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Forwarded to the Union Minister of Law and Justice, Ministry of Law and Justice, Government of India by M.C. Setalvad, Chairman, Law Commission of India, on July 19, 1958.
I have great pleasure in forwarding herewith the Ninth Report of the Law Commission on the Specific Relief Act.
2. At its first meeting held on the 17th September, 1955 the Commission decided to take up the revision of the Specific Relief Act and entrusted the task to a Committee consisting of Shri D. Narasa Raju and Shri S.M. Sikri.
3. It was subsequently decided that Shri P. Satyanarayana Rao, the senior Member of the Section of the Commission dealing with Statute Revision should assist the Committee in drawing its report. The consideration of the subject was initiated by Shri Narasa Raju who explained the scheme for the revision of the Act. The principles underlying the scheme were discussed at a meeting of the Statute Revision Section held on the 14th April, 1956. A draft Report prepared on the basis of the scheme by Shri Sikri in consultation with the Members of the Committee was thereafter circulated to all the Members of the Commission and their views were invited thereon. These views with the draft Report were discussed at meetings of the Statute Revision Section held on the 13th July, 1957 and the 7th December, 1957. Important suggestions made by Members at these meetings were accepted and it was left to the Chairman to finally settle the Report in the light of the discussion.
4. Dr. N.C. Sen Gupta has signed the Report subject to a separate note which has been annexed to the Report.
5. The Commission wishes to acknowledge the services rendered by its Joint Secretary, Shri D. Basu, in connection with the preparation of this Report.
1. History of the legislation. — The Specific Relief Act was passed in 1877, and has since been amended by Acts 4 of 1882, 12 of 1891, 9 of 1899, 21 of 1929, 10 of 1940 and 3 of 1951. It has also been adapted by the Adaptation Orders, A.O. 1937, A.O. 1948 and A.O. 1950. In 1951, it was extended to Part B States and now it extends to the whole of India except the State of Jammu and Kashmir and the Scheduled Districts under the Scheduled Districts Act, 1874.
1. Banerji Law of Specific Relief, 2nd Edn., p. 34.
1. Specific Relief Act, 8th Edn., pp. 735, 737.
It is to be noticed that even Pollock and Mulla did not consider such a drastic change worth the labour involved. We have given careful consideration to the suggestion, and are unable to accept it. The main consideration which has brought us to this conclusion is that the Specific Relief Act deals with certain equitable principles and remedies which stand apart, both historically as well as intrinsically, from the common law rules which are embodied in our Code of Civil Procedure. The subjects dealt with by the Act, such as, specific performance, declaratory decrees, injunctions, rescission and rectification, usually find a separate treatment in legal literature. Moreover, the legal profession and the Courts have become used to the present arrangement and a change with the sole object of formal perfection would not be justified.
4. A further suggestion, is that the Act should also deal with compensatory relief. We are, however, of the view that compensatory relief is inconsistent with and generally an alternative to specific relief and is therefore best dealt with separately. In so far as it is complementary to specific relief, the Act deals with it.
5. Scheme adopted for revision. — The Act, as revised by us, deals only with certain kinds of equitable remedies. These are (1) Recovery of possession of property, (2) Specific performance of contract, (3) Rectification of instruments, (4) Rescission of contracts, (5) Cancellation of instruments, (6) Declaratory decrees and (7) Injunctions. The other forms of specific relief mentioned in Appendix A, Forms 41-46 and 49, of the Code of Civil Procedure and in statutes, such as the Transfer of Property Act, Trusts Act, Partnership Act, are different in origin and nature and no advantage will be gained by including them in this Act.
1. 72 LQR, pp. 43-44.
7. Though we have suggested occasional changes in the language of the Act we recognise that this is a matter for the drafting expert and we have left it largely to the official draftsman.
8. In consonance with the recommendations in our previous reports, we propose that all the illustrations in the Act should be omitted. It is true that Whitley Stokes, in his Introduction to the Anglo-Indian Codes,1 quoted Macaulay's expectation that the "illustrations will, greatly facilitate the understanding of the law". We are of the view, however, that the illustrations have not in the whole, served to clarify the provisions of the Act. Some of the illustrations are not warranted by the terms of the relevant sections; others have tended to prevent the development of equitable jurisprudences Moreover, the Indian Legislature has for some time past given up the practice of inserting illustrations in Acts.
1. Vol. 1, p. xxivv.
9. Examination of the provisions of the Act, indicating the changes required.—We now proceed to examine the provisions of the Act pointing out the difficulties which have arisen in the application of the Act and indicating our proposals for their solution.
