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Remedies For Breach Of Contract Under Specific Relief Act And Code Of Civil Procedure: A Critical Study

A contract is an agreement enforceable by law. In a generic sense, a contract is a collection of corresponding promises, either in a written format or oral, between two or more than two parties, binding them in a contractual legal relationship.

A contract is a legal obligation on the parties to that contract who have agreed to deal with each other.

In general perspective, a breach is a non-performance of an act required to be done for the fulfilment of a promise, agreement, or a contract. As per the Oxford dictionary, a breach is a failure to do something that must be done by law. Here, something means an action or inaction that breaks an agreement.

A breach of contract is a failure on part of either of the parties to perform their obligations mentioned under the contract. Such non-performance causes the other party to suffer a loss. According to Black's law dictionary, breach of contract means failure to live up to the terms of a contract

A contract is legally binding as per the Indian Contract Act, 1872, it observes that a breach of contract is a violation of the entitled legal duty. In such a violation, if one of the parties fails to fulfil the obligations of the contract then the other must terminate it. A breach of contract could be either in its entirety or partly. The party who breaches the contract must give compensation only for the part they have not performed.

A remedy is a legal way of repositioning the aggrieved party into the place they were before the breach of contract or in a place where they would be after the performance of the contract.

Introduction
The Specific Relief Act was first enacted as 'Specific Relief Act,1877' which was later amended as 'Specific Relief Act, 1963' by the Parliament of India on the recommendation of the 9th Law Commission Report.

Law of Contract is a Substantive law and therefore it cannot be exhaustive in granting reliefs and remedies. Keeping the same in mind, based on the Principle of Equity, Justice and Good Conscience the Specific Relief Act, 1963 (hereinafter referred to as 'the Act') widens the extend of seeking relief under the Civil Courts and provides for a cluster of reliefs and remedies when it comes to violation of a legal right as the act does not provide any rights in itself but it requires it to be pleaded in front of the court to be granted and enforced.

The laws are commonly differentiated based on:
  • Rights
  • Remedies
  • and its procedure,
The law of specific relief is based on the second category as it lays out various reliefs and remedies to be provided. As per the section 4 of the act it specifically deals with the imposition of only civil rights as the penal rights do not fall in its ambit.

The remedies laid down by Civil Courts of Justice are classified as:
  1. one where the plaintiff gets his entitlement, and
  2. the plaintiff is compensated for the loss if the status quo is not restored.

The above mentioned is done by seeking various remedies that are recognized by the Court under the provisions laid down by the Act:
  • Damages or Compensation
  • Recovery of Possession of Property
  • Specific Performance of Contract
  • Rectification of Instrument
  • Rescission of Contracts
  • Cancellation of instruments
  • Declaratory Decrees
  • Injunctions

Damages

Damages is one of the widely used legal remedy for a breach of contract. The word Damages implies compensation in form of money for the loss suffered by the aggrieved party.
The party who is injured by the breach of contract may bring an action of breach of contract either by remedy of specific performance or the damages available such as general or liquidated damages, nominal damage (no loss situation), compensatory, punitive and specific.

The compensatory amount and the type of damages to be awarded is at the discretion of the court. The damages are usually proportionate to the loss incurred or by putting the injured party in status quo. It is important to note that burden lies on the aggrieved party to prove their loss.

Hadley v. Baxendale (1854) 9 EX 341
The plaintiffs carried on extensive business as miller. The mill got shut due to the breakage of the crankshaft. To get a new part, this broken crankshaft was to be sent to Greenwich. The defendants were the carriers and they promised to take it to Greenwich. They were asked to do so immediately as the mill has stopped. Due to certain circumstances, the delivery got delayed and the plaintiff's mill could not run for a longer period. The plaintiff brought an action against the defendants.

The rule laid down here was that where two parties have a contract with each other and one of them breaches it, then the damages to be received by the aggrieved party must be fair and reasonable whether the breach arose naturally or by the contemplation of both the parties.

S. 73 of Indian Contract Act, 1872 lays down provisions regarding the Compensation for loss or damage caused by the breach of contract It talks about the right of the party who suffers from the breach of a contract while S. 74 deals with a situation where the parties have already specified the penalty for breach of contract. S. 75 states that a party who has rightfully rescinded a contract is entitled to receive compensation.

