Proposed Amendments To The Specific Relief Act, 1963 - Impact Analysis

The underlying objective of the parties behind entering into any contract is the performance of their respective parts. If for any reason this performance fails, courts tend to award damages in order to put the affected party back to his original position.

However, if for any reason damages are an inadequate remedy or it is not possible to award compensation, then a relief of specific performance may be awarded to the affected party at the discretion of the court. We have a codified enactment dealing with issue, i.e., the Specific Relief Act, 1963 (“SRA”) governing this aspect.

The proposed Specific Relief (Amendment) Bill, 2018 (“Amendment Bill”) which was passed by the Lok Sabha recently seeks to alter some fundamental propositions in the functioning of the SRA. By proposing a series of changes, the Amendment Bill attempts to simplify and remove the ambiguities embedded in the current legal position. The Amendment Bill has suggested, inter alia, the following changes:

a) Makes specific performance the general rule

The Amendment Bill has suggested a significant departure from the current legal position in this regard. Under the current scenario specific performance of a contract is relegated to the position of a `last resort relief’. It depends on the discretion of the court and can be granted only if a) when compensation in monetary terms is not adequate; or b) when monetary compensation cannot be easily ascertained. Therefore, specific performance is currently granted as an exception rather than a general rule. The Amendment Bill by amending section 10 of the SRA makes the granting of specific performance a general rule and has taken it out of the discretion of the courts.

This move is laudable as it helps in reducing the ambiguity in the relief process. The absence of clear cut guidelines as to the exercise of this discretionary power had made the relief of specific performance defunct. The parties were absolutely dependent on the court’s discretion. A clear and definite legal framework envisaged by the Amendment Bill where specific relief is the general norm would go a long way in attracting foreign investors.

b) Substituted Performance

The Amendment Bill in its attempt to make the process more efficient has introduced the concept of substituted performance in the Specific Relief Act. It gives the right to an affected party to get the contract performed by a third party or by its own agency.

The pre-requisites of exercising this right are that the affected party would need to give a written notice of not less than 30 days to the other party in order to effect substituted performance. The costs pertaining to substituted performance may be recovered from the other party.

It is to be noted here, that substituted performance is an alternative to the relief of specific performance. An affected party who has exercised the right to substituted performance cannot claim the relief of specific performance. Such a right would help in speedy disposal of relief cases and the affected party would not be solely dependent on the other party for specific performance.

c) Injunctions

The Amendment Bill also seeks to prevent the granting of injunctions in relation to infrastructure projects. The aim behind this proposed change is to prevent delays in completing infrastructure projects. Infrastructure projects for this purpose include:

a) Transport

b) Energy

c) Water and sanitation

d) Communication e) Social and commercial infrastructure.

The Amendment Bill also proposes for setting up of special courts to deal with infrastructure projects.

d) Time Limit for Case Disposal

The Amendment Bill seeks to fix a time limit of 12 months for disposal of cases pertaining to contractual relief. Considering the above the Amendment Bill hence, is a welcome step in the direction of simplifying and streamlining the process of contractual relief in India. Contracts are the bedrock of commercial activity in any economy and a legal regime free from ambiguities and having a definite and set tone, helps in boosting investor confidence. It is high time that the archaic Indian laws are overhauled and altered in order to usher economic growth.



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