Specific Performance of Contract: Legal Remedies & Requirements in India
Author: Shreya Jaiswal
Student, Usha Martin University
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KEY TAKEAWAYS
- Specific performance is not automatic — Courts exercise judicial discretion and will only order it where monetary compensation is inadequate or impossible to ascertain, not in every case of breach.
- The contract must be valid — A suit for specific performance can only be maintained where the underlying agreement satisfies all essentials of a valid contract under the Indian Contract Act, 1872; void and unlawful agreements are completely barred.
- Title and personal bars matter — A person who has violated the contract’s essential terms, or a vendor who knowingly had no title, cannot obtain or resist specific performance — courts look closely at the conduct of both parties.
ABSTRACT
When a party to a contract fails to perform their contractual obligation, the other party has two options: to insist on the actual performance of the contract, or to seek compensation for its non-performance. The first of these remedies is known as specific performance. The Specific Relief Act, 1963 governs this remedy in India and lays down the conditions under which courts may direct a party to fulfil their contractual promise. This article examines the meaning, essentials, and key provisions governing specific performance under Indian law, supported by relevant judicial decisions.
Keywords: Specific Performance; Specific Relief Act 1963; Indian Contract Act 1872; Breach of Contract; Equitable Relief; Section 10; Section 14; Section 20
I. MEANING AND DEFINITION OF SPECIFIC PERFORMANCE
A contract, in its simplest form, is an agreement upon consideration to do or not to do a particular thing. According to Section 2(h) of the Indian Contract Act, 1872, a contract is an agreement enforceable by law. From every contract there immediately and directly results an obligation on each of the contracting parties towards the other to perform such terms of the contract as they have undertaken to perform.
If the person on whom this obligation rests fails to discharge it, this results in a right to the other party — at their election — either to insist on the actual performance of the contract or to obtain satisfaction for its non-performance. The former remedy is called specific performance.
Halsbury defines specific performance as “an equitable relief given by the court in cases of breach of contract, in the form of a judgment that the defendant does actually perform the contract according to its terms and stipulations.”
As affirmed in Ameer Mohd v. Barkat Ali, AIR 2002 Raj 406, if the person on whom a contractual obligation rests fails to discharge it, this results in a right to the other party to insist on the actual performance of the contract or to obtain satisfaction for its non-performance.
II. ESSENTIAL CONDITIONS FOR SPECIFIC PERFORMANCE
The Contract Must Be Valid and Enforceable
For a suit for specific performance to lie, the underlying agreement must be a valid and enforceable contract. A valid contract must satisfy the requirements of Section 10 of the Indian Contract Act, 1872. There must be an agreement between parties who are competent to contract, with free consent, lawful consideration, a lawful object, and it must not have been declared void.
The effect of Section 10 of the Indian Contract Act read with Section 9 of the Specific Relief Act, 1963 is to bar the enforcement of all void, unlawful, and imperfect agreements. Where there is merely a moral, religious, or social obligation rather than a legal one, specific performance cannot be claimed. The bar would also cover an agreement entered into by a minor, as such an agreement is void.
Section 9 is a new provision, absent from the Specific Relief Act, 1877. It makes clear that in suits for specific enforcement, the defendant may take all available defences under any law relating to contracts — for instance, incapacity of the parties, fraud, mistake, undue influence, or coercion under the Indian Contract Act, 1872.
In Bishandayal and Sons v. State of Orissa, (2001) 1 SCC 555, it was held that even a government contract concluded without fulfilling the requirements prescribed by Article 299 of the Constitution of India cannot be specifically enforced.
No Adequate Standard for Ascertaining Damages
Specific performance is permitted when there exists no standard for ascertaining the actual damages caused by the breach of contract. If the damage is ascertainable, the remedy available is a claim for damages rather than specific performance.
For instance, if the article sold 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. In such a situation, specific performance is not permitted.
In Banwari Lal Agarwala v. Ram Swarup Agarwala, AIR 1998 Pat 88, it was held that the plaintiff tenant was entitled to a decree of specific performance under Section 10 of the Specific Relief Act, 1963. Where, from some special or practical features of the contract — either in its subject-matter, its terms, or the relation of the parties — it is impossible to arrive at a legal measure of damages, or at least with sufficient certainty so that real compensation cannot be obtained by means of an action at law, the contract will be enforced in specie.
In Ram Karan v. Govind Lal, AIR 1999 Raj 167, there was an agreement for the sale of agricultural land. The buyer had paid the full sale consideration to the seller, but the seller avoided executing the sale deed as per the agreement. The buyer brought an action for specific performance and 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, 1963, and therefore the seller was directed to specifically perform the contract by executing the sale deed in favour of the buyer.