1. Janardan v. Bhairab, 30 IC 365 (Cal).
No doubt, there are the Scheduled and Tribal Areas for which special provisions have been made in the Fifth and Sixth Schedules to the Constitution. Paragraph 5 of the Fifth Schedule and Paragraph 12(1) (b) of the Sixth Schedule empower the Governor of the State in which a Scheduled or Tribal Area is included, to exclude the operation of general Acts of Parliament or of the Legislature of the State to such Areas, by issuing notifications. Thus, the present practice would appear to be to extend all general Acts of Parliament to the whole of India, leaving it to the Governor to exclude the operation of such of them in any Tribal or Scheduled Area, as he may deem fit. It is therefore, unnecessary to make any special provision for such Area.
We recommend that the Act should extend to the whole of India except the State of Jammu & Kashmir.
1. Vide section 2(d), Appendix I.
A few other drafting changes have been suggested by us in the section.
12. Section 4.—Clause (a) of section 4 may be omitted as unnecessary. According to the definition clause, words occurring in this Act, which are defined in the Indian Contract Act, 1872, are to have the meanings respectively assigned to them in that Act. Under section 2(h) of the Contract Act, only "an agreement enforceable by law is a contract". A mere agreement is not enforceable in law. There is, therefore, no question of any specific relief being granted in respect of a mere agreement which is not a contract. This position will be clear from the new section 8 proposed by us.
13. Sections 5-6.—We are of the opinion that sections 5 and 6 should be omitted. They embody propositions too elementary to be codified and serve no useful purpose. Whitley Stokes1 considered them unnecessary and recommended their repeal.
1. Introduction to Specific Relief Act in the Anglo-Indian Codes, Vol. I, p. 939.
1. Specific Relief Act, 8th Edn., p. 745.
We have suggested certain drafting alterations in the section in order to meet this criticism.
15. Section 8.—Except for the substitution of the word 'provided' for the word 'prescribed', no change is proposed in section 8.
16. Section 9.—As suggested in our earlier Report on the Limitation Act, section 9 should be omitted.1 The object of this section, which corresponds to section 15 of the Limitation Act,2 1859, was to discourage people from taking the law into their own hands, however good their title. It provides a summary and speedy remedy through the medium of the Civil Court for the restoration of possession to a party dispossessed by another, leaving the parties to fight out the question of their respective titles in a regular suit.
1. Vide para. 145 of the Third Report of the Commission (Limitation Act, 1908).
2. Pollock & Mulla Specific Relief Act, 8th Edn., p. 749.
But the section has not served its purpose. The remedy has not been speedy because the evidence which is generally led to establish possession is nearly the same as would be necessary in a title suit. It has been felt that the question of possession cannot be determined without going into the question of title to some extent. A decree under section 9 does not determine title, and it is generally followed by a suit for recovery of possession based on title. The result has been a multiplicity of proceedings.
17. Section 10.—But for a verbal change, no alteration is proposed in section 10.
18. Section 11.—It has been suggested that section 11 is unnecessary and should be omitted. But this section confers a right to a relief which is not given by any other provision of the Act.
First, specific delivery under section 11 is to be distinguished from specific performance of a contract inasmuch as the right of recovery in section 11 is not based on contract but on the right to possess.
Secondly, section 11 is to be distinguished from section 10. The distinction between the two kinds of action is fully explained in Banerji's Tagore Law Lectures1 Under section 10, the suit is, in reality, a suit for recovery of movable property or damages in the alternative and the decree and its execution are governed by the provisions of Order 20, rule 10 and Order 21, rules 30-31. Plaintiff himself is obliged to state in his plaint the estimated value of the movables [vide Form No. 32, Sch. I, App. A of the C.P.C.], which would be paid to him if delivery cannot be had [Order 21, rule 31(2), C.P.C.].
1. Law of Specific Relief, 2nd Edn., pp, 74-75.
1. Nelson Specific Relief Act, p. 115, quoted in Banerji's Law of Specific Relief, 2nd Edn., p. 75.
1. Specific Relief Act, 8th Edn., pp. 756-757.
"In England a person entitled to the immediate possession of a specific chattel was in principle entitled to recover it by an action of detinue. The writ in that action demanded specific delivery. But owing to the defective procedure for the execution of common-law judgments, this could not in practice be enforced. Then a court of equity, when applied to for relief, had to be satisfied that the remedy in damages to the value of the goods, which alone was available for the plaintiff at common law, would not be adequate, or that some specially equitable right of the plaintiff under a trust, for example, was involved."
