause (b) of sub-section (1) shall be granted by the court unless it has been specifically claimed:
Provided that where the plaintiff has not claimed any such relief in the plaint, the court shall, at any stage of the proceedings, allow him to amend the plaint on such terms as may be just for including a claim for such relief.
(3) The power of the court to grant relief under clause (b) of sub-section (1) shall be without prejudice to its powers to award compensation under section 21.
If the vendor dies before executing sale agreement, his legatees can be acquired to specifically perform the agreement and render possession of property to the purchaser.
Goparaju Venkata Bharata Rao v. Nagula Ramakotayya, MANU/AP/0915/2001 : AIR 2001 AP 425: There was agreement for sale of property in favour of the plaintiff. The plaintiff was put in possession of suit property. The execution of the agreement was to take place after entire consideration was paid by the plaintiff. The original owner died. Her legatees under will dispossessed the plaintiff and postponed execution of sale deed.
The plaintiff proved that the agreement to sell was a genuine document. In a suit for specific performance it was held that the plaintiff was entitled to relief of specific performance of agreement possession of property as against, the legatee of the original owner property.
P.C. Varghese v. Devaki Amma Balambika Devi, MANU/SC/1085/2005 : AIR 2006 SC 145: Decree for partition and separate possession of property can be granted in addition to decree for specific performance of contract.
(1) A contract, otherwise proper to be specifically enforced, may be so enforced, though a sum be named in it as the amount to be paid in case of its breach and the party in default is willing to pay the same, if the court, having regard to the terms of the contract and other attending circumstances, is satisfied that the sum was named only for the purpose of securing performance of the contract and not for the purpose of giving to the party in default an option of paying money in lieu of specific performance.
(2) When enforcing specific performance under this section, the court shall not also decree payment of the sum so named in the contract.
Illustration
A contracts to grant B an under lease of the property held by A under C, and that he will apply to C for a licence necessary to the validity of the under-lease and that, if the licence is not procured. A will pay B Rs. 10,000 A refuses to apply for the licence and offers to pay B the Rs. 10,000. B is nevertheless entitled to have the contract specifically enforced if C consents to give the licence.
The dismissal of suit for specific performance of a contract or part thereof shall bar the plaintiff's right to sue for compensation for the breach of such contract or part, as the case may be, but shall not bar his right to sue for any other relief to which he may be entitled, by reason of such breach.
The section 21 makes it obligatory for the plaintiff to also claim compensation or damages for breach of contract either as an alternative or in substitution in a suit for specific performance. The provisions of section 24 are enacted as a necessary corollary to section 21 providing a caution by creating a bar against filing any fresh suit for compensation for breach of contract upon dismissal of a suit for specific performance.
The provision of this Chapter as to contracts shall apply to awards to which the Arbitration Act, 1940 (10 of 1940) does not apply and to directions in a Will or codicil to execute a particular settlement.
The section 25 makes the provision contained in Chapter II of Specific Relief Act, 1963, applicable to awards other than those made under Arbitration
Act, 1940, and also to directions to make settlement incorporated in any testamentary disposition i.e., Will or codicil.
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