Legal Narrative
ABSTRACT
When a contract is breached the two widely known remedies are monetary compensation and secondly specific performance of contract is available to the aggrieved party. The remedy used to be decided on the basis of subject matter of contract, loss suffered by aggrieved and by following the principle of equity and reasonableness. The doctrine of Pacta Sunt Servanda meaning - agreements must be kept, serves as foundational basis behind every contract. To preserve this very foundational basis of contract Indian legislatures bring the 2018 Amendment1to make specific performance of contract a mandate rather than discretion. This article examines the overview and need of specific performance, how it serves as contractual sanctity, along with judicial interpretation and 2018 Amendment.
KEYWORDS: Specific Relief Act, 2018 Amendment, Specific Performance, Substituted Performance, equitable remedy.
INTRODUCTION
Specific Performance is a form of remedy in civil law which restores the parties in contractual relation to their original position. In day to day life individuals and entities comes into agreement in order to facilitate their businesses, fulfills their necessities by sharing resources and building mutual trust. To ensure these all transactions goes smoothly and to give it a binding force, the contract law provide equitable remedy in form of specific performance by compelling the defaulting party of the agreement to perform his part of promise so that the very essence of the contract remain intact. In India the sole legislation governing the specific performance of contract has been incorporated under The Specific Relief Act, 1963 under Chapter Ⅱ of Part Ⅱ from Section 9 to 25. It covers provisions for those contracts which can be enforced, their performance in whole or in part, its substituted performance and category of person against or by whom contracts can be made enforceable. These provisions empower the court to mandatorily enforce the performance of contract with some statutory exceptions. However before 2018 courts had discretion in enforcing specific performance but the general tilt of court were mainly remain in awarding compensation and refraining from enforcing performance of contractual liability. That discretionary act of court severely impacted the core values of contract resulting into prolonged uncertainty, unfairness with aggrieved party where monetary compensation didn’t put the party in its previous status and especially to real estate businesses. The 2018 Amendment changes the discretionary nature of specific performance of contract into a mandatory rule.
OVERVIEW OF SPECIFIC PERFORMANCE
The doctrine of specific performance of contract was first developed in Equity Court of England during 14 and 15 century2. Before it, the breached contract was addressed only by awarding compensation. These compensations were sometimes proved to be inadequate, especially when subject matter of contract was a rare art or land or a thing of necessity for plaintiff and the loss suffered by plaintiff could not be restored in monetary terms. Hence this new concept of specific performance was introduced to compel the defaulting party to perform the actual promise rather than simply compensating injured party.
In India the doctrine of Specific Performance was first introduced and codified during British regime through –THE SPECIFIC RELIEF ACT, 1877. This legislation was drafted upon lines of New York Civil Code 18623. This ACT of 18774 was later on repealed by The Specific Relief Act 1963 on the recommendation of Law Commission of India in its NINTH REPORT. However the relief of specific performance was matter of discretionary power of court based on various factor like the amount of damages caused could not be ascertained or when compensation could not justify the actual loss suffered by plaintiff. Court exercises its discretionary power on principle of justice, equity, good conscience and allows the enforcement of specific of performance when plaintiff has also willingness and readiness to perform his part of contract subject to other statutory basis. Over the years the Indian court and legislatures have played significant role in shaping this doctrine of specific performance. The latest amendment to the Act was enforced in 2018, which brought major changes to laws related to specific performance.
THE 2018 AMENDMENT AND MANDATORY RULE
The 2018 Amendment5 brings a major change in enforcement of specific performance of contract. The 2018 amendment enacted on the recommendation of the Expert Committee Report constituted under Ministry of Law and Justice and headed by Mr. Anand Desai, its main purpose include making enforcement of contract more effective for infrastructure development and ease of doing businesses by making specific performance a general rule than mere exception.6
REASON OF INCORPORATING THE 2018 AMENDMENT
The primary reason behind bringing the 2018 amendment is discussed as follow
I. Safeguarding Infrastructure and Public Development – The legislature recognized that contractual dispute in sectors like energy; transportation and construction frequently stalled public utilities. By incorporating strict specific performance rules, introducing substituted performance and barring courts from granting injunction that disrupt infrastructure project, the law makers prioritized uninterrupted economic development.
