The Specific Relief (Amendment) Act, 2018

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The Specific Relief (Amendment) Act, 2018
31 August 2018

Introduction

The Specific Relief (Amendment) Act, 2018 (‘Amendment’) Act seeks to amend the Specific Relief Act, 1963 (‘Act’).

The Amendment Act was published in the official gazette on 1 August 2018. It will come into force on such date as the Central Government, may, by notification in the official gazette, appoint.

This update addresses the major changes brought about by the Amendment Act to the Act.

The Amendment Act was introduced with a view to promote ease of doing business, thereby facilitating the overall economic development of the country. It has brought about various new provisions such as obtaining substituted performance, engaging experts, timely disposal of disputes, etc. The Amendment Act is the very first amendment ever made to the 55-year-old Act.

Major changes

The major changes brought about in the Act are set out below :
Specific performance : The Amendment Act has done away with the discretionary power of the court to grant specific performance. Section 10 of the Act has been amended to provide that the court ‘shall’, and not ‘may’, provide specific performance.

Effectively, specific performance is no longer a limited right. Earlier, specific performance could only be granted by the court in cases where:

  • Monetary compensation could not be ascertained; or
  • Monetary compensation was not an adequate relief.

The parties are now free to seek specific performance even if the aforementioned grounds are not met.

Non-enforceable contracts : The Amendment Act has, under Section 14, enlisted new and amended grounds to disqualify contracts from being specifically enforced. It, thus, provides that a contract may not be specifically enforced, where:

  • A party to the contract has obtained substituted performance of contract; or
  • The contract is so dependent on the personal qualifications of the parties that even the court cannot enforce specific performance of its material terms.

The other grounds that disqualify a contract from being specifically enforced remain unchanged.

Substituted performance : The Amendment Act has substituted the old Section 20 with a new section. The old Section 20 provided discretion as regards granting specific performance. The new section allows a party that has suffered breach, to obtain substituted performance through a third party or his own agency and thereby recover the costs and expenses incurred, from the party committing breach.

Further, as per the new section, the suffering party must give a notice of not less than 30 days to the party committing breach, calling upon them to perform their obligations under the contract in the stipulated time. Upon his refusal to do so, the party suffering breach may enforce substituted performance. Thereafter, once the party suffering breach has claimed the substituted performance, it may claim compensation for breach but will be disqualified to claim the relief of specific performance.

Substituted performance, thus, is an added remedy to a person suffering breach. This provision falls in line with the intent of the Amendment Act to focus more on performance of contract, than on providing compensation.

Recovery of possession : A person dispossessed of his immovable property or any person claiming through him may recover the same by filing a suit for possession. The Amendment Act has now included a person, through whom the dispossessed got possession, among the persons who may file a suit for possession.

The Amendment Act has, therefore, recognized possessory rights of third parties over immovable property.

 Injunction in case of infrastructure projects : The Amendment Act has inserted a new Section 20A that disallows courts from granting injunction under a contract relating to an infrastructure project if the same would cause impediment or delay in the progress or completion of the project. As per the Amendment Act, infrastructure projects refer to the following categories, as provided by the newly inserted Schedule to the Act:

  • Transport;
  • Energy;
  • Water sanitation;
  • Communication;
  • Social and commercial infrastructure.

Experts : The Amendment Act allows the courts to engage one or more experts for obtaining expert opinion on any specific issue. The court may require any person to provide the relevant information or an access to document goods or property for inspection. The opinion or report given by the expert will form a part of the record of the suit. The court may also examine the expert personally in open court with respect to any of the matters referred to him or mentioned in his opinion or report or the manner in which he has made the inspection.

Special courts : The Amendment Act requires state governments to designate one more civil court as special courts, in consultation with the Chief Justice of the high court. These courts will exercise the jurisdiction within the local limits of the area to try suits related to infrastructure projects.

This amendment has been made to avoid hampering the development of infrastructural projects due to cumbersome litigations. Designation of special courts would imply express disposal of suits relating to infrastructure.

Expeditious disposal of suits : The Amendment Act has also stipulated a period of 12 months from the date of service of summons to the defendant, as the period for disposal of a suit. This period may be extended to not more than 6 months in aggregate after recording the reasons in writing for such an extension by the court.

Persons who may sue for specific performance : The Amendment Act adds a new category among the persons who may sue for specific performance. It entails that a limited liability partnership (LLP) that has entered into a contract and is subsequently amalgamated with another LLP, then the new LLP which arises out of the amalgamation may obtain a specific performance. Effectively, the specific performance of contract may be sought against the new LLP so formed.

Conclusion

The Amendment Act is a welcome change with regard to the law for specific relief. It has made the Act more specific, direct and clear.

The provisions have been carefully drafted so as to maintain the balance of interests of the parties. It not only makes specific performance a rule but also provides for an added remedy of substituted performance. Further, the Amendment Act provides for the designation of special courts and disallows the grant of injunction in relation to infrastructure projects in order to avoid delays.

All the amendments have thus been added to make the law consonant with the current industrial requirements, economic development and to facilitate ease of doing business in the country.