The legal process of contract enforcement in India involves providing legal remedies to parties aggrieved by a breach of contract in India. The motive of contract enforcement by the Indian law is to compel the party breaching an agreement to compensate through performance or financial aid.
As a result, it leads to the fulfilment of the contract and awards compensation to the party suffering from the breach of contract. It’s also a way to uphold justice and restore faith in the legal system.
The legal system compels compensation through two principal remedies:
The interplay between both remedies shapes the judicial landscape for cases involving a breach of contract. Read this comprehensive guide to understand the difference between monetary compensation and specific performance in India.
Table of Contents
The Legal Foundations of Damages & Specific Performance
The Indian contract enforcement has its roots in the Indian Contract Act of 1872. This act defines the norms for a valid contract. Additionally, it defines breaches under Sections 10 and 73.
Specific Relief Act, 1963, is the statute governing particular performance, notably modified by the Specific Relief (Amendment) Act, 2018. It made some specific performances the default remedy unless exceptions are applied. This shift from discretion defines the way courts approach contractual remedies.
What are Contract Damages in India?
Under the Indian law, damages for a breach of contract stand for monetary compensation provided to the aggrieved person. It must restore the aggrieved party to the state they would be if the contract were performed. The damages are governed by Sections 73 and 74 of the Indian Contract Act, 1872.
Specific damages include:
The court usually awards damages when the breach is not related to any unique or irreplaceable subject matter. Also, when the monetary compensation can restore the party’s position, damage compensation is the court’s primary solution.
Nevertheless, specific limitations exist. Under those cases, monetary compensations fail to satisfy when the parties are dealing with unique assets or ongoing obligations.
What is Specific Performance Law in India?
Specific performance in India is an equitable legal remedy compelling a party to fulfil their obligations according to what’s stated in the binding contract. It involves more than paying monetary damages to the aggrieved individual. The court typically orders specific performance when the monetary compensation seems inadequate due to the breach of contract.
The court orders specific performances when:
The decision to grant specific performance in India lies with the court. It’s also based on factors such as the nature of the contract and the parties’ conduct. Aggrieved parties can consult contract lawyers to find the right compensation befitting their situation.
Comparative Analysis: Specific Performance vs. Damages
Here’s a more detailed analysis of specific performance vs. damages:
| Criteria | Specific Performance (SP) | Damages |
| Statutory Basis | Sections 10, 14, 16 – Specific Relief Act | Sections 73, 74 – Indian Contract Act |
| Readiness & Willingness | Mandatory (Sec 16(c)) | Not required |
| Inadequacy of Damages | Not needed post-2018 | Key test – damages must be inadequate |
| Subject Matter | Unique, irreplaceable assets | Generic, replaceable items |
| Practical Implications | Time-sensitive, enforces intent | Cheaper, faster, less equitable |
| Commercial vs Personal Contracts | Common in real estate, IP, trusts | Common for routine, movable goods |
In short, when the damages are inadequate and if the contract involves a unique specific subject matter, the parties are supposed to perform a particular performance.
Landmark Judgments: Where the Indian Court Compelled Specific Performance over Damages
The 2018 amendment to the Specific Relief Act makes specific performance in India mandatory. However, there are landmark judgments where the Indian courts have ordered parties to perform specific performance over damages.
Some notable case examples include Jayakantham & Others v. Abaykumar. This case emphasises equitable principles. Additionally, specific performance in India was granted despite the difficulties, showcasing a commitment to enforce contracts as originally agreed upon. The following are key examples when the Indian court compelled action instead of compensation for damage.
Jayakantham & Others v. Abaykumar
The Supreme Court in this case demonstrated a commitment to equitable principles while re-evaluating the order by a lower court. It stressed the importance of a party’s conduct and the fairness of an agreement when deciding whether to grant damages or specific performance.
K.S. Vidyanadam & others vs. Vairavan
In this case, the court saw the refusal of specific performance as the suitable solution considering the difficulties after the contract concludes. Refusal is the best solution if they affect the terms of the defendant and not the terms of the contract itself. This judgment demonstrates a scenario where damages might seem a more appropriate overall remedy for the case.
Manjunath Anandappa v. Tammanasa
In this case, the Supreme Court affirmed readiness and willingness as a prerequisite for different performances.
Multiple Supreme Court rulings since 2018 have upheld the principle of specific performance as mandatory compensation, except in statutory exceptions. This highlights the declining role of judicial discretion.
While both damages and specific performance are major compensations for an aggrieved party, the Indian courts started to lean toward specific performance in 2018. This intention to compel actual contract performance over awarding compensation shows the courts’ commitment to enforce contracts as per original agreements.
However, choosing the right remedy relies on the nature of a contract, the adequacy of damages, and the urgency of the aggrieved party. The future of contract enforcement points toward efficient, predictable redress, especially with increasing digitalisation and commercial complexity.
FAQs
When can I Seek Specific Performance?
When your contract involves unique subject matter and immovable property where damages are inadequate, you can seek specific performance in India as an aggrieved party of the contract. However, you must show readiness and willingness to fulfil your part of the contract in return.
What if the Contract Involves Movable Property?
Specific performance is typically available for unique movable property. However, it’s typically more common in properties that are immovable.
Can Oral Contracts be Specifically Enforced?
If an oral contract is definite, provable, and involves unique subject matter, courts may decree specific performance, though written evidence strengthens your case.