The equitable gloss, however, applied only to cases where damages could not afford adequate relief1 or where there was a fiduciary relationship between the parties1 by reason of which the defendant would be bound, in conscience, to make specific delivery. These special cases are specified in section 11.
1. Vide Winfield on Tort, 6th Edn., p. 415.
2. Cf. Wood v. Rowcliffe, (1847) 3 Ch 382 (383).
In the circumstances we are of the view that Section 11 should not be omitted.
1. Venkatasubba Rao v. Asiatic Steam Navigation Co., (1916) 39 Mad 1 (FB).
2. Specific Relief Act, 8th Edn., p. 757.
3. Subbarayalu v. Annamalai, ILR 1946 Mad 174-179.
4. Whiteley Ltd v. Hill, (1918) 2 KB 808 (819).
"The power vested in the Court to order the delivery up of a particular chattel is discretionary, and ought not to be exercised when the chattel is an ordinary article of commerce and of no special value or interest, and not alleged to be of any special value to the plaintiff, and where damages would fully compensate".
20. In England1 and in America,2 one finds that the text-books on Specific Performance deal with the defences open under the law of contract as well a5 the defences available in equity Courts in proceedings to enforce a contract by way of specific performance. In India, the defences that are available under the law of contract, such as incapacity of parties, the absence of a concluded contract, the uncertainty of the contract, coercion, fraud, misrepresentation, mistake, illegality, or want of authority to enter into the contract, have all been dealt with in the Contract Act. Further, it is provided by section 4(a) of the Specific Relief Act that an agreement which is not a valid contract under the Contract Act is not specifically enforceable.
1. Fry Specific Performance, 6th Edn., pip. 125 et seq; Halsbury's 2nd Edn., Vol. 31, p. 345.
2. 49 American Jurisprudence pp. 24 et seq.
Hence, a repetition, in the Specific Relief Act, of the defences available "under the law of contract may be avoided by inserting in the Act a specific provision to the effect that all defences open under the law relating to contracts shall be open to a defendant in a suit for specific performance. We, therefore, propose to insert a new section1 to the above effect and to omit clause (a) of section 4 which becomes redundant.
1. Vide section 8, Appendix I.
1. Banerji Law of Specific Relief, 2nd Edn., p. 84.
2. Vide section 12, Appendix I.
1. Law of Specific Relief, 2nd Edn., p. 129.
In short, this clause is totally inconsistent with the basic principle followed by the Courts of Equity in England in granting specific performance, namely, the non-existence or inadequacy of the remedy at law, but not merely the impracticability of enforcing such a remedy.
We, therefore, recommend that this clause be omitted.
(c) Where the property consists of goods not easily procurable in the market.
The last exception has been specially developed in the United States3,Courts have enforced specific performance of contracts to furnish gas, water or other necessary materials to a manufacturing establishment, where the thing contracted for is not immediately available from other sources and a breach of the contract would stop the operations of the plaintiff's establishment. The same principle is applied where the goods are such that they can be supplied by no one except the defendant. A contract to furnish stone from a certain quarry for building was enforced where the stone was of a peculiar colour and the building was partially constructed from the stone already furnished. Even a contract for the delivery of a motion-picture film to an exhibitor has been enforced.
1. Cf. Pusey v. Pusey, (1684) 1 Vern 273; Falcke v. Grey, (1859) 4 Drew 65.
2. Wood v. Rowcliffe, (1844) 3 Hare 304.
3. 49 Am Juris sections 126-128, pp. 149, 152.
In view of the vast economic developments which are taking place in India, we would recommend the adoption of this exception from the American Law.
24. Section 13.—It is not clear from the language of section 13 whether the section has an independent existence or has to be read along with the succeeding sections relating to partial performance. Collett1 as well as Banerji2 have taken the latter view. We think it should be made clear that the principle embodied in section 13 is a general principle which has to be borne in mind while applying sections 14 to 16. We propose to amalgamate sections 14-17 into one section and to append section 13 in a modified form as an Explanation thereto, omitting the reference therein to section 56 of the Contract Act.
