18 April 2018

Specific Relief Act 1963 | A Radical Shift

The Lok Sabha has recently passed the Specific Relief (Amendment) Bill 2017 (Bill), proposing to bring about very significant amendments to Specific Relief Act 1963 (Act). The Bill has been introduced by the Legislature so as to bring the Act in tune with the rapid economic growth in India and further, to keep it in tune with the expansion of infrastructure activities that are needed for its overall growth and development.

The following are some of the most significant changes proposed by the Bill vis-a-vis the Act:

• Discretion of the Courts: The power of the Courts to grant specific performance of contract under the Act has always been discretionary. Normally, in the event of breach of a contract, the general remedy available to a person under civil law is to sue for monetary compensation. It is only when such monetary compensation is inadequate that the Courts step in and entertain pleas for and/or grant specific performance of a contract. With the introduction of this Bill, the Legislature intends to make take away such discretion given to the Courts and further intends to make grant of specific performance mandatory.

• Readiness and Willingness: As per Section 16 (c) of the Act, the Party seeking specific performance has to not only aver that he is ready and willing to perform his part of the contract from the date of the contract to the time of hearing the suit, but he also has to prove the same in the event such an averment is controverted. In a catena of judicial pronouncements, the Courts of Law have held that making of such an averment as laid down in Section 16 (c) is mandatory, in the absence of which, the Court has the power to dismiss the suit filed by the party seeking specific performance. As a result thereof, various suits had been dismissed by the Courts in the past. By way of the amendments proposed under the Bill, the Legislature has sought to do away with the harsh implications of the aforesaid condition.

• Infrastructure Projects: After listing down a category of projects and infrastructure, the Bill proposes to restrain Courts from granting injunctions in infrastructure projects. However, such a restriction is imposed on the powers of Courts only in cases where granting injunctions would cause any impediment or delay in the progress or completion of such an infrastructure project. Apart from imposing restrictions on the powers of Courts in granting injunctions, the Bill also proposes to empower one or more Civil Courts as ‘Special Courts’, to exercise jurisdiction and try suits under this Act in respect of contracts relating to infrastructure projects.

• Time lines: The Bill also seeks to fix a time limit of twelve months for disposal of cases under the Act, through the newly proposed Section 20C. However, if one reads the proposed Section 20C with the Statement of Objects and Reasons of the Bill, it may be construed that the provisions of such a time limit of twelve months has been introduced specifically for the purposes of infrastructure projects. However, this still remains to be clarified.

• Concept of Substituted Performance: The Bill proposes to introduce a new concept to the Act, known as ‘substituted performance of contracts’. Where a contract is broken, such a proposed amendment seeks to give the aggrieved party a right to get the contract performed by a third party or by his own agency and to recover expenses and costs, including compensation, from the party who failed to perform his part of contract. Such substituted performance of a contract is supposed to act as an alternative to specific performance and hence, any party opting for substituted performance shall have forfeited his right to specific performance of the contract. 

 MHCO COMMENTS AND OBSERVATIONS:

We are of the opinion that the introduction of this Bill would be a welcome change to the Specific Relief Act. Not only would the proposed amendments bring the Specific Relief Act more in tune with the rapid economic growth in India, but it would also ensure that the aggrieved party to a contract shall now be entitled to receive what he had originally signed up for.

This article was released on 18 April 2018.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.com for any assistance