specific performance as equitable remedy

June 21, 2021

INTRODUCTION

In this project we shall be dealing with specific performance as equitable remedy. Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. It is typically available in the sale of land law, but otherwise is not generally available if damages are an appropriate alternative. Specific performance is almost never available for contracts of personal service, although performance may also be ensured through the threat of proceedings for contempt of court.

Specific performance of contracts including, Contracts that can be specifically enforced, contracts not specifically enforceable & Specific performance of part of contract. Specific performance is equitable relief, given by the court to enforce against a defendant, the duty of doing what he agreed by contract to do. As with all equitable remedies, orders of specific performance are discretionary, so their availability depends on its appropriateness in the circumstances. Such order are granted when damages are not an adequate remedy and in some specific cases such as land (which is regarded as unique).

LEGAL PROVISION

Specific Performance as Equitable Remedy under The Specific Relief Act, 1963 from section 9 To 25
9. Defences respecting suits for relief based on contract.—Except as otherwise provided herein where any relief is claimed under this Chapter in respect of a contract, the person against whom the relief is claimed may plead by way of defence any ground which is available to him under any law relating to contracts.
10. Specific performance in respect of contracts.—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.
11. Cases in which specific performance of contracts connected with trusts enforceable.—(1) Except as otherwise provided in this Act, specific performance of a 1 [contract shall], be enforced when the act agreed to be done is in the performance wholly or partly of a trust.
(2) A contract made by a trustee in excess of his powers or in breach of trust cannot be specifically enforced.
12. Specific performance of part of contract.—(1) Except as otherwise hereinafter provided in this section, the court shall not direct the specific performance of a part of a contract.
(2) Where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed be a only a small proportion to the whole in value and admits of compensation in money, the court may, at the suit of either party, direct the specific performance of so much of the contract as can be performed, and award compensation in money for the deficiency.
(3) Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed either—
(a) forms a considerable part of the whole, though admitting of compensation in money; or
(b) does not admit of compensation in money;
he is not entitled to obtain a decree for specific performance; but the court may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the contract as he can perform, if the other party—
in a case falling under clause (a), pays or has paid the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed and in a case falling under clause (b) [pays or has paid] the consideration for the whole of the contract without any abatement; and
(ii) in either case, relinquishes all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant.
(4) When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed the court may direct specific performance of the former part.
Explanation.—For the purposes of this section, a party to a contract shall be deemed to be unable to perform the whole of his part of it if a portion of its subject-matter existing at the date of the contract has ceased to exist at the time of its performance.

13. Rights of purchaser or lessee against person with no title or imperfect title.—(1) Where a person contracts to sell or let certain immovable property having no title or only an imperfect title, the purchaser or lessee (subject to the other provisions of this Chapter), has the following rights, namely:—
(a) if the vendor or lessor has subsequently to the contract acquired any interest in the property, the purchaser or lessee may compel him to make good the contract out of such interest;
(b) where the concurrence of other person is necessary for validating the title, and they are bound to concur at the request of the vendor or lessor, the purchaser or lessee may compel him to procure such concurrence, and when a conveyance by other persons is necessary to validate the title and they are bound to convey at the request of the vendor or lessor, the purchaser or lessee may compel him to procure such conveyance;
(c) where the vendor professes to sell unencumbered property, but the property is mortgaged for an amount not exceeding the purchase money and the vendor has in fact only a right to redeem it, the purchaser may compel him to redeem the mortgage and to obtain a valid discharge, and, where necessary, also a conveyance from the mortgagee;
(d) where the vendor or lessor sues for specific performance of the contract and the suit is dismissed on the ground of his want of title or imperfect title, the defendant has a right to a return of his deposit, if any, with interest thereon, to his costs of the suit, and to a lien for such deposit, interest and costs on the interest, if any, of the vendor or lesser in the property which is the subject-matter of the contract.
(2) The provisions of sub-section (1) shall also apply, as far as may be, to contracts for the sale or hire of movable property.

14. Contracts not specifically enforceable.—The following contracts cannot be specifically
enforced, namely:—
(a) where a party to the contract has obtained substituted performance of contract in accordance with the provisions of section 20;
(b) a contract, the performance of which involves the performance of a continuous duty which the court cannot supervise;
(c) a contract which is so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms; and
(d) a contract which is in its nature determinable.

