Specific Relief After the 2018 Amendment

The 2018 amendment to the Specific Relief Act, 1963 changed the starting point of contract remedies in India. Before it, a court could order a party to actually perform a contract only in its discretion and mainly where money compensation was not enough. After it, the new Section 10 says specific performance "shall be enforced by the court", subject only to Section 11(2), Section 14 and Section 16, and the Act adds substituted performance, expert help for courts, special courts and a bar on injunctions that stall infrastructure projects.

This explainer is for B.A. LL.B. and LL.B. students preparing for contract and specific relief papers, and for anyone who has signed a sale agreement for a house plot and wants to know what happens if the other side backs out. It is a civil law topic, so the BNS, BNSS and BSA do not change it.

What was the law before 2018?

Under the original 1963 Act, the two main remedies for an unperformed contract were money compensation and specific performance, and specific performance was discretionary. Courts used it mainly where compensation was inadequate or could not be easily worked out. A buyer of land in Nagercoil who paid an advance could win the case and still receive only a refund with damages, because the court had room to say money was enough. Section 21 also let a court award compensation either in addition to, or in substitution of, specific performance.

What did the 2018 amendment change?

The Specific Relief (Amendment) Bill, 2017 was introduced in the Lok Sabha on 22 December 2017, passed by the Lok Sabha on 15 March 2018 and by the Rajya Sabha on 23 July 2018. Going by the Bill as introduced, these are the main changes a student should know by section number:

• Section 6: a suit to recover possession can also be brought by the person through whom the dispossessed person had obtained possession.
• Section 10 (substituted): specific performance "shall be enforced by the court", subject to Sections 11(2), 14 and 16. The old "inadequate compensation" test is gone.
• Section 11(1): "may, in the discretion of the court" becomes "shall" for contracts relating to trusts.
• Section 14 (substituted): now lists only four contracts that cannot be specifically enforced: where substituted performance has been obtained under Section 20; contracts involving a continuous duty the court cannot supervise; contracts so dependent on personal qualifications that material terms cannot be enforced; and contracts that are determinable in nature.
• Section 14A (new): the court may engage experts on a specific issue, with fees paid by the parties as the court directs.
• Sections 15(fa) and 19(ca): cover a limited liability partnership formed by amalgamating two LLPs.
• Section 16: no specific performance for a person who has obtained substituted performance, and the plaintiff must now prove (not merely aver) readiness and willingness to perform the essential terms.
• Section 21(1): compensation can be claimed only "in addition to" specific performance.
• Section 25: the reference to the Arbitration Act, 1940 is replaced by the Arbitration and Conciliation Act, 1996.
• Section 41(ha) and a new Schedule: no injunction that would impede or delay an infrastructure project.

The section wording above is taken from the Bill as introduced. Read the current text on India Code before quoting it word for word, and check the official commencement date there too.

How does substituted performance work under Section 20?

Take a shop owner in Madurai who hired a contractor to fit out the premises. The contractor stops halfway. Under the new Section 20, the owner can have the work finished through a third party or by his own agency and recover the expenses and costs actually incurred from the contractor. The steps are:

1. Send the party in breach a written notice of not less than thirty days calling on him to perform.
2. Wait for the period in the notice. Substituted performance is allowed only if he refuses or fails to perform within it.
3. Get the work done. Costs are recoverable only if the contract is actually performed by the third party or by the owner.

Two consequences follow. Once the owner chooses substituted performance, Section 20(3) bars him from later claiming specific performance. Section 20(4) still lets him claim compensation for the breach.

What is special about infrastructure contracts?

Section 20A says no injunction shall be granted in a suit involving a contract relating to an infrastructure project listed in the Schedule where the injunction would cause impediment or delay in the project. The Schedule has five categories: transport, energy, water and sanitation, communication, and social and commercial infrastructure. The Central Government can amend it by notification. Section 20B requires the State Government, in consultation with the Chief Justice of the High Court, to designate civil courts as Special Courts for these suits. Section 20C sets a disposal target of twelve months from service of summons on the defendant, extendable by up to six months in aggregate with written reasons. Whether Tamil Nadu has issued its Special Court notification, and which courts it names, should be checked in the Tamil Nadu Government Gazette or with the Madras High Court.

How have the courts read the amendment?

Two questions come up repeatedly. First, does the amended Section 10 apply to contracts signed, or suits filed, before the amendment came into force? Second, how much discretion does a court keep now that the section says "shall"? Case names and citations are left out here because they could not be confirmed against official sources for this article. Before your exam, look up the current Supreme Court position on retrospectivity on the Supreme Court website or in your SCC or AIR digest, and note any Madras High Court rulings your teacher discusses in class.

How should you write about this in an exam?

• Open with the shift: discretionary remedy before 2018, general rule after, quoting the new Section 10.
• Give the Section 14 list in full, since a question on which contracts still cannot be enforced is easy to set.
• Explain Section 20 as a three step process with the thirty day notice, and state the bar in Section 20(3).
• Mention Section 16(c) and the change from "aver" to "prove".
• Close with the infrastructure provisions (Sections 20A to 20C and 41(ha)) and the open question on pending cases.

Students who want guided practice on contract remedies can see how the subject sits within our programmes.

Sources

• Specific Relief (Amendment) Bill, 2017 (PRS Legislative Research): full text of the Bill as introduced, clause by clause.
• PRS Bill Track: Specific Relief (Amendment) Bill, 2017: introduction and passage dates in both Houses and key features.
• PRS Bill Summary: Specific Relief (Amendment) Bill, 2017: plain-language summary, including the 30 day notice and the 12 month Special Court timeline.
• India Code: The Specific Relief Act, 1963: official record of the Act on the Legislative Department portal.
• Indian Kanoon: The Specific Relief Act, 1963: text of the Act for comparing the original provisions.