1. Collett Law of Specific Relief, p. 117.
2. Banerji Specific Relief, 2nd Edn., p. 282.
25. Sections 14-17.—While section 17 enunciates the general rule that the Court will not enforce specific performance of a part of a contract, sections 14, 15 and 16 provide exceptions to this general rule, and the Privy Council has held1 that sections 14-17 taken together constitute a complete Code and that any claim for specific relief of a part of a contract must be brought within the terms of these sections. In these circumstances, it is desirable to amalgamate sections 14 to 17 into one section and to provide that the court shall not direct the specific performance of a part of a contract except as provided therein.
1. Graham v. Krishnachandra Dey, (1925) 52 Cal 335 (338) (PC).
26. Sections 14, 16 and 17.— No change in principle is required in sections 14, 16 and 17.
27. Section 15.—Section 15 contemplates two types of cases, namely, (i) where the part, which must be left unperformed, forms a considerable portion of the whole but admits of compensation in money, and (ii) where it does not admit of compensation. In our opinion, the principle embodied in the section, as it stands, is inequitable so far as the former case is concerned; for, where monetary assessment of the part unperformed is possible, there is no reason why the plaintiff should not get a proportionate abatement of the consideration when he is to relinquish all claim to further performance or any further compensation for the breach. In the latter case, on the other hand, no question of abatement arises because apportionment of the consideration is not possible.
We have, in Appendix I, suggested a redraft of the section, in conformity with the above view.
28. Section 18.—There is some uncertainty as to whether section 18 covers the case of an absence of title as distinguished from that of an imperfect title. The section mentions only 'imperfect title'. But according to a Nagpur decision,1 the wording of clause (a) of section 18, whereby the vendee can compel the vendor to make good the contract out of 'any' interest in the property subsequently acquired by the vendor, "indicates that an imperfect title would include even complete absence of title".
1. Pudlik Jainarayan, AIR 1949 Nag 83.
"...........if a contract be in other respects good and fit to be performed, and the consideration has been received, incapacity to perform it at the time of its execution will be no answer when the means of doing so are afterwards obtained."
A defendant cannot be permitted to say that he did not mean to acquire that interest.1 Accordingly, it would be advisable to make the position clear by including in section 18 the case of a total absence of title.
1. Fry Specific Performance, 6th Edn., p. 464.
29. The applicability of sections 14 to 16 in a case falling under section 18 (a) came up for the consideration of the Supreme Court in Kalyanpur Lime Works Ltd. v. State of Bihar, 1945 SCR 958.
1. See Dalmia Jain & Co. Ltd. v. K.L. Works, AIR 1952 Pat 393.
2. Dalmia Jain & Co. Ltd. v. K.L. Works, AIR 1952 Pat 400 (401).
It is, therefore, advisable to make it clear that sections 14 to 16 apply also to cases covered by section 18.
"Section 43 follows the equitable rule in that until the option is exercised, it treats the transferee as the beneficiary of a trust.........But it departs from the equitable rule in that it does not requite the transfer to be effected by a further conveyance..........If the transferee were enforcing the contract under section 18(a) of the Specific Relief Act, the transferor would be required to execute a further conveyance. But under section 43 the exercise of the option or the mere requisition of the transferee is sufficient to bring the subsequent interest within the scope of the original transfer."
The words 'sale or lease', as observed by Das J.,3 do appear to be apt or appropriate to executed contracts only. We recommend that these words be substituted by the word 'contract', which will refer to the 'contract to sell or let' mentioned in the opening sentence of section 18.
1. AIR 1952, Pat 392(409); (see also Rauden, J., pp. 404-5, who observes that " the words 'sale or lease; appear to be used in contrast to the word 'contract'".
3. Transfer of Property Act, 4th Edn., p. 196.
4. Dalmia Jain v. K.L. Works, AIR 1952 Pat 393 (409).
31. Clause (b).—Clause (b) of section 18 refers to cases like contracts for the assignment of leasehold interest where the lessor's consent is necessary for the same. As was observed in Bain v. Fothergi, (1874) 7 HL 158 (209).
"whenever it is a matter of conveyancing and not a matter of title it is the duty of the vendor to do every thing that he is able to do by force of his own interest and also by force of the interest of others whom he can compel to concur in the conveyance."
1. Dart Vendor & Pruchaser, 8th Edn., Vol II, p. 924.
The requirement of concurrence seems to be the essence of the clause but there are cases where concurrence alone may not be enough and if a conveyance by another person, who is bound to convey at the vendor's request, is required, there is no reason why the vendor should not be compelled to get the conveyance from that person by a resort to legal proceedings, if it cannot be had amicably. Suitable changes have been suggested in clause (b) to make this clear.