S. 10 of the act lays down provisions for cases in which specific performance of a contract is enforceable.
S. 12 of the act states that the courts may grant specific performance of a part of the contract as per the provisions of this section only.

For instance, In B. Santoshamma v. D. Sarala[1], decided on 18.09.2020 held that the court may, under Section 12 of the Specific Relief Act directs that the party who has defaulted to perform specifically as per the part of the said contract, as he can perform, provided the other party accepts to pay or has paid the consideration for the whole of the contract, would be less proportion to the total value of the contract if admits of compensation.

The provisions discussed above can be applied to online or e-contracts considering that the scope of these e-contracts is very vast it requires specific laws to regulate it. An amendment adding provisions specifically for e-contracts are necessary.

Recovery Of Possession Of Property

Immovable Property:
S.5 A person entitled to the possession of specific immovable property may recover it in the manner provided by the Code of Civil Procedure, 1908 (5 of 1908)

The section in simple words provides that any person who is lawful owner of immovable property can get the possession of such property by due course of law. It means that when a person is entitled to the possession of specific immovable property, he can recover the same by filing the suit as per provisions of CPC.

In India, persons are not permitted to take forcible possession. Even the owner of a property i.e. landlord has no right to re-enter by showing force or intimidation. He must have to proceed under the law and taking of forcible possession is illegal. The law respect possession and Courts usually frowns upon the dispossession which is carried out not in accordance with law.
The statutory recognition of the rule can be seen under Section 6 of the act.

The main object of Section 6 is to discourage forcible dispossession on the principle that disputed rights are to be decided by due process of law and no one should be allowed to take law into his own hands, however good his title may be. Section 6 provides summary remedy through the medium of Civil Courts for the restoration of possession to a party dispossessed by another within 6 months of its dispossession leaving them to fight out the question of their respective title in a competent Court if they are so advised.

Movable Property:
S.7 Recovery of specific movable property:
A person entitled to the possession of specific movable property may recover it in the manner provided by the Code of Civil Procedure, 1908.

Property of every description except immovable property is movable property.

State of Gujarat v. Biharilal[2], it has been held that the property which is being capable of identified by the occupant of that property is equipped with sometime of contract and that which possessed the characteristic of movable property, will be covered under section 7 of Specific Relief Act, 1963.

Joseph v. National Magazine Co Ltd[3] A writer refused to have his name published as the author which had been re-edited and altered by a magazine expressing other opinions in a different style. He was not entitled to specific performance of his contract as that would require supervision by the court of editing the article though he would be entitled to damages for loss of opportunity of enhancing his reputation.

Therefore, the parties if fulfilling the necessities as carved out above can be entitled to this equitable and magnificent remedy. The caution should be laid upon the ingredients and the pigeonholes where a case can be fitted.

Specific Performance Of Contract

One of the main aspects of civil rights is the fulfilment of expectations created by a contract and so, Specific performance refers to fulfilment of a promise made under a contract as mutually agreed upon. Specific Performance is considered to be an equitable relief granted by the court.

Contracts must be enforced but the only way law of contract can do that is by awarding compensation the aggrieved party.

A suit for specific performance s filled by the aggrieved party in a court od competent jurisdiction. This is done because the other party has failed to perform the obligations of the contact. An obligation includes every duty enforceable by law and a consequence of failure in doing so results in specific performance of the contract.

Remedy of specific performance which is affected in case of breach of contracts is provided by the equity courts. However, this cannot be asked for as a right because it is provided on the satisfactory discretion of the court.

If the compensation to be awarded cannot be determined. Remedy of specific performance is awarded in cases where it is impossible to fix compensation. In this case, the court directs the defendant to perform his promise as agreement as agreed at the time of making the contract.

Remedy of specific performance is awarded when there is no substitute or alternate for the subject matter of the contract.

Remedy of specific performance is awarded in case of goods, the value of which cannot be easily ascertained, and the goods have a unique character. For example, buildings, land or goods having special value for the plaintiff.

