Introduction:

Parliament passed the Specific Relief (Amendment) Bill, 2018 (the “Bill”) on July 23, 2018 to bring momentous changes in the Specific Relief Act, 1963 (the “Act”), which remained unamended for 55 years. The Minister of Law and Justice, Mr. Ravi Shankar Prasad on December 22, 2017 introduced this Bill in the Lok Sabha to further the Government’s ease of doing business policy and to curb the discretionary powers of the court to grant injunction in certain projects. On March 15, 2018, the Bill was passed by the Lok Sabha and is now, all set to become a law.

What is specific performance? A right to specific performance is a right of a party to a contract to compel the counter party to perform its obligations under the contract.

Under the existing law, specific performance is an exception and not a general rule in the enforcement of contracts.To ease enforcement of contracts and provide better remedies, certain provisions have been proposed in this Bill as discussed below.

Highlights of the Bill:

1. Under the existing law, specific performance is not granted if monetary compensation can be awarded. This condition has been removed. Now, specific performance may be granted even if the claimant could be adequately compensated in monetary terms.
2. Substituted performance: The Bill has introduced a concept of ‘substituted performance’ as an optional remedy to the affected party. This provision will require the affected party to give a 30 day notice to the defaulting party seeking specific performance of the contract. If the defaulting party does not comply, then the affected party has the option to get the contract performed by a third party or by itself.If the affected party has availed of this remedy then it cannot ask for specific performance. What is important here is that the affected party can recover the expenses and other costs incurred, from the party committing such breach. This remedy may prove much more beneficial, because in most circumstances it is more effective to have the contract or work completed rather than wait for the breaching party to be compelled by a court to do so. While the party is not entitled to seek specific performance once she has availed of this remedy, she continues to be entitled to claim compensation for breach.
3. Protection to infrastructure projects:New provisions have been inserted in the law barring the courts from granting injunctions in proceedings involving infrastructure projects, where injunction would cause any undue delay or impediment in the completion of the infrastructure projects. A new schedule has been inserted which sets out the projects that would fall under ‘infrastructure projects’. These include transport, energy, water & sanitation, communication and social & commercial infrastructure.
4. Special courts for infrastructure projects: One or more Civil Courts shall be designatedas Special Courts to determine suits relating to infrastructure projects. The designation of such courts shall be done by each State Government in consultation with the Chief Justice of respective High Courts.
5. Fast track proceeding system: A welcome change is the time limit of 12 monthsthat has been fixed for disposal of cases involving infrastructure projects from the receipt of summons by the other party. This may be extended by an additional 6 months by the court under a reasoned/speaking order. This timeline would make court proceedings almost as quick and efficacious as arbitration proceedings. It only remains to be seen how these timelines will be met considering the huge number of vacancies in our judiciary.

Conclusion:

This Bill is a landmarkstep towards making enforcement of contracts a general rule and not an exception. It marks a huge contribution to the government’s ease of doing business initiative. Once the Bill receives the President’s assent, it is also likely to boost infrastructure development in India.

The process of claiming relief and executing unperformed contracts will now become easier as the discretionary powers that were given to the courts by the Actare taken away. The difficulties in timely executing and efficiently performing infrastructure projects which involve huge investments are likely to decrease. This change marks a definite step to fill the trust deficit andcurb uncertainties thereby increasing the confidence of investors in India, the Indian judicial delivery system and the investment market.