Specific Performance of the Contract

By Mohd. Sahil Khan 10 Minutes Read

Introduction

Specific performance is an equitable remedy granted by a court to compel a party to fulfill their contractual obligations. Unlike damages, which are monetary compensation for breach of contract, specific performance orders the breaching party to perform the contract as agreed. This remedy is particularly useful when the subject matter of the contract is unique or when monetary compensation is inadequate to rectify the loss.

For the relief of specific performance of the contract, there must be a contractual obligation between the parties. The non-performance of the contract by a party leads to breach of the contract and the specific performance of the contract is the resultant remedy that is available to the aggrieved party. For instance, if A and B enter into a contract for the sale and purchase of the house. Later, A denies selling the house, in such a case, B can file a suit against A for specific performance of the contract.

Nature of Specific Performance

The entire base of this remedy has been built upon the concept of equity. The suit for specific performance of the contract is essentially filed for the breach of contract. However, it is not the only relief available to the aggrieved party, rather; the injured party can file a suit for damages under Section 73 of the Indian Contract Act.

It is pertinent to note that both these reliefs can be claimed together and are not mutually exclusive. Prior to the 2018 Amendment, specific performance was a discretionary relief. However, insertion of Section 10(1)(a) has made it a mandatory relief. The same was affirmed in Smt. Katta Sujatha Reddy & Anr v. Siddamsetty Infra Projects Pvt. Ltd.& Ors[1].

Purpose of Specific performance

According to Halsbury’s laws of England, specific performance is an equitable relief granted by the court to enforce against a defendant. The purpose is to enforce upon the defendant the duty to which he had agreed in the contract. It aims at preserving the sanctity of contracts.

Key objectives of specific performance:

• To enforce the exact terms of the contract: It ensures that the contract is performed as agreed upon, rather than simply providing monetary compensation for the breach.
• To protect the expectation interest: This means that the court aims to put the injured party in the position they would have been in had the contract been fully performed.
• To prevent unjust enrichment: By forcing the breaching party to perform their obligations, the court prevents them from unfairly benefiting from the contract breach.

Specific performance is particularly useful in cases involving unique or irreplaceable goods, such as real estate or antiques. In these instances, monetary compensation cannot adequately substitute for the actual performance of the contract.

Conditions for specific performance of the contract

1. The Contract must be valid and enforceable

The cornerstone of any specific performance claim is a valid contract. This means there must be a clear offer, acceptance, and consideration. The contract should also be legal and not against public policy. Without a solid contractual foundation, the court cannot enforce specific performance.

2. Inadequacy of Damages

Perhaps the most critical condition is that the damages must be inadequate. This means that money alone cannot truly compensate the aggrieved party for the breach. This is often the case in contracts involving unique items, such as real estate or antiques. For instance, if someone contracts to sell a rare painting, money cannot replace the unique artistic value.

3. Conduct of the parties

To secure specific performance, a party must demonstrate impeccable conduct as elucidated in H. P. Pyarejan v. Dasappa[2] . Conversely, the defendant’s behavior is equally relevant. As the Supreme Court has affirmed in Aniglase Yohannan v. Ramlatha[3], a plaintiff with a prima facie case, as evident from the pleadings, should not be denied relief solely based on procedural technicalities.

4. Feasibility of Performance

The court must be able to supervise and enforce the order. Contracts involving continuous or personal services can pose challenges. For example, forcing someone to provide personal services against their will might be impractical and even counterproductive.

5. Absence of Unfairness or Hardship

The court will consider the potential impact of the order on both parties. If enforcing the contract would cause undue hardship or unfairness to one party, the court might hesitate. This includes considering factors like changed circumstances and the balance of equities.

6. Readiness and Willingness

Section 16 of the Specific Relief Act provides for the concept of ‘readiness’ and ‘willingness’. The party seeking specific performance must demonstrate their readiness and willingness to fulfill their own contractual obligations. The court in His Holiness Acharya Swami Ganesh Dassji v. Sita Ram Thapar[4] provided for distinction between ‘readiness’ and ‘willingness’. Readiness implies the financial capacity of the party to perform the contract. Whereas willingness implies the conduct of the plaintiff. Both readiness and willingness should be present at all stages of the contract.

The court in V.S. Ramakrishnan v. P.M. Mohammed Ali[5] held that in a suit for specific performance, the trial court must frame a specific issue on readiness and willingness. Furthermore, the courts have observed in various rulings that readiness and willingness of the plaintiff is essential to claim the relief of specific performance under Section 16(c) of the Act.

The court ruled in Mehboob-ur-Rehman v. Ahsanul Ghani[6] that specific performance of contract cannot be enforced in favor of the person who failed to prove readiness and willingness.

7. The Clean Hands Doctrine

The relief of specific performance is based on two principles:

a. He, who comes to the court must come with clean hands.

b. He, who seeks equity must do equity.

Defences against specific performance of the contract

A defendant facing a specific performance claim can employ several defences. These typically revolve around challenging the validity of the contract, the plaintiff’s conduct, or the impracticability of the order. Common defences include:

• Contractual defects: The defendant can claim that the contract is invalid, uncertain, or unenforceable due to factors such as lack of consideration, mutual mistake, or illegality.
• Inadequacy of consideration: The defendant may contend that the consideration provided by the plaintiff was insufficient to justify specific performance.
• Unclean hands: The defendant may assert that the plaintiff’s conduct in the transaction was fraudulent or unfair, precluding equitable relief.
• Hardship: The defendant may argue that enforcing the contract would cause undue hardship, such as financial ruin or personal inconvenience.
• Impossibility of performance: The defendant may claim that subsequent events have made contract performance impossible. For example, the seller agrees to sell a specific vintage car to the buyer. Before delivery, the car is involved in a serious accident and is irreparably damaged. The seller could argue that the contract is impossible to perform due to the destruction of the car.
• Delay or laches: The defendant may claim that the plaintiff’s delay in seeking relief has prejudiced their position.

Conclusion

Specific performance is a judicial remedy that compels a party to fulfill their contractual obligations. Unlike monetary damages, which offer financial compensation, specific performance aims to enforce the exact terms of the agreement. The court carefully weighs the equities, considering factors like the uniqueness of the contract’s subject matter, the parties’ conduct, and the potential hardships of enforcement. Ultimately, specific performance is a tool for justice, employed when monetary compensation cannot adequately redress the wronged party.

[1] CIVIL APPEAL NO. 5822 OF 2022.

[2] AIR 2006 SC 1144.

[3] 2005 (7) SCC 534.

[4] (1996) 4 SCC 526.

[5] CIVIL APPEAL NOS. 8050­8051 OF 2022.

[6] AIR 2019 SC 1178.

Mohd. Sahil Khan