Remedy of specific performance is awarded at the sole discretion of the court.

Rectification Of Instrument

Rectification of instrument, in literal terms means correcting the errors, here instrument means contract. Rectification of instruments under Specific Relief Act is a fair or an impartial remedy that is issued by the Court when facts are not in accordance to the intention of the parties.

Sec. 26 provides that a contract or any other instrument may be rectified when it does not express the real intention of the parties because of any fraud or mutual mistake of the parties. Rectification consists in bringing the document in conformity with the actual or prior agreement.

The essentials of application of rule of rectification are:
  1. There must have been a genuine agreement different from the expressed agreement.
  2. It was through fraud or mutual mistake between the parties that the contract in question did not express truly the intention of the parties.
  3. A unilateral mistake will not afford relief for rectification of instrument.
  4. The court must determine the intention of the parties about meaning and legal consequences of the instrument. It is discretionary for the court to grant the relief of rectification.

Sartaj v. Ayub Khan (2019)[4]
In this case, it was held that the appellant filed a civil suit with the allegation that the plaintiff purchased property (land) from the defendant by registered sale deed for valuable consideration but due to inadvertent mistake and misunderstanding in the sale deed they are taking undue advantage for the same. In the judgment it was held that the appeal is liable to be allowed and the judgment passed by the lower appellate court is liable to set aside and the judgment and decree passed by the trial court are liable to be restored.

Noordin Esmailiji v. Mohamed Umar Subrati (2019)[5]
The case began with an agreement between the Nevitia Floor Mills and Sardar Haji Badloo Subrati. The land has been divided into six parts. And the dispute regarding the land began. At last, it was held that a suit for rectification of deed on grounds of mutual mistake if the rights of third parties have not intervened. The date of the notice of the mistake is the date from which time runs.

According to me, the rectification of an instrument is necessary, as because of this section parties can be saved from being in any kind of fraud or if there is any mistake occurs in a contract by the parties then with the help of section 26 one can complain in the Court regarding the same. As there are certain provisions within which if the court does not find it justified then the rectification may not be enforced.

Rescission Of Contracts

In general words, the term Rescission connotes annulment, destruction, repeal or unwinding of a transaction. The Act prescribes Rescission of Contract as a relief to a person on whom a contract has been imposed using a fraud or illegality.

Such a person has a right to seek relief by way of asking the court to declare the contract not binding upon him. Thereby, getting rid of the contract i.e. Rescission of Contract. The right to rescind a contract heavily relies on the assumption that the contract never really existed because of the defects it accompanied. It is well settled that a person who sues for rescission of contract cannot claim alternative relief of specific enforcement but a person who filed a suit for specific enforcement can alternatively claim for rescission of the contract.

In Sardar Mohan Singh v. Mangailal, the Hon'ble Supreme Court observed that Court does not lose its jurisdiction after the grant of the decree of specific performance nor it becomes functus officio. The trial court retains its power and jurisdiction to deal with the decree of specific performance until the sale deed is executed in the execution of the decree. It also stated that the court has the discretion to extend the time for the compliance of the conditions mentioned in the decree for specific performance.

Rescission of Contract is a relief provided to a party whose consent to the contract has been obtained by coercion, misrepresentation, fraud, or undue influence. Based on the principle of Equity, the right of rescission has been interpreted by the Indian Courts in such a way as to provide relief to both the parties i.e. one who wants to rescind the contract and the other who might get affected by such rescission.

While entering into a contract, a party may reserve a right in his favour to rescind or terminate the contract on the happening of a certain event or a breach of contract. The court may at its discretion rescind the contract if it is satisfied that the party claiming the rescission has performed his part of the contract. It is pertinent to mention that court's aid is not necessary in cases where a party has an option to rescind a contract and it simply declares the precursory rights of the parties instead of creating a right in favour of the parties.

Cancellation Of Instruments

In simple language, cancellation of instruments means the nullification of a written document which is proof of a transaction between the parties that are part of the transaction.