II. To protect sanctity of contract – Prior to 2018, specific performance was discretionary where monetary compensation was default norm and performance was exception. The substitution of word ‘May’ with ‘shall’ under section 10 of Specific Relief Act has made the specific performance a mandatory rule and damages as exception.
MANDATORY RULE
The legislative intent of making specific performance of contract as mandatory rule is evident from amended part of section 10 of Specific Relief Act which read as- “The specific performance of a contract shall be enforced by the court subject to the provisions contained in sub section 2 of section 11, section 14 and section 16.7” This provision mandated the court to strictly enforce the performance of contract subject to few exceptions. The four exceptions to mandatory performance of contract includes - ( ⅰ) when plaintiff had already obtained substituted performance. (ⅱ) contract involving continuous duty which cannot be supervised by court. (ⅲ) contract which required personal qualification and skills. (ⅳ) contract of a determinable nature, apart from these four every cases of breached contract is compulsorily made to be enforceable by court. The mandatory nature of specific performance ensures fairness and legitimate expectation of plaintiff. However in order to ensure this mandatory rule does not become a rigid framework, the amendment also introduced new concept of “Substituted Performance”. If a either party breaches a contract, the aggrieved party now has option under section 20 to get the contract performed by a third party or through their own agency and subsequently recover the cost from the party who has breached the contract. Once a party chooses this option of substituted performance, they waive off their right to seek specific performance against original promisor. The Hon’ble Delhi High Court also recognized this and held in the case of Poonam Verma v. DDA that the remedies under section 20 is alternative not cumulative upon the completion of substituted act8.
Allahabad High Court in the case of Tushar Agrawal V. Ganesh Prasad9 observed that after the amendment with effect from 1.10.2018, the relief of specific performance of contract is no longer discretionary and the court is now obliged to enforce the specific performance of contract subject to statutory exception as given under section 10 of Specific Relief Act.
Supreme Court in the case of B. Santoshamma Vs D. Sarala10, held that the courts are now supposed to grant the relief of specific performance keeping in mind only the condition mentioned under section 11(2), section 14 and section 16 of Act.
CONCLUSION
The new change of specific performance from discretion to mandatory rule marks a significant milestone in contract law. However prior to 2018 Amendment, the discretion not a complete discretion court was used to apply the principle of non arbitrariness while granting specific performance or compensation. The new change encourages performance of contract at first instance without breaching. The 2018 Amendment11t has perfectly balanced the discretionary and mandatory rule by ensuring that it does not become a rigid tool for aggrieved party as it introduced the concept of rule of substituted performance. Ultimately this Amendment enhances ease of doing business, reduces economic cost of contract breaches and promises are strictly fulfilled rather than merely compensated.
FOOTNOTES
1 The Specific Relief ( Amendment) Act, 2018 ( Act No. 18 of 2018)
2Sidhant Singh, The doctrine of specific performance under the Indian Contract; A Study of Judicial Interpretation, VOL 6,Issue 3 IJLMH 1029 (2023).
3 New York (State), Commissioners of the code, Draft of a Civil Code for the State of New York (1862).
4 The SPECIFIC RELIEF ACT 1877.
5Ibid 1
6 PSA, Specific Relief (Amendment) Act, 2018:A Paradigm Shift?, Legal 500 ( Oct. 30,2018).
7Section 10, The Specific Relief Act 1963 ( as amended by 2018 Amendment).
8Specific Performance after 2018 Amendment –How Courts Interpret substituted performance today, Lawcurb, (Dec. 15, 2025).
9 Tushar Agrawal vs. Ganesh Prasad, 2026; AHC: 133431
10 B. Santoshamma and Anr vs., D. Sarala and Anr,( 2020 INSC 556; SC)
11 Ibid 1
