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Specific Performance Of Contracts Chandigarh Mohali

Specific Performance Of Contracts

To know about the Specific Performance of Contracts, firstly we should know that What is Contract?

Definition Of Contract

A contract can be defined as a written or oral agreement which is legally enforceable entered into for a particular purpose by two or more parties where each party assumes a legal obligation that must be fulfilled.

Section 10 of Indian Contract Act, 1872 states that an agreement becomes a contract if it is entered into with the free consent of parties, for a lawful consideration, for a lawful object and is not void.

Definition Of Specific Performance Of A Contract

The specific performance is a discretionary order made by a court wherein a party to a contract must perform a specific action as outlined in an existent contract. Specific performance can refer to any kind of forced action, though it is usually enforced so as to complete a transaction that had been previously agreed to.

Can Only A Part Of The Contract Be Enforced?

As per Section 12 of the Act, the specific performance of a part of contract may be enforced in the following cases:

  1. When Section 12 corresponds to Sections 13 to 17 of the Act with certain modifications.
  2. Section 12 (1), (2) and (4) provides exceptions to the general rule of specific performance of a part of a contract.
  3. As a general rule, a contract is intended to be deal with as a whole but not piecemeal. However, section 12(1) is an exception to the general rule. Specific Performance Of Contracts Chandigarh Mohali
  4. The part that is unperformed must be a considerable portion of the whole; or
  5. It does not admit of compensation in money;
  6. The part to the contract who is not in default can sue for part performance

Specific Performance Of Contracts

When The Court Enforce Specific Performance And What Contracts Are Specifically Enforced? Specific Performance Of Contracts Chandigarh Mohali

As per Section 10 of the Specific Relief Act, 1963 a court may order specific performance of a contract when: –

  1. When there is no standard for ascertaining the actual damages for non-performance of an obligation given in the contract and;
  2. Non-performance of an obligation of a contract cannot be compensated with money.

As per Section 14(3) of Specific Relief Act, 1963 the contracts which can be specifically enforced by a court are as follows: – Specific Performance Of Contracts Chandigarh Mohali

  1. Execution of a mortgage or furnishing any other security for securing repayment of any loan which the borrower is not willing to repay provided that if only part of a loan is advanced;
  2. Taking up and paying for any debentures of a company;
  3. Execution of formal deed of partnership, if the parties have entered into a partnership;
  4. Purchasing a share of a partner of a firm;
  5. If a suit is for enforcement of a contract for construction of a building or any other work on a land

Provided: -That the building or other work is sufficiently described in the contract so that the court is able to determine the nature of the building; that the plaintiff has a substantial interest in the performance of a contract. The interest must be such that compensation in terms of money for non-performance of the contract is not an adequate relief; that the defendant already has the possession of the land in which the building is to be constructed or other work is to be executed. Specific Performance Of Contracts Chandigarh Mohali

Specific Performance Can Be Obtained By Whom?

As per Section 15 of the Specific Relief Act, 1963 provides for the persons who can obtain specific performance of a contract: Specific Performance Of Contracts Chandigarh Mohali

  1. Any party to a suit;
  2. The representative in interest or the principal of any party;
  3. When a contract is a settlement of marriage or a compromise of doubtful rights between members of the same family, any beneficiary entitled thereunder;’
  4. If a tenant enters into a contract for life in due exercise of a power, the remainder man;
  5. A reversioner in possession, if an agreement is a covenant entered into with his predecessor in title and the reversioner is entitled to the benefit of such covenant;
  6. A reversioner in remainder, if an agreement is a covenant and the reversioner is entitled to the benefit and will sustain material injury if there is a breach of contract;
  7. If a company has entered into an amalgamation with another company through a contract, the new company which arises out of such amalgamation;
  8. If the promoters of a company entered into a contract before its incorporation for purposes of the company and such contract is warranted by the terms of the incorporation, the company provided that the company accepted the contract and communicated such acceptance to the other party of the contract.

Specific Performance Be Enforced Against Whom?

As per Section 19 of the Specific Relief Act, 1963, the persons against whom specific performance can be enforced are provided:

  1. Either party to a suit;
  2. A person claiming under a title arising subsequently to the contract except the transferee for value who has paid his money in good faith and without notice of original contract;
  3. If a company has entered into an amalgamation with another company through a contract, the new company which arises out of such amalgamation;
  4. If the promoters of a company entered into a contract before its incorporation for purposes of the company and such contract is warranted by the terms of the incorporation, the company provided that the company accepted the contract and communicated such acceptance to the other party of the contract;
  5. Any person claiming under a title which, though prior to the contract and known to the plaintiff might have been displaced by the defendant.

    What Are The Defences Available To The Defendant In Suit For Specific Performance Of Contract? Specific Performance Of Contracts Chandigarh Mohali

The following defences in a suit for specific performance of contract are available:

  1. That the plaintiff’s unperformed part is large
  2. The contract depends on personal qualifications or volition of parties as in the case of Motiram vs Khyli Ram, AIR 1967 All 484
  3. Mutual decision
  4. Contract does not have consideration
  5. Essential part of contract does not exist anymore
  6. Performance of contract would involve hardship to defendant than the plaintiff
  7. Performance of contract involves continuous duty more than three years
  8. Uncertainty in the terms laid down of contract

(Also Read Jurisdiction of Civil Court In India)

The Application Of Cpc In The Specific Performance Of Contract

Under Order 1, Rule 10, C.P.C, a person may be added as a party to the suit in the following two happenings:

  1. When he ought to have been joined as plaintiff or defendant, and is not joined so, or
  2. When, without his presence, the questions in the suit cannot be completely decided.

Order 22, Rule 10, C.P.C. speaks of cases where an assignment, creation or devolution of any interest during the pendency of a suit and the suit may, by leave of the Court, be continued by or against the person to or upon whom such interest has come or devolved as discussed in the case of Lingaraja Mohanty vs Binodini Mohanty & Ors. on 20 April, 2011)

In the case of Sri Kakulam Subrahmanyam and another Vs. Kurra Subba Rao, AIR1948PC95,the court held that a minor’s agreement is void, and thus it is clear that there is no agreement to be specifically enforced; and it is unnecessary to refer to former decisions and distinctions, following English authorities which were applicable only on the view now overruled by the Privy Council.

In the case of Mrs. Saradamani Kandappan’s case; AIR2011SC3234, it was held that the legal position is clear from the decision of a Constitution Bench of this Court in the case of Chand Rani v.Kamal Rani MANU/SC/0285/1993 : 1993 (1) SCC 519, where the court held that:

“It is a well-accepted principle that in the case of sale of immovable property, time is never regarded as the essence of the contract. In fact, there is a presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement. It has to be ascertained whether under the terms of the contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language.”

Author: This article was written by Richaa Mukhopadhyay, B.A. LLB(Hons), CS(executive), ALSK, ICSI, student of Amity Law School, Amity University, Kolkata.

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