The insolvency of a defendant is generally also a ground for granting specific relief to the plaintiff. Where there is a probability that pecuniary compensation, if awarded, cannot be recovered, specific performance may be granted.
III. CONTRACTS THAT CANNOT BE SPECIFICALLY ENFORCED
Section 14 of the Specific Relief Act, 1963 sets out the contracts which cannot be specifically enforced. These are: a contract for the non-performance of which compensation in money is an adequate relief; a contract which runs into such minute or numerous details, or which is so dependent on the personal qualification or volition of the parties, that the court cannot enforce its material terms; a contract which is in its nature determinable; and a contract the performance of which involves a continuous duty which the court cannot supervise.
IV. SPECIFIC PERFORMANCE OF PART OF A CONTRACT
The general rule under Section 12(1) of the Specific Relief Act, 1963 is that the court shall not direct the specific performance of only a part of a contract. However, this rule has exceptions. Where a party is unable to perform the whole of their part, but the unperformed part is only a small proportion of the whole in value and admits of compensation in money, the court may direct specific performance of so much of the contract as can be performed, and award compensation for the deficiency.
In Kartar Singh v. Harjinder Singh, AIR 1990 SC 854, the Supreme Court held that Section 12(1) propounds a general principle that ordinarily the court shall not direct specific performance of a part of a contract. However, where the respondent and his sister jointly owned a property and the respondent contracted to sell the entire property for Rs. 20,000, but the sister refused to sell her share, this was not a matter of performance of a part of a contract and was therefore not covered by Section 12.
V. RIGHTS AGAINST A PERSON WITH NO TITLE OR IMPERFECT TITLE
Section 13 of the Specific Relief Act, 1963 is based on the doctrine of feeding the grant by estoppel. Accordingly, where a person represents valid title and enters into a contract to sell the property, but subsequently acquires valid title, they cannot plead the prior defective or imperfect title to evade performance of the contract — they are obliged to perform it.
Section 13 grants the purchaser or lessee certain rights in such circumstances, including the right to compel the vendor or lessor to make good the contract out of any subsequently acquired interest, to procure the concurrence of other necessary persons, or to redeem any mortgage where the vendor has only a right of redemption.
VI. WHO MAY OBTAIN AND WHO IS BARRED FROM SPECIFIC PERFORMANCE
Section 15 of the Specific Relief Act, 1963 provides that specific performance may generally be obtained by any party to the contract, or by their representative in interest or principal — subject to the proviso that where the learning, skill, solvency, or personal quality of the party is a material ingredient, or where the contract provides that their interest shall not be assigned, their representative shall not be entitled to specific performance unless the contracting party has already performed their part.
Conversely, Section 16 sets out the personal bars to relief. Specific performance cannot be enforced in favour of a person who would not be entitled to recover compensation for breach, who has become incapable of performing or has violated any essential term of the contract, or who fails to aver and prove that they have performed or have always been ready and willing to perform the essential terms on their part.
VII. DISCRETION OF THE COURT AND COMPENSATION
Section 20 of the Specific Relief Act, 1963 preserves the judicial discretion of courts in decreeing specific performance. The court is not bound to grant such relief merely because it is lawful to do so. The discretion is not arbitrary but must be sound and reasonable, guided by judicial principles, and capable of correction by an appellate court. The court must meticulously consider all facts and circumstances of the case before exercising this discretion.
Section 21 further provides that in a suit for specific performance, the plaintiff may also claim compensation for breach, either in addition to or in substitution of performance. In determining the amount of compensation, the court is guided by the principles specified in Section 73 of the Indian Contract Act, 1872.
In Jagdish Singh v. Natthu Singh, AIR 1992 SC 1604, the Supreme Court held that Section 21 comes into operation in two types of cases: first, where the defaulting party commits a breach of contract against which the wronged party is otherwise entitled to compensation and the court decides that specific performance ought not to be granted; and second, where the decision of the court is in favour of specific performance but the same is insufficient to satisfy the demands of justice, and hence some compensation in addition is considered proper to render full justice.
It is also important to note that under Section 24, the dismissal of a suit for specific performance shall bar the plaintiff’s right to sue for compensation for the breach of the same contract, though it shall not bar any other relief to which the plaintiff may be entitled.
VIII. CONCLUSION
Specific performance is a significant equitable remedy under Indian law that steps in where monetary compensation alone cannot do justice to the aggrieved party. The Specific Relief Act, 1963 carefully balances the interests of both parties by setting out clear conditions under which specific performance may be granted, limiting contracts that can be so enforced, preserving judicial discretion, and providing for compensation where full performance is not possible. The cases discussed in this article illustrate how courts have applied these provisions in practice to ensure that contractual obligations are honoured and that technical procedural gaps do not become a shield against legitimate claims.
** Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of The Lawscape.
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