Cancellation of documents is dealt with under Sections 31, 32 and 33 of the Specific Relief Act, 1963. If there is an instrument, which is void or voidable due to some reason and a party to such an instrument has enough reasons to believe that the said instrument has the potential to act against him and may even cause serious injury to him, then such a person can file a suit with regards to the cancellation of such an Instrument. This is a discretionary relief.

Cancellation of Instruments can be done in two ways, as follows:
  • Complete cancellation where the court decides to cancel the whole instrument.
  • Partial cancellation where only a part of the instrument is cancelled out. These types of cancellations are mentioned under Section 32 in the Specific Relief Act and have been further explained later in this article.

Prem Singh & Ors v. Birbal & Ors. (2008)[6]
The Hon'ble Supreme Court, in this case, has talked about Section 31 in the Specific Relief Act, 1963. The Hon'ble Court believed cancellation of an instrument can be entrusted upon when either the document is a void document or a voidable document.

The Hon'ble Court held that as far as void documents are considered the aggrieved party may not be required to file a suit for cancellation of an instrument/document under Section 31 in the Specific Relief Act, 1963. Though when a similar concern is raised with regards to a voidable document/instrument then a suit for such shall be required to be filed under Section 31 in the Specific Relief Act, 1963 for the purpose of cancellation of the instrument.

The purpose of cancellation of instruments by the courts in India under the Specific Relief Act of 1963 has always been with an intent to serve justice to the parties who are in a fear of being harmed or are actually being harmed by the other party due to the performance of such instrument/contract. The court serves justice in such situations by way of cancellation of the instrument or contract. Thus, it can be said that provisions with regards to the cancellation of instruments under the Specific Relief Act, 1963 is commendable and falls in line with the purpose of Courts to serve justice.

Declaratory Decrees

If any person entitled to any legal character, or to any rights as to any property is denied by another and if any suit is filed by the person so denied it is called a declaratory suit. A Declaratory decree is a binding declaration of right in equity without consequential relief. In simple terms, a declaratory decree is cone which settles the right and removes the confusion of the status of the party.

Provision regarding Declaratory Decree has been provided in S. 34 and 35 of the Specific Relief Act, 1963.

The declaratory decree is an order which declares the rights of the plaintiff. It is a binding declaration under which the court declares some existing rights in favour of the plaintiff and declaratory decree exists only when the plaintiff is denied of his right which the plaintiff is entitled to. After that specific relief is obtained by the plaintiff against the defendant who denied the plaintiff from his right.

According to S.34 of the act , any Person entitled to any legal character, or to any right as to any property, may institute a suit against any person denying, or interested to deny, his title to such character or right, and the court may in its discretion make therein a declaration that he is so entitled, and the plaintiff need not in such suit ask for any further relief

Declaratory decree provisions bring out to merely perpetuate and strengthen the Plaintiff in case of an even adverse attack so that the attack on the Plaintiff cannot weaken his case and it is mentioned in the case of Naganna v. Sivanappa[7] and by the arguments made in this case, it encourages the plaintiff to come forward to enjoy the rights which they are entitled to and if any Defendant denied the Plaintiff from providing any rights for which the Plaintiff is entitled, then it gives them the power to file the suit and get special relief.

Tarak Chandra Das v. Anukul Chandra Mukherjee[8], it was held that the court had absolute discretion to refuse the relief if considered the claim to be too remote or the declaration if given, would be ineffective. In this same case, it was observed that the term mentioned above in this article 'Right to Property' showed that Plaintiff should have an existing right in any property, not the mere interest in that property would lead to special relief.

Declaratory decree is a provision which focuses on the rights of the Plaintiff and gives immense power to the Plaintiff to deal effectively against the defendant. How the court uses their discretionary power under what circumstances and other aspects analysis helps the reader also to analyse and understand the Declaratory decree concept in the simplest way.

According to my opinion and analysis, Declaratory decree is a concept which is to be wider and covers more aspects than it currently does and the main thing according to my opinion should be amended in a long-term is that there should be a limitation on the use of discretionary power by the different courts and fixation should be done in which cases or in which type of cases, the discretion of court can be used.

