Specific Relief Act (SRA)
The Specific Relief Act in Real Estate, Commercial and Infrastructure Contracts
The 2018 amendment was driven by the world of business, and its effects are felt most in three arenas. In real estate, where land is unique, specific performance has always been the natural remedy, and is now stronger still. In commercial contracts, performance is now the rule and substituted performance a new self-help option. In infrastructure, the policy is reversed: the court will not injunct a project, leaving the aggrieved party to damages. This note explains how the Act works in each arena.
Figure: Specific relief in real estate, commercial and infrastructure contracts, and the common thread of the 2018 policy
1. Real Estate Transactions
The classic home of specific performance ▪ Land is unique. Immovable property is presumed to be unique, so damages rarely compensate a disappointed buyer; specific performance is the natural remedy. ▪ Enforcing the sale. A buyer under an agreement to sell can compel the seller to execute the sale deed under Section 10, and, since 2018, performance is the rule rather than a discretionary favour. ▪ Part performance. A buyer in possession under an unregistered agreement is protected by Section 53A of the Transfer of Property Act, which shields his possession and supports his claim. ▪ Readiness and willingness. The buyer must plead and prove he was ready and willing to perform, under Section 16(c), and must sue within three years, under Article 54 of the Limitation Act. ▪ The seller's defences. The seller may resist on grounds of hardship, delay or want of title; the court weighs these under Sections 16 and 20. |
2. Commercial Contracts
Point | The position after 2018 |
|---|---|
Performance the rule | Supply, distribution, franchise and shareholder agreements can now be specifically enforced as a rule under Section 10 |
Substituted performance | Under Section 20, a party may, after notice, get the work done by a third party or his own agency and recover the cost from the defaulter |
Personal skill and supervision | Contracts so dependent on personal qualifications, or requiring constant court supervision, remain unenforceable under Section 14 |
Determinable contracts | A contract terminable at will (determinable) cannot be specifically enforced under Section 14 |
Damages | Damages under Section 21 remain available in addition to, or in substitution for, performance |
- The commercial policy. The reforms aim at the ease of doing business and at predictable enforcement, so that a party cannot simply pay damages to walk away from a bargain.
3. Infrastructure Contracts
Projects must not stall ▪ Section 20A: no injunction. In a suit concerning a contract relating to a notified infrastructure project, the court shall not grant an injunction that would cause impediment or delay in the progress or completion of the project. ▪ The Schedule. The Act's Schedule lists the categories of infrastructure, such as transport, energy, water and sanitation, and communication. ▪ Section 20B: special courts. State Governments may designate special courts to try infrastructure suits. ▪ Section 20C: time limit. Such suits are to be disposed of within twelve months, extendable by up to six months. ▪ The policy. Completion of public works is preferred over an individual's restraint; the aggrieved party is left to damages rather than a stay. |
4. The Common Thread
i. Enforce the bargain. Across real estate and commercial contracts, the 2018 amendment tilts the law towards making parties do what they promised, rather than paying their way out with damages.
ii. Protect the project. In infrastructure, the policy is reversed: the court will not injunct a project; the remedy is damages, so that public works are not held hostage to a private dispute.
iii. Speed and certainty. Special courts, twelve-month timelines and substituted performance are all aimed at faster, more predictable enforcement.
5. Practical Cautions
i. The date of the contract governs. For contracts made before 1 October 2018, the old discretionary law still applies; the new rule-based law applies only from that date.
ii. Check the Schedule and the notified courts. The categories of infrastructure and the special courts are notified; verify the current position in your State before advising.
iii. Plead readiness and willingness. In real estate suits especially, the failure to plead and prove readiness and willingness under Section 16(c) remains fatal.
6. Frequently Asked Questions
Q. Why is specific performance the natural remedy in real estate?
A. Because immovable property is presumed unique, so money damages rarely compensate a buyer; the court can compel the seller to execute the sale deed under Section 10.
Q. What is substituted performance in a commercial contract?
A. A remedy under Section 20 that lets a party, after thirty days' notice, get the contract performed by a third party or his own agency and recover the cost from the party in breach.
Q. Can a court injunct an infrastructure project?
A. No. Under Section 20A, the court shall not grant an injunction that would cause impediment or delay in a notified infrastructure project; the remedy is damages.
Q. Does the 2018 law apply to a property agreement signed in 2017?
A. No. The old discretionary law applies, because the amendment is prospective and governs only contracts executed on or after 1 October 2018.
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