14A. Power of court to engage experts.—(1) Without prejudice to the generality of the provisions contained in the Code of Civil Procedure, 1908 (5 of 1908), in any suit under this Act, where the court considers it necessary to get expert opinion to assist it on any specific issue involved in the suit, it may engage one or more experts and direct to report to it on such issue and may secure attendance of the expert for providing evidence, including production of documents on the issue.
(2) The court may require or direct any person to give relevant information to the expert or to produce, or to provide access to, any relevant documents, goods or other property for his inspection.
(3) The opinion or report given by the expert shall form part of the record of the suit; and the court, or with the permission of the court any of the parties to the suit, may examine the expert personally in open court on any of the matters referred to him or mentioned in his opinion or report, or as to his opinion or report, or as to the manner in which he has made the inspection.
(4) The expert shall be entitled to such fee, cost or expense as the court may fix, which shall be payable by the parties in such proportion, and at such time, as the court may direct.

15. Who may obtain specific performance.—Except as otherwise provided by this Chapter, the specific performance of a contract may be obtained by—
(a) any party thereto;
(b) the representative in interest or the principal, of any party thereto: Provided that where the learning, skill, solvency or any personal quality of such party is a material ingredient in the contract, or where the contract provides that his interest shall not be assigned, his representative in interest or his principal shall not be entitled to specific performance of the contract, unless such party has already performed his part of the contract, or the performance thereof by his representative in interest, or his principal, has been accepted by the other party;
(c) where the contract is a settlement on marriage, or a compromise of doubtful rights between members of the same family, any person beneficially entitled thereunder;
(d) where the contract has been entered into by a tenant for life in due exercise of a power, the remainderman;
(e) a reversioner in possession, where the agreement is a covenant entered into with his predecessor in title and the reversioner is entitled to the benefit of such covenant;
(f) a reversioner in remainder, where the agreement is such a covenant, and the reversioner is entitled to the benefit thereof and will sustain material injury by reason of its breach;
(fa) when a limited liability partnership has entered into a contract and subsequently becomes amalgamated with another limited liability partnership, the new limited liability partnership which arises out of the amalgamation.
(g) when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation;
(h) when the promoters of a company have, before its incorporation, entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation, the company:
Provided that the company has accepted the contract and has communicated such acceptance to the other party to the contract.

16. Personal bars to relief.—Specific performance of a contract cannot be enforced in favour of a person— (a) who has obtained substituted performance of contract under section 20; or
(b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in subversion of, the relation intended to be established by the contract; or
(c) who fails to prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms of the performance of which has been prevented or waived by the defendant.
Explanation.—For the purposes of clause (c),—
(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;
(ii) the plaintiff must prove performance of, or readiness and willingness to perform, the contract according to its true construction.

17. Contract to sell or let property by one who has no title, not specifically enforceable.—(1) A contract to sell or let any immovable property cannot be specifically enforced in favour of a vendor or lessor—
(a) who, knowing himself not to have any title to the property, has contracted to sell or let the property;
(b) who, though he entered into the contract believing that he had a good title to the property, cannot at the time fixed by the parties or by the court for the completion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt.
(2) The provisions of sub-section (1) shall also apply, as far as may be, to contracts for the sale or hire of movable property
18. Non-enforcement except with variation.—Where a plaintiff seeks specific performance of a contract in writing, to which the defendant sets up a variation, the plaintiff cannot obtain the performance sought, except with the variation so set up, in the following cases, namely:—
(a) where by fraud, mistake of fact or mis-representation, the written contract of which performance is sought is in its terms or effect different from what the parties agreed to, or does not contain all the terms agreed to between the parties on the basis of which the defendant entered into the contact;
(b) where the object of the parties was to produce a certain legal result which the contract as framed is not calculated to produce;
(c) where the parties have, subsequently to the execution of the contract, varied its terms.

19. Relief against parties and persons claiming under them by subsequent title.—Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against—
(a) either party thereto;
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract;
(c) any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant;
(ca) when a limited liability partnership has entered into a contract and subsequently becomes amalgamated with another limited liability partnership, the new limited liability partnership which arises out of the amalgamation.
(d) when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation;
(e) when the promoters of a company have, before its incorporation, entered into a contract for the purpose of the company and such contract is warranted by the terms of the incorporation, the company: Provided that the company has accepted the contract and communicated such acceptance to the other party to the contract.