Injunction

The term injunction has been the subject of various attempts at a definition. It has been defined by Joyce as An order remedial, the general purpose of which is to restrain the commission or continuance of some wrongful act of the party informed. Which means Injunction is an order or decree by which a party to an action is required to do or refrain from doing an act or thing. An injunction can be issued for and against individual, public bodies or even in the state.

There can be cases where the nature of the contract does not allow damages to likely serve any purpose nor admit to specific performance. In such cases, the court may have to restrain the party who threatens the breach, to the possible extent. When he is prevented from resorting to other openings, it may exert some pressure upon his mind, and he may be persuaded to go ahead with the performance of his contract.

This type of remedy is known as preventive relief. This is granted by issuing an order known as injunction. Injunction is a form of specific relief which the court grant when the pecuniary compensation would be inadequate or altogether futile.

Injunctions can be issued under the Specific Relief Act 1963 which is also governed in India by the Code of Civil Procedure, 1908.
The court at its discretion can grant two types of injunctions:
  1. Temporary Injunction: as the name suggests it is only granted for a stipulated amount of time or before the court gives a direction about the matter in question. They can be accessed at any point of the court and are governed by the Civil Procedure Code, 1908 (CPC).
     
  2. Permanent Relief: it is one that is issued at the time of the final judgment and is thus often, for a longer duration. In this case, the Defendant is indefinitely barred from commissioning an act, or prohibition from commissioning an act that will harm the Plaintiff's interests. S. 38 of the Special Relief Act, 1963 sets out the cases in which Permanent Injunctions may be granted.

Conclusion
Behind every action taken, there lies a reason and similarly the Specific Relief Amendment Act, 2018 was introduced due to the following reasons:
Firstly, the World Bank placed India on the 100th rank out of 190 countries in its Doing Business 2018 report. The report highlighted India's deficiency in the fields of Enforcement of Contracts and its associated Legal systems and procedures that are being followed. Subsequently, India's Economic Survey 2018 highlighted that India is still lacking in the enforcement of contracts in our country and steps needed to be taken to ensure speedy justice and the need for a well-defined law. The National Judicial Data Grid has estimated the number of pending cases in India to be at 26.5 million as of April 2018.

Secondly, the ministry of Law and Justice had constituted an expert committee in 2016 led by Mr. Anand Desai to examine the Specific Relief Act, 1963 and to make suggestions for an amendment keeping in mind the point of view of enforceability of contract and other relief provided under the act since the act was framed in 1963 and many changes have taken place in our country since that time. The committee also had to pay special attention to see that specific performance is granted as a rule, a grant of compensation or damages for non-performance remains as an exception and discretionary relief is done away with. The committee on proper inspection concluded that changes needed to be made in the Specific Relief Act, 1963 in alignment with the agenda for which the committee was set up. Hence the amendment act was introduced.

Since every coin has two sides the Specific Relief Amendment Act,2018 too has both its pros and cons. It is usually seen that a proper analysis of the pros and cons of a piece of legislation takes at least 5-10 years so that both its short term as well as long term effects can be taken into consideration. The Specific Relief Act was amended after 55 years and this amendment has filled all the gaps that existed in the legislation and which came to be found over the years as and when cases were filed under this Act. The Amendment Act takes care of the pre-existing loopholes in the Act and it has inserted new provisions in the original act too and it is only a matter of time before these new provisions turn out as a boon or bane in solving the problems existing in the disposal of cases.

End-Notes:
  1. B. Santoshamma v. D. Sarala, Civil Appeal No. 3574 OF 2009.
  2. State of Gujrat v. Biharilal, Civil Appeal no. 1826 of 1998.
  3. Joseph v. National Magazine Co, 1959 Ch 14: (1958) 3 WLR 366.
  4. Sartaj and Another v. Ayub Khan, (2019) 137 ALR 611.
  5. Noorudin Esmailji Kurwa v. Mohomed Umar Subrati, (1940) 42 BOMLR 605.
  6. Prem Singh & Ors v. Birbal & Ors, Civil Appeal No. 2412 of 2006.
  7. Naganna v. Sivanappa , (1915) ILR 38 Mad 1162
  8. Tarak Chandra Das vs. Anukul Chandra Mukherjee, A.1.R. (1946) Cal. 118.

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