32. Clause (c).—Clause (c) imposes an obligation upon the vendor to obtain a conveyance from the mortgagee, in case of sales of mortgaged properties. A conveyance from the mortgagee is however not necessary except in the case of an English mortgage or a mortgage by conditional sale. The words 'where necessary' should, therefore, be inserted in clause (c).
33. Where a claim for specific performance is refused, the plaintiff may, in certain cases, be entitled to get a refund of earnest money or purchase money1 or other sum deposited by him as a pre-payment.
1. Munni v. Kamta, AIR 321; Govind v. Miraji, (1944) nag 718.
1. Amma v. Udit, (1898) 31 All 68 PC; Abdul Rahman v. Rahim Bakshi, AIR 1929 Lah 332; Raghu Naht v. Chadra, 17 CWN 100; Fibrosa v. Faribairn; (1942) 2 All ER 122 (HL); Munshi v. Vishnu, AIR 1954 All 450.
In England, it was held in earlier cases1 that where the remedy of specific performance was refused on merely equitable grounds, the purchaser could recover damages for breach of contract but could not recover his deposit. But section 49(2) of the Law of Property Act, 1925, now provides that the Court may "order the repayment of any deposit" either in an independent action for its return or in a suit for specific performance "where the Court refuses to grant specific performance". Hence, either party may, in a suit for specific performance, claim repayment of any deposit when the claim for specific performance is refused.
1. Cf. National Provincial Bank (in re:), (1895) 1 Ch 190.
In India, in some cases, a claim for refund of the earnest money has been made in the alternative in a suit for specific performance1 and it has been held that even in the absence of a specific prayer2 for return of earnest money, the Court may, in a suit for specific performance, direct a refund while refusing specific performance, if the facts disclose a case for such a refund.
1. Amma v. Udit, (1898) 31 All 68 (PC); Karsandas v. Chhotalal, AIR 1924 Bom 119; Natesa Aiyar v. Appava Padatyarhi, 38 Mad 178.
On the other hand, there has been some uncertainty as to the right of the plaintiff to ask for an amendment claiming such a relief at a late stage of the proceeding. While in some cases it has been held that such an amendment should be allowed at any stage of the litigation1 there is a contrary view2 that the appellate court should not give this relief where the plaintiff has not initially claimed it as an alternative relief in his suit for specific performance.
1. Ibrahimabhai v. Fletcher Ors. Road, (1896) 21 Bom 827.
2. Somasundaram Chettiar v. Chidambaram Chettiar, AIR 1951 Mad 282.
We are of the view that, as in the matter of compensation, the law should not allow a decree to be made without a proper pleading, but that the Court should try to prevent multiplicity of proceedings by allowing amendment seeking to introduce a claim for a refund or a similar relief, even at a late stage. We recommend that a specific provision, on the above lines, should be inserted in the Act, enabling a person to obtain a refund or similar relief in a suit for specific performance.
34. We have next to consider whether it should be made obligatory on the plaintiff to make the claim for a refund in the suit for specific performance itself.
Pollock and Mulla1 have suggested that it is ".....desirable that the right to return of the deposit should be determined in the suit for specific performance..."
1. Specific Relief Act, 8th Edn., p. 782.
1. Munni Bibi v. Kamta Singh, (1923) 45 All 378. (This is also the law in England under the Law of Property Act, 1925). Of course, in the case of default by the vendor, the purchaser may, instead of sui8ng for specific performance, sue only for refund of the deposit with, or without damages; Naturam v. Uluk Chand, AIR 1926 Cal 1041.
Having regard to the fact that the number of such suits cannot be considerable. We do not think it right to recommend a provision barring such suits.
1. Krishnaji v. Sangappa, AIR 1952 Bom 181; Velayuda v. Kumaraswami, 52 IC 700 (Mad); Ramchandracharyulu v. Rangacharyulu, AIR 1926 Mad 1117.
1. Kartik v. Dibakor, AIR 1952 Cal 362; Arjun Sing v. Sahu, AIR 1950 All 415.
2. Enayat Ullah v. Khalil Ullah, AIR 1938 All 432.
3. Cf. Abdul v. Abdul, 46 Mad 148.
On the same principle, where the vendor or lessor is a joint tenant, and the suit for specific performance is brought by his purchaser against the continent in possession of the entire property, it has been contended that the plaintiff should be permitted to ask for a partition as well as possession in the same suit.1 In Bhagwan v. Krishnaji, (1920) 44 Bom 967 (972), Heaton, J., however, thought that on principle it was not proper that a transferee should have specific performance in such cases as it would lead to further litigation because "he will be unable to obtain separate possession of it without bringing a suit for partition."
