A contract establishes a contractual obligation on the parties involved. It binds them either to do or not to do certain things. When there is a failure in performance of the obligation, either of the parties can sue the other. The most common, easiest and well established legal remedy for breach of a contract is to provide compensatory or punitive compensation, in terms of money, to the other party.
But in some cases of contractual obligation, the compensatory or punitive compensation is inadequate or inequitable. This happens when the unmet contractual obligation in the contractual relation cannot be calculated in money terms. For instance, in a contract when there is an obligation on a party to return an invaluable thing like an irreplaceable object of a particular kind, failure of which cannot be compensated by any other means, the legal remedy required is to return that object and nothing else. Similarly, if someone dispossesses another person, as part of a contractual relation, of his home which is invaluable to him in non-monetary terms, the only option is to recover the possession of that house.
In such a case, what the party wants is the other one to perform a specific thing - like delivery of any invaluable thing or perform any particular thing that has no substitute at all - then it is the Specific Relief Act, 1963 which enables the party to get it enforced through the court.
Specific reliefs that the act provides for
Specific relief is essentially an order of a court which requires a party in a contractual obligation to do a specific thing stated in the contract. Specific performance comes into play when compensatory damages in terms of money cannot adequately compensate the loss. No directive for specific performance will be issued by the court when monetary compensation is an adequate relief in a contractual failure or the specific performance in question involves a continuous supervision by the court. The specific relief issued by the court is a discretionary one, provided on the basis of principle of equity. It is not a matter of right. Civil remedies alone come under the specific relief act.
The Specific Relief Act is a procedural law. It provides for a range of specific reliefs and they are as follows:-
Recovery of possession of property
Any person having a right of possession of a specific movable or immovable property involved in a contractual relation can recover it, in the manner laid down in the Civil Procedure Code (CPC). A mere possessory title is good enough to take such an action. Similarly a person in possession of a movable property, when he is not its owner, has an obligation to deliver it to the possession of the person entitled to it.
A person who is in possession of an immovable property cannot be dispossessed of it except by exercise of legal course of due process of law even if the possessor holds no title of the property. The purpose of this provision is to prevent a person from using force to dispossess another one of a property he holds just as a possessor. The court has power to issue orders for enforcing any of the above said rights under the act.
Specific performance of contracts
When a party in a contractual obligation files a suit for a specific performance of an obligation, the court has the authority to direct the other party to perform it. This is done in a breach of contract when the actual damage caused cannot be ascertained in the absence of any standard for quantification of loss or when monetary compensation cannot be treated as an adequate relief.
A court can specifically enforce a contract to execute a mortgage, or a security for ensuring a repayment of any loan, or a formal deed of partnership/purchase of a share of the partnership. A suit for the enforcement of a contract for the construction of any building or execution of any other work on land is also possible.
As said earlier, a suit for specific relief cannot be enforced when compensation for non-performance of a contract in money terms is an adequate relief. If a contract runs into minute details or dependent on the parties in performance in such a way that a court cannot enforce it in material terms, such a suit cannot be enforced for specific performance. If a contract is calculable in nature, that would not come under the specific relief law. If performance of a contract involves continuous duty which a court cannot supervise normally, such a contract also cannot be enforced under the act.
In allowing specific performance, the court should exercise sound and reasonable discretion in tune with well established judicial principles. Nothing should be granted by the court just because it is lawful for the court to do so. The comparative advantage of each party in the contract should be kept in mind by the court while taking a decision.
In some cases of specific performance, the plaintiff may claim compensation also in addition, or as a substitute, or both. But when the plaintiff does not claim compensation the court cannot award compensation.
If the petitioner, in addition to specific performance, asks for some reliefs such as possession, partition or refund of earnest money, the court can provide them if it is claimed in the suit. The court can allow him to amend the suit to add such a claim if it is not prayed for initially.
Rectification of instruments
The act allows the court to issue orders for rectification of documents executed in mutual mistake of the parties. But rectification is not possible when mistake is unilateral. If the instrument does not by mistake express the real intention of the parties, the court can allow and specifically enforce such a rectification of the instrument so as to express that intention.
Rescission of contracts
A person may sue for rescission of voidable and terminable contracts or of contracts unlawful for causes not apparent on its face. This is quite opposite to the relief of specific performance. On rescission of contract the other party is relieved of discharging the contractual obligation.
However, if the plaintiff has ratified the contract or the position of parties cannot be restored to the original position or the third parties have acquired rights, the court cannot rescind the contract.
If the sale or lease of any property is decreed as a specific performance and the purchaser or lesee does not pay the purchase money or the amount, it is possible that the seller or lessor can seek rescission of contract and the court can rescind the contract.
A suit for specific performance can have alternate prayer of rescission. The court while rescinding the contact has to ensure equity to both parties equally.
Cancellation of instruments
A person can sue for cancellation of an instrument, including registered ones, when he had an apprehension of any serious injury from it. Then the court can order cancellation of it on merit. The court can cancel an instrument partially and retain the rest in force when it enforces a spectrum of different rights and obligations. While cancelling, the court can allow compensation or restoration of money already provided so as to ensure equity of justice on both parties.
A person can ask the court to declare his right to a property he holds including a contingent right when it is being denied by someone else. The court can then issue a declaration as to his entitlement in the property. This declaration would prevent some future litigation.
This relief is invoked when there is a doubt about one’s right over a property. The declaration thus made is binding only on the parties to the suit and not on others. A stranger to a contractual obligation cannot seek this remedy.
Preventive reliefs are provided by issuing injunctions – either temporary or perpetual.
Temporary injunction will be in force for a specified time but the perpetual ones will be in force forever. Temporary injunctions are issued when there is irreparable injury, incomparable mischief or grave injustice. A temporary relief to be issued must be in the nature of perpetual relief sought for.
Perpetual injunctions can be granted only after hearing both parties. By issuing injunction, the court prevents the defendant to perform or not to perform an act so as to prevent a breach of contract in assertion of the right of the plaintiff.
In addition to issuing injunction, the court can allow claim for damages or relief for specific performance in addition as prayed for, in genuine cases of irreparable injury. The plaintiff can be allowed to amend the petition so as to add a claim for damages at any stage of the proceedings.
The power of the court to grant injunction is an exercise of discretion and not a matter of right of the plaintiff. But that exercise must be based on well settled principles of law. The guiding principle behind the prohibitory injunction is that it is issued based on the principle that in order to ensure exercise of a legal right, there is a need to prohibit its violation. In granting injunction the court should weigh the gravity of mischief that the breach of contract provides to both the parties and arrive at an equitable decision.
Section 38 of the act speaks about when to grant perpetual injunctions but the Section 41 speaks about when injunctions should be refused - such as restraining anybody from using a judicial process or a legislative body etc.
The law purports to ensure some sort of equitable justice in addition to normal remedies when there is an obvious failure in meeting a binding legal obligation under a contract.
The law upholds that one who does equity alone can seek equity and therefore the plaintiff who comes with no clean hands cannot seek any remedy. The plaintiff must be fair, honest and free from any taint in order to invoke the provisions under this law. The law is a bright spot in the body of Indian legal thought in terms of its fairness and right dispensation.