20. Substituted performance of contract.—

(1) Without prejudice to the generality of the provisions contained in the Indian Contract Act, 1872 (9 of 1872), and, except as otherwise agreed upon by the parties, where the contract is broken due to non-performance of promise by any party, the party who suffers by such breach shall have the option of substituted performance through a third party or by his own agency, and, recover the expenses and other costs actually incurred, spent or suffered by him, from the party committing such breach.
(2) No substituted performance of contract under sub-section (1) shall be undertaken unless the party who suffers such breach has given a notice in writing, of not less than thirty days, to the party in breach calling upon him to perform the contract within such time as specified in the notice, and on his refusal or failure to do so, he may get the same performed by a third party or by his own agency:
Provided that the party who suffers such breach shall not be entitled to recover the expenses and costs under sub-section (1) unless he has got the contract performed through a third party or by his own agency.
(3) Where the party suffering breach of contract has got the contract performed through a third party or by his own agency after giving notice under sub-section (1), he shall not be entitled to claim relief of specific performance against the party in breach.
(4) Nothing in this section shall prevent the party who has suffered breach of contract from claiming compensation from the party in breach.

20A. Special provisions for contract relating to infrastructure project.

(1) No injunction shall be granted by a court in a suit under this Act involving a contract relating to an infrastructure project specified in the Schedule, where granting injunction would cause impediment or delay in the progress or completion of such infrastructure project
. Explanation.—For the purposes of this section, section 20B and clause (ha) of section 41, the expression “infrastructure project” means the category of projects and infrastructure Sub-Sectors specified in the Schedule.
(2) The Central Government may, depending upon the requirement for development of infrastructure projects, and if it considers necessary or expedient to do so, by notification in the Official Gazette, amend the Schedule relating to any Category of projects or Infrastructure Sub-Sectors.
(3) Every notification issued under this Act by the Central Government shall be laid, as soon as may be after it is issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the notification or both Houses agree that the notification should not be made, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that notification.

20B. Special Courts.

The State Government, in consultation with the Chief Justice of the High Court, shall designate, by notification published in the Official Gazette, one or more Civil Courts as Special Courts, within the local limits of the area to exercise jurisdiction and to try a suit under this Act in respect of contracts relating to infrastructure projects.
20C. Expeditious disposal of suits.—Notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908), a suit filed under the provisions of this Act shall be disposed of by the court within a period of twelve months from the date of service of summons to the defendant:
Provided that the said period may be extended for a further period not exceeding six months in aggregate after recording reasons in writing for such extension by the court.

) In a suit for specific performance of a contract, the plaintiff may also claim compensation for its breach in addition to such performance.
(2) If, in any such suit, the court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the plaintiff is entitled to compensation for that breach, it shall award him such compensation accordingly.
(3) If, in any such suit, the court decides that specific performance ought to be granted, but that it is not sufficient to satisfy the justice of the case, and that some compensation for breach of the contract should also be made to the plaintiff, it shall award him such compensation accordingly.
(4) In determining the amount of any compensation awarded under this section, the court shall be guided by the principles specified in section 73 of the Indian Contract Act, 1872 (9 of 1872).
(5) No compensation shall be awarded under this section unless the plaintiff has claimed such compensation in his plaint: Provided that where the plaintiff has not claimed any such compensation in the plaint, the court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation.
Explanation.—The circumstances that the contract has become incapable of specific performance does not preclude the court from exercising the jurisdiction conferred by this section.

22. Power to grant relief for possession, partition, refund of earnest money, etc.

(1) Notwithstanding anything to the contrary contained in the Code of Civil Procedure,1908 (5 of 1908), any person suing for the specific performance of a contract for the transfer of immovable property may, in an appropriate case, ask for—
(a) possession, or partition and separate possession, of the property in addition to such performance; or
(b) any other relief to which he may be entitled, including the refund of any earnest money or deposit paid or 1 [made by] him, in case his claim for specific performance is refused.
(2) No relief under clause (a) or clause (b) of sub-section (1) shall be granted by the court unless it has been specifically claimed:
Provident that where the plaintiff has not claimed any such relief in the plaint, the court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just for including a claim for such relief.
(3) The power of the court to grant relief under clause (b) of sub-section (1) shall be without prejudice to its powers to award compensation under section 21.

23. Liquidation of damages not a bar to specific performance.

(1) A contract, otherwise proper to be specifically enforced, may be so enforced, though a sum be named in itas the amount to be paid in case of its breach and the party in default is willing to pay the same, if the court, having regard to the terms of the contract and other attending circumstances, is satisfied that the sum was named only for the purpose of securing performance of the contract and not for the purpose of giving to the party in default an option of paying money in lieu of specific performance.
(2) When enforcing specific performance under this section, the court shall not also decree payment of the sum so named in the contract.

24. Bar of suit for compensation for breach after dismissal of suit for specific performance.— The dismissal of a suit for specific performance of a contract or part thereof shall bar the plaintiff’s right to sue for compensation for the breach of such contract or part, as the case may be, but shall not bar his right to sue for any other relief to which he may be entitled, by reason of such breach.