In the circumstances, we consider it advisable to provide that the plaintiff, in a suit for specific performance, may also claim the ancillary reliefs of partition on possession either initially or by an amendment at a later stage without prejudice to his right to compensation under section 19.
1. Md. Mozaharal Ahad v. Md. Azimaddin Bhuiya, AIR 1923 Cal 507 (511, 512).
On the other hand, the Nagpur High Court1 has held that the word compensation used in section 19 of the Specific Relief Act should be understood in the sense of damages as contemplated in section 73 of the Contract Act. The same conclusion might be said to follow also from the observation of the Privy Council in Ardeshir's case, (1928) 52 Bom 597 PC. that section 19 of the Specific Relief Act, with the exception of the Explanation, embodies the same principle as Lord Cairns' Act, which enabled a suitor to claim both specific performance and damages for breach of contract in the same proceedings. But the Privy Council did not disapprove of the view expressed in the Bombay High Court2 by Macleod, C.J., that the word compensation was used with the intent to emphasise the fact that the Court in awarding compensation was not bound to follow the ordinary rules with regard to damages for breach of contract and that the measure of damages was not necessarily the same as in a suit for damages for breach of contract. Later, however, the Privy Council in a case3 under section 19 upheld a decree on the footing of 'damages' for breach of contract. In a Bombay case4 Chagla J. (as he then was) has held that in deciding whether the plaintiff is entitled to compensation, the principle, which the Court must adopt, is the same as underlies section 73 of the Contract Act, that is to say, the plaintiff is bound to prove some loss or damage. But there may be cases where the injury cannot be assessed in terms of money. In such cases, the Court would award nominal damages.
1. Partapchand v. Raghunath, AIR 1937 Nag 243; Dwarkaprasad v. Kathelen, AIR 1955 Nag 28.
2. Sasson v. Ardeshir, AIR 1926 Bom 189.
3. Ramji v. Kishore, (1927) 117 IC 1 (PC).
4. Ramchandra v. Chinubhai, AIR 1944 Bom 76.
In these circumstances, we think it is desirable to provide that compensation under the present section should be assessed on the same principles as are followed under section 73 of the Contract Act.
37. There has been a difference of judicial opinion as to whether the Court has power to award compensation in a suit for specific performance, where the plaintiff has not specifically prayed for it in the plaint.
The Lahore1 High Court has held that the Court has the power to award damages whether in substitution for or in addition to specific performance even though the plaintiff has not specifically claimed it in the plaint.
1. A.P. Partinidhi Sabha v. Lahori, (1924) 5 Lah 509.
The Madras1 High Court has, however, held that the Court cannot award damages in addition to specific performance in the absence of a specific claim for damages and a proper pleading stating why the relief of specific performance would be insufficient to satisfy the justice of the case and the amount which should be awarded.
1. Somasundarm v. Chidambaram, AIR 1951 Mad 282.
The Madras view would appear to be based on the principle that there should be a proper pleading in every case. While it is proper that the Court should have full discretion to award damages in any case it thinks fit, one cannot, on the other hand, overlook the question of unfairness and hardship to the defendant, if a decree is passed against him, without a proper pleading.
What we recommend is that in no case should compensation be decreed unless it is claimed by a proper pleading. It should be open to the plaintiff to have an amendment, at any stage of the proceeding; in order to introduce a prayer for compensation, whether in lieu of or in addition to specific performance.
38. Section 20.—Section 20 does not state the entire law relating to liquidation of damages as a bar to specific performance. It appears that the principles of English law on this subject have been applied by the court in our country. If would therefore be expedient to codify those principles.
In interpreting section 20 the Courts1 in India and the Judicial Committee2 always sought to ascertain the intention of the parties, on the true construction of contract.
1. Cf. Sadiq Hussain v. Anup Singh, (1923) 4 Lah 327; Kandasami Shanmugha, AIR 1949 Mad 302.
2. Bissessar v. Vas, (1927) 55 Cal 238 (PC).
1. Kandasami v. Shanmugha, AIR 1949 Mad 302 (303).
1. 2nd Edn. Vol. 31 , Para. 373.
