Specific performance is equitable relief given by a court in case of breach of contract in the form of a judgment that the defendant is to actually perform the contract according to its terms and stipulations.
From every contract there immediately and directly results from an obligation on each of the contracting parties towards the other to perform such of the terms of the contract as he has undertaken to perform.
An obligation includes every duty enforceable by law. Consequently, whenever a man comes under a liability to do or forbear from doing anything, he remains under an obligation. This liability may be a consequence of either a contract or a tort.
An obligation to forbear is a positive duty generally imposed by a contract. This form of specific relief is described as "the specific performance of contract".
Defences against suits for specific performance based on contracts [S. 9]
9. Defences respecting suits for relief based on contract- Section 9 of the Specific Relief Act, 1963 provides that except as provided in this chapter (i.e. Chapter II, Sections 9 to 25) all defences open under the law of the contract shall be open to a defendant, where any relief is claimed under this Chapter in respect of a contract.
Defences that are available under the law of contract, such as incapacity of parties, the uncertainty of contracts, coercion, undue influence, fraud, misrepresentation, mistake, etc. have all been dealt with in the Indian Contract Act.
It has been held that a Government contract which is concluded without fulfilling the requirements prescribed by Article 299 of the Constitution of India cannot be specifically enforced.
Validity of original contracts
In a suit for specific performance, the subsequent purchaser challenged the contention that the original contract to sell was fictitious and not genuine, but the suit was ultimately decreed. It was held that the first appellate court ought to have considered the evidence and recorded its own finding as to whether the original agreement was true and valid.
Delay as ground of defence under law of contract
The Supreme Court in Motilal Jain v. Ramdasi Devi, has laid down the following relevant aspects of delay with respect to the specific performance of a contract for sale of immovable property:
(i) delay running beyond the period prescribed under the Limitation Act;
(ii) delay in cases where, though the suit is within the period of limitation, yet:
(a) due to delay the third parties have acquired rights in the subject-matter of the suit;
(b) in the facts and circumstances of the case, delay may give rise to plea of waiver or otherwise it will be inequitable to grant a discretionary relief.
Section 10 as it originally stood was as follows:
10. Cases in which specific performance of contract enforceable- Expect as otherwise provided in this chapter, the specific performance of any contract may, in the discretion of the Court, be enforced-
(a) when there exists no standard for ascertaining the actual damage 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 pressure 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 of consists of goods which are not easily obtainable in the market;
(b) where the property has held the defendant as the agent or trustee of the plaintiff.
Section 10 has been amended by the Specific Relief (Amendment) Act, 2018, which has shifted the claim for enforcement of the provision to Section 11(2), Section 14 and Section 16.
Where the circumstances in which the contract was executed were not established and doubts remained about the honesty of the transaction, equitable relief of specific performance was not granted. There was absence of signature of the purchaser on the agreement to sell.
The court said that this would be to disentitle him to file a suit if the agreement is executed by the owner of the property. But in this case there were civil disputes pending between the parties over the property in the suit.
Also suspicions arose about validity of the agreement in question. Specific performance was not allowed by the court.
In Sky Petroleum Ltd. v. VIP Petroleum Ltd., the plaintiff operating filling stations was a purchaser of petroleum products from the defendants at fixed prices. Due to movement of prices of petroleum products to the detriment of the defendant, the defendant tried to terminate the contract.
Since the plaintiff had no other alternative supplier, it moved an application for an injunction. The court held that to grant an injunction, in the terms sought, would be to order specific performance of a contract to sell and purchase non-specific or unascertained chattels, and that such an order would normally be refused because damages would be a sufficient remedy.
That in the unusual circumstances in which the defendants were the only source of supply available to the plaintiffs and the sole means by which the plaintiff could continue their business damages would not be a sufficient remedy and an injunction would be granted.
Agreement for reconveyance or repurchase
An agreement to repurchase property which had been sold, popularly known as the agreement for reconveyance, has been held to be specifically enforceable.
Unreasonable delay by a plaintiff in performing his part of the contract operates as a bar to his obtaining specific performance, provided that -
(i) time was originally the essential element of the contract; or
(ii) it was made an essential element by a subsequent notice; or
(iii) the delay has been so unreasonable and long that it amounts to abandonment of the contract.
As a general proposition of law, 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 of the essence of the contract the court may infer that it is to be performed within a reasonable time if the conditions are evident:
(i) from the express terms of the contract;
(ii) from the nature of the property; and
(iii) from the surrounding circumstances, for example, the object of making the contract.
It has been held that a person seeking specific enforcement of a contract must approach the court within a reasonable time even if time is not of the essence of the contract. It was further held that "reasonable time" means as soon as circumstances permit.
A valid contract of sale must be proved by producing the original document.
Sale by joint owners
Where any property is held jointly, and once any party to
the contract has agreed to sell such joint property by agreement, then, even if the other co-sharer has not joined, at least to the extent of his share, he is bound to execute the sale deed.
Performance of trust
11. Cases in which specific performance of contract of contracts connected with trusts enforceable.-
(1) Except as otherwise provided in this Act, specific performance of a contract shall 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.
Enforcement of trustee's duty
The creation of a trust imposes a duty on the trustees, which may be enforced eve by strangers to the transaction who may not have been in existence at its date, if they have an interest under the contract. Thus, contracts connected with trust can be specifically enforced either at the instance of the beneficiaries or at the instance of the trustees.
A suit for specific enforcement should be filed for specific performance within the period stipulated under Article 54 of the Limitation Act, 1963.
Specific performance of part of contract [S. 12]
Section 12 deals with specific performance of a part of a contract. It provides in clause (1) that as a general rule, the court shall not grant specific performance of a part of a contract. The section, however, recognises in clauses (2) to (4) certain exceptions to the above rule.
Whether specific performance of a part of the contract is to be ordered or not has been wholly left by the section to one deciding factor, namely, the proportion the part which can be performed bears to that which cannot be performed.
Where the part which cannot be performed bears only a small proportion to the whole in value and the unperformed part can be compensated adequately in terms, the court may order specific performance of one and compensation for the other.
Rights of purchaser or lessee where seller's or lessor's title imperfect [S. 13]
Section 13 deals with the rights of a purchaser or lessee against a person with no title or imperfect title. The idea underlying this section is that when a person enters into a contract without the power for performing that contract and subsequently he acquires the power of performing the same, he is bound to do so.
The section comes into play when the seller of immovable property has no title or only an imperfect title. If he acquires any interest in the property subsequently, the purchaser can compel him to make good the contract out of such interest.
Where concurrence of or conveyance by some other person is necessary to enable the vendor to validate his transfer, and if that person is bound to concur at the direction of the vendor, the purchaser can compel the vendor to procure such concurrence and validate the transfer.