25. Application of preceding sections to certain awards and testamentary directions to execute settlements.

The provisions of this Chapter as to contracts shall apply to awards to which 2 [the Arbitration and Conciliation Act, 1996 (26 of 1996)], does not apply and to directions in a will or codicil to execute a particular settlement.

SPECIFIC PERFORMANCE AS EQUITABLE REMEDY-
The common law remedy of damages is available as of right, but it often proves inadequate. Damages are not very helpful if the subject matter of the contract that has been breached is something unique or irreplaceable. Nor will damages suffice if the breach of contract involves continuing conduct or a harm that once done cannot be reversed. Consider the scenarios below.
Equity has developed a number of special remedies that can be used when damages are not adequate.

The most important equitable remedies are decrees of specific performance and injunctions. Under an order of specific performance, one party to a contract is ordered to perform their contractual obligations. This is the remedy Jenny would want in the first scenario, as this would mean she could get the house she wants. An injunction is a court order to a party to refrain from doing, or possibly to do, a particular act. In the scenario about David and Victoria, the remedy they would want is an injunction preventing the newspaper from printing the story about their marriage. Other equitable remedies include rescission, rectification, delivery up and cancellation of documents, accounts, and the appointment of a receiver.

The general nature of Equitable remedies-
The remedies developed by the courts of equity differ from the remedies developed by the common law courts. Equitable remedies supplement rather than compete with common law remedies. They are not available in every single case where a claimant has suffered a wrong. In particular:
• equitable remedies are only available if the relevant common law remedy is insufficient to protect the claimant or compensate for the wrong he has suffered;
• equitable remedies are always discretionary;
• equity acts in personam;
• the courts are guided by the maxims of equity. The maxim “equity will not act in vain” is a prominent example. The court will not make an order that cannot be observed or intervene where it would be pointless to do so.
Remedy available only if remedy at law is inadequate- It is a precondition of the award of an equitable remedy that the remedy at law (usually damages) is inadequate. Damages might be inadequate where the justice of the case demands, where damages are difficult to quantify or where the obligation is such that successive breaches would bring about successive actions for damages. The aim of the equitable remedy is to “do more perfect or complete justice” (Wilson v Northampton and Banbury Junction Railway Co).
Equitable remedies are always discretionary- The common law remedy of damages for breach of contract is an example of a remedy that is available as of right. If the claimant establishes that the defendant has broken the terms of a contract and the claimant has suffered damage as a result, then the court will award damages. There are also legal mechanisms to ensure that the defendant complies with the award of damages, and these are available whenever damages are awarded. The court does not have any discretion as to whether to award damages or assist in their collection.
If the claimant is seeking an equitable remedy such as specific performance, the court has a discretion – a choice – whether to award that remedy. Although the court’s discretion is wide, it is exercised in line with established rules and principles, so that it should be possible to predict whether an injunction or specific performance will be available on any given facts.
Equity acts in personam- Equitable remedies are personal and exercised against a specified individual. The remedy prevents the specified individual from acting unconscionably and strikes at the defendant’s conscience and conduct.

The maxim “Equity will not act in vain” Equitable remedies will be refused if the court cannot ensure that they will be observed. The defendant must be in a position to comply with the order made. The court will not interfere where there is no point in doing so. The operation of this rule is illustrated by Jones v Lipman. L changed his mind about selling land to J, even though they had a binding contract. L knew that if J brought an action for specific performance, J would probably be successful and L would have to transfer the land. With this in mind, L sold the land to a third party, hoping that the court would refuse to make an order for specific performance and award damages instead. This strategy relied on the maxim that equity will not make a pointless order: since L did not own the land any more, L could not transfer it to J.

However, L’s strategy failed. This was because L did not sell the land to an innocent third party. L sold it to a company that he had bought for the purpose of buying the land. As L controlled the company, he was able to make it complete the contract with J. An order for specific performance was not therefore pointless. The court made the order against both L and the company. The result would have been different if he had sold the land to someone else.

Specific performance: general nature-
A decree of specific performance is one of the most important equitable remedies. It is a court order directed to someone who is party to a contract to instruct them to perform their obligations under the contract. Refusal to observe the terms of the order is a contempt of court.
As specific performance is an equitable remedy, it has the following features:
• it is an order in personam;
• it is discretionary;
• the appropriate remedy at law must be inadequate.