"Where the contract contains a stipulation that in the event of non­performance a certain sum of money shall be paid, that fact is not in itself decisive in considering whether or not specific performance should be granted. Nor does the distinction between penalty and liquidated damages affect the answer to this question. The answer is to be found by considering the intention of the parties, that is, whether the party bound to performance has an alternative choice given to him by the contract, to perform or to pay the agreed sum, or whether he is bound to do a certain thing, with a penal sum or sum by way of liquidated damages attached as security. In the latter case the Court, notwithstanding the penal clause, enforces performance, if the contract be such that without the penal clause it would have been proper for specific performance".
We recommend that these principles should be incorporated into the section, with a proviso that the plaintiff cannot have both specific performance and the sum specified in the contract.
39. Section 21, clause (a).—Some of the clauses of section 21 require in our view amplification.
Thus, while as a general rule, contracts to lend or mortgage are not specifically enforced, as they come under clause (a), there are certain exceptional cases where specific performance has been granted by the Courts upon the assumption that damages would not afford adequate relief in such cases, and these exceptions should be mentioned in the section itself, to make it comprehensive.
1. Where a loan has been advanced either in whole or in part by the lender on a contract to execute a mortgage but the borrower refuses to execute the mortgage, specific performance of the contract can be obtained if the borrower is not willing to repay the loan at once.1 Where a part of the loan only has been advanced, the lender must be ready and willing to advance the remaining sum according to the agreement.
1. Jewan Lal v. Nilamni, AIR 1928 PC 80; Fry Specific Performance, 6th Edn., p. 24; 49 Am. Juris., section 83, p. 101.
2. Another such case is the specific performance of a contract to subscribe for debentures of a company. Though Section 122 of the Companies Act, 1956 provides for the specific performance of such a contract we think it would be expedient, for the sake of comprehensiveness, to make a provision in this section.
40. Clause (b).-No change is necessary in clause (b).
41. Clause (c).-Pollock and Mulla1 point out that clause (c) appears to be redundant inasmuch as under section 29 of the Contract Act, a contract "which is not certain, or capable of being made certain," is void. We agree with this view and recommend that clause (c) be omitted.
1. Specific Relief Act, 8th Edn., p. 790.
1. Lindley on Partnership, 11th Edn., p 582; Halsbury's, 2nd Ed., Vol. 31, para. 486.
2. Byrne v. Reid, (1902) 2 Ch 735; Vindachala v. Ramaswami, (1863) 1 MCHCR 341.
3. Dodson v. Downey, (1901) 2 Ch 620.
We, therefore, propose to provide for such cases. We also suggest that the word "revocable" in clause (d) be substituted toy the word 'determinable', for, as Pollock and Mulla1 observe, the expression 'revocable contract' is inaccurate.
1. See section 12, Appendix I.
44. Clause (f).-In view of the new section 8 proposed by us clause (f) appears to us to be unnecessary and should be omitted.
45. Clause (g).-In clause (g), the limit of three years, which is a departure from the English rule, is artificial and arbitrary. We have no hesitation in recommending the omission of the time-limit and the substitution of the proper rule, viz., that the Court will not decree specific performance if the contract involves the performance of such a continuous duty that the court is not able to supervise it.
46. A contract to build or repair would come within clause (g) and would not, generally he specifically enforced.1 But such a contract is enforced in England2 and in America3 in certain exceptional ceremoniousness. Such a contract would be specifically enforced if the building or work is defined by the contract with sufficient particularity so as to enable the court to determine the exact nature of the work, or that the plaintiff has a substantial interest, in the performance of the contract, so that compensation for its breach would not be an adequate relief and that the defendant has under the contract obtained possession of the land on which the work is to be carried out.
1. Ramchandra v. Ramchandra, ILR 225 Bom 46.
2. Halsbury's, 2nd Edn., Vol. 31, para. 365, p. 33; Fry, 6th Edn., p. 48; Dart Vendor & Purchaser, Vol. II. p. 879; Wolverhampton Corporation v. Emmons, (1901) 1 KB 515.
3. Pomeroy Specific Performance, 3rd Edn., section 23; Story Equity Jurisprudence, 1920, p. 308.
In our view provision should be made in the clause for such a case.
47. Clause (h).—We recommend the omission of clause (h) in view of the new provision recommended by us in section 8.
48. Section 22, clauses I-II.—Clause I of section 22, as it stands, is somewhat vague. If the circumstances mentioned in the clause are such as render the contract voidable, it is open to the party who has the option, to avoid it and no question of specific performance may thereafter arise.
There are, however, certain circumstances in which a Court of equity refuses to decree specific performance, on the ground of unfairness, even though in law the circumstances are not such as to render the contract voidable. Such unfairness may be due either to the terms of the contract or the conduct of the parties, or other circumstances, existing at the time of the contract. Thus, the Court will not decree specific performance to compel the defendant to perform an act which would inevitably subject him to some penal consequences, such as an action for damages or to a criminal prosecution. Even if the performance of the agreement does not involve a breach of trust, a court of equity is always reluctant to enforce an agreement against trustees which may injuriously affect their interest or that of their beneficiaries. A contract of sale, therefore, made by trustees in an unbusiness like manner will not generally be enforced, unless it is clearly established that the price was adequate. The general doctrine in regard to contracts the performance of which involves a breach of trust or an unlawful act applies not only to technical trustees but also to all persons occupying a fiduciary relation or position of confidence towards others, including agents, directors of corporations, assignees in bankruptcy and the like. We, therefore, suggest that the scope of clause I should be clarified by providing that the unfair advantage referred to in this clause may be due to circumstances which may not be sufficient to render the contract voidable.
49. It is not possible to exhaustively enumerate the grounds of unfairness or of hardship mentioned in clause II. As stated by Pomeroy1, "the variety of forms of, hardship and unfairness is infinite; the Courts, therefore, in dealing with these subjects have wisely refrained from limiting themselves by special rules. In this particular field precedents are of comparatively little value." There are however certain circumstances which, by themselves, have been held not to constitute an unfair advantage or hardship. Thus the fact that the contract is onerous to the defendant or improvident in nature2-3, or that there is inadequacy of consideration4-5, will not be circumstances falling within clause II. It would be advisable to add an Explanation to the section making this position clear.
1. Pomery Specific Performance, p. 126.
2. Davis v. Maung Shwe Goh, 38 Cal 805 (PC); Ram Sundar v. Kali AIR 1927 Cal 889.
3. 49 American Jurisprudence, p. 75.
4. Haywood v. Cope, (1858) 25 Beav 140 (150-3).
5. Cf. Narasinga Row v. Rangasami Theran, 35 IC 871; Pichai v. Chaturbhuja, AIR 1933 Mad 736.
50. It is not clear from clause II at what point of time the circumstances causing the hardship must exist in order to be a ground for refusing specific performance.
1. Halsbury's 2nd Ed., vol 31, para 420.
2. Fry Specific Performance, 6th Edn., pp. 199-202.
1. Sankaralinga v. Ratnasami, AIR 1952 Mad 389-393.
2. Ramaralinga v. Jagdammal, AIR 1951 Mad 612; Shib Lal v. Collector of Bareilly, 16 All 423.
1. Halsbury's 2nd Edn., Vol. 31, para. 420; 49 Am. Juris., p. 78.
We recommend that the foregoing principles be incorporated in an Explanation to the section.
1. Fry Specific Performance, 6th Edn., p. 219.
"A contract to be specifically enforced by the Court must, as a general rule, be mutual,—that is to say, such that it might, at the time it was entered into, have been enforced by either of the parties against the other of them. When, therefore, whether from personal incapacity to contract, or the nature of the contract, or any other cause, the contract is incapable of being enforced against one party, that party is generally, incapable of enforcing it against the other, though its execution in the latter way might in itself be free from the difficulty attending its execution in the former."
1. Ashburner Equity, 2nd Edn., p. 405.
2. 49 Am. Juris., section 35, p. 49; Williston on Contracts, sections 1439, 1440.
According to Ashburner1 the doctrine of want of mutuality as formulated by Fry "appears to be an unfortunate invention of Lord Redesdale and although it has often been spoken of with respect, it does not appear to form the ratio decidendi of any line of cases." He points out that the illustrations given by Fry in support of his proposition do not support him.
In an illuminating article on the subject, Ames1 strongly criticizes the rule as generally stated, and sets out no less than eight propositions, each one of which is at variance with the statement just quoted.
1. Ames, Mutuality in Specific Performance, 3 Columbia Law Rev. I.
In India, it was at one time thought1 that the doctrine of mutuality had been rejected by the Indian Legislature on the ground of its artificiality. But the Privy Council applied it in Sarwarjan's case2 and observed that since it was not within the competence of a manager or guardian to bind the minor or his estate by a contract for the purchase of immovable property, the minor also could not enforce such a contract, after attaining majority, because there was a want of mutuality.
1. Whitley-Stokes Anglo-India Codes