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Specific Relief (Amendment) Act 2018; An Overview

A few years back, India was counted amongst the few worst performing countries in the way it was performing business. The report published in 2016 by World Bank of doing business, India secured 130th Position in ease of doing business.[1] The report has taken into consideration eleven areas while calculating the ranking of ease of doing business; one of them was ‘Contract Enforcement’. It is important for the economic development of the country that its contract enforcement mechanism is effective.

In this view, the government constituted an expert committee[2] to suggest the reforms in the act of 1963 to refine the contract enforcement obligations. The committee submitted its report in 2016 by suggesting a few of the amendments in The Specific Relief Act 1963.

The Specific Relief Amendment Bill was passed by both the houses on 23rd July 2018 and has obtained its assent from the president on 1st August 2018. The Ministry of Law & Justice vide a notification stated 1st October 2018 as the date from which the provisions of the Specific Relief (Amendment) Act shall come into force. In general, the amendment act highlights the issue of delay in the enforcement of contracts and aims to provide some additional remedies to the aggrieved party to the contract.

History:
The contract law in India has been regarded as one of the old laws in India and its implementation has now become difficult due to insufficiency in the contract enforcement mechanisms, which is one of the reasons of delayed justice and huge cost of litigation.

Objective of the amendment act:
  1. To provide a platform for the traders with ease of doing business.
  2. Expeditious disposal of cases
  3. Development purpose.
Highlights of The Amendment:
  1. The Remedy of Specific Performance is no more a discretionary rule: By the Amendment Act, 2018 it has become a mandatory rule of practice to provide specific performance as a remedy to the aggrieved party to the contract. Earlier this rule was performed conditionally, it was provided in the cases when either:
    1. the actual damage has caused due to non-performance of some actions which could not be ascertained, or
    2. when the monetary compensation would not be an adequate relief for the non-performance of the contract.

    Further, a slight amendment has also been done in section 11, now it has become compulsory for the Trusts also to perform the specific performance in the contract. Prior to the amendment, this was not the mandatory rule. But when the contract has been made in excess of their powers then it cannot be specifically enforced.[3]
     
  2. When the contract is not enforced specifically: However the discretion of the court is curtailed to grant specific performance of the contract, unless within the contract where specific performance is sought, where any aggrieved party comes within the purview of the amended section 11(2) or Section 14 or section 16 of the act. Therefore the amended act further provides a provision to seek compensation in addition to the specific performance of the contract.
    • Section 14: It states (a) When a party has obtained substituted performance under section 20; (b) Which involves performance of a continuous duty that the court cannot supervise; (c) when a contract is dependent upon the personal qualification of the parties.
       
    • Section 14A: Confers the power to the court to appoint experts if required in the suit.
    •  Section 16: It states there can be no specific performance in the cases:
      1. where substituted performance is already obtained under section 20, or'
      2. who has become incapable of performing or violates any essential term or on his part remained unperformed or acts in fraud or willfully acts in variance or in the subversion of, the relation intended to be performed by the contract, or
      3. Who fails to prove that he has performed or willing to perform the essential terms of the contract other than the terms which have been prevented or waived by the defendant.
         
  3.  Substituted Performance in a contract[4]: Substituted Performance means when the performance of the remaining act is done by any third party to the contract. After the amendment of the act the aggrieved
    1. Party to the contract has the option of Substituted Performance through a third party or by his own agency, and the cost actually suffered and expenses can be recovered by the party at the breach.
    2. No substituted performance unless the party suffers such breach has given a 30 day notice to the party in breach calling him to perform the contract within the time as specified in the notice, and on his failure or refusal to do that act, he may get it performed by a third party or his agency. Provided; that the aggrieved party cannot recover the expenses and cost unless he has got the contract performed by a third party or his own agency.
    3. When the aggrieved party has got the contract performed through any third party or by his own agency after giving of the aforesaid notice, he shall not be entitled to claim relief of specific performance against the party in breach.
    4. Nothing shall prevent the party who has suffered a breach of contract from claiming such compensation from the party in breach.

     
  4. No Injunction against Infrastructural Projects[5]: Section 20A of the amended act Provides that (1) when the contracts is related to infrastructural projects no injunction can be granted in such projects, until such an injunction may cause delay in the completion of that project. (2) Central Government may, depending upon the requirement may amend the schedule-I (Containing the Category of projects and Infrastructure Sub-Sectors). (3) Every notification issued under this act by Central Government shall be laid, as when both the houses should have consensus over passing or denying that notification.
     
  5.  Establishment of Special Courts[6]: The state government in consultation with the chief justice of high court can make provisions to make one or two civil courts as special courts by publishing a notification in the official gazette, within the local jurisdictions of the court and can try a suit under this act of contracts relating to Infrastructural Projects.
     
  6. Expeditious Disposal of suits[7]: Notwithstanding anything contained in the Civil Procedure Code, 1908. A suit filed under this act shall be disposed within a period of 12 months from the date of service of summons to the defendant (The said period may be increased maximum to 6 months, after recording the reasons in writing).

Conclusion

Some significant changes have been brought with the Amendment act, 2018 being the mandatory time period for disposable of the case and not providing injunction in infrastructural projects.
The Indian Contract Act has been brought with the motive to put a promisee in a position as if the contract is performed, and not to punish the party who has breached the contract.

However by granting a relief of specific performance where the party is legitimately not willing or able to perform the contract and the substitute is readily available is the same as punishing the party at the breach. Also, when a party at breach is not willing to perform availing to some genuine hardships it will not avoid or lessen the conflict rather may worsen the situation.

End-Notes:
  1. Doing Business 2016: Measuring Regulatory Quality and efficiency, P. 5.
  2. Expert Committee consisted of: (1)Mr. Anand Desai, Managing Partner, DSK Legal, New Delhi – chairperson; (2) Mr. Amit Kapur, Senior Partner J. Sagar Associates, New Delhi – Member; (3) Mr. Akashay Cudasma Managing Partner – west Shardul Amarchand Mangaldas & Co., New Delhi – Member; (4) Dr.Arghya Sengupta, Vidhi Centre for Legal Policy, New Delhi – Member; (5) Dr. Nilima Bhadbhade, Associate Professor, ILS Law College Pune – Member; and (6) Dr. Mukulita Vijayawargiya, Additional Secretary, Legislative Department, Ministry of Law and Justice – Member Secretary.
  3. The Specific Relief (Amendment) Act 2018, Sec 11(2)
  4. The Specific Relief (Amendment) Act 2018, Sec 20
  5. The Specific Relief (Amendment) Act 2018, Sec 20A
  6. The Specific Relief (Amendment) Act 2018, Sec 20B
  7. The Specific Relief (Amendment) Act 2018, Sec 20C

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