Equity acts in personam-
Because the order to perform the contract is issued against an individual defendant, it is an order or remedy made in personam. This contrasts with a remedy in rem, which relates to the property that is the subject matter of the remedy. As a result, it does not matter where the subject matter of the contract is, so long as the defendant is within the court’s jurisdiction.
For example, suppose that Jones and Cox enter a contract in which Jones agrees to sell chickpeas from Australia to Cox. They are both resident in England. Due to a worldwide shortage of chickpeas, the price increases dramatically. Jones finds another buyer who will pay a lot more than Cox agreed to pay, and refuses to supply Cox with the chickpeas at the contract price. Although the chickpeas are still in Australia, Cox can bring an action against Jones in an English court because Jones is within the court’s jurisdiction (Penn v Lord Baltimore [1750]). Cox is likely to seek an order for specific performance rather than damages because he cannot now obtain chickpeas at the price he contracted to pay for them.

The remedy is discretionary-
As with the other equitable remedies, a decree of specific performance is discretionary, that is, the court may refuse to issue the decree in certain circumstances. This discretion is not exercised arbitrarily, but in well-defined situations, for instance, where the contract is one that requires constant supervision or where the claimant has not behaved properly himself. Where the claimant has not behaved properly himself he will not be able to claim specific performance because he has not complied with the equitable maxim “he who comes to equity must come with clean hands”.

CASES-
Walters v Morgan
The defendant agreed to grant the plaintiff a mining lease over land he had just bought. Specific performance was refused as the plaintiff had produced a draft lease and induced the defendant to sign the agreement in ignorance of the value of the property. The plaintiff had hurried the defendant into signing the lease before he knew the value of the property.

Lamare v Dixon
The plaintiff induced the defendant to agree to take a lease of cellars by orally promising they would be made dry. The promise had no effect as a misrepresentation as it related to the future. The court refused the plaintiff specific performance since he had made no attempt to perform his promise.

Patel v Ali
The vendor and her husband were co-owners of the house they contracted to sell in 1979. The husband’s bankruptcy caused delay in completion. After the contract the vendor got bone cancer, had a leg amputated and later gave birth to her second and third children. The purchaser obtained specific performance, against which the vendor appealed on grounds of hardship. She spoke little
English and relied on friends and relatives for help, hence it would be hardship to leave the house and move away. It was held that the court could in a proper case refuse specific performance on the grounds of hardship subsequent to the contract, even if not caused by the plaintiff and not related to the subject matter. On the facts, there would be hardship amounting to injustice, therefore damages were awarded.

Wolverhampton Corp v Emmons
The plaintiff acquired land for an improvement scheme and sold part of it to the defendant, who covenanted to demolish houses on it and build new ones. The demolition was carried out and plans for new houses approved. The defendant then refused to continue. It was held that specific performance would be ordered since the defendant’s obligations were precisely defined by the plans, and damages would be inadequate because the defendant had possession of the site, and the plaintiff could not get the work done by employing another contractor.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

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CONCLUSION
To conclude this project, in specific performance as equitable remedy, Courts are hate to grant orders since monetary damages are a far easier means to afford compensation. If a court grants an order, it often must enforce it with additional orders should the party fail to perform, and such involvement can be complex and long lasting. Alternatively, awarding monetary damages finishes the court’s involvement since the party can seek to enforce that judgment via writs of execution that do not require constant court participation.
The party seeking such equitable relief must be prepared to overcome the reluctance of most courts to go beyond monetary damages. It is certainly possible and in the case of real property transactions, almost routine, but proper preparation of pleadings is essential.

BIBLIOGRAPHY
BOOK REFERENCES
Gandhi B.M., Equity, Trusts and Specific Relief (Eastern Book Company, Reprint 2019)
WEB REFERENCES
https://www.scconline.com/blog/post/2020/06/18/specific-performance-principles-revisited/
http://www.legalservicesindia.com/article/942/Specific-performance-of-Contracts.html#:~:text=Author%20Name%3A%20sprshprsd-,specific%20performance%20of%20contracts%20including%2C%20Contracts%20that%20can%20be%20specifically,of%20part%20of%20contract…&text=Specific%20performance%20is%20equitable%20relief,agreed%20by%20contract%20to%20do.
https://saylordotorg.github.io/text_law-for-entrepreneurs/s19-04-equitable-remedies.html

Aishwarya Says:

If you are interested in participating in the same, do let me know.

Do follow me on Facebook, Twitter Youtube and Instagram.

If you would also like to contribute to my website, then do share your articles or poems at adv.aishwaryasandeep@gmail.com

We also have a Facebook Group Restarter Moms for Mothers or Women who would like to rejoin their careers post a career break or women who are enterpreneurs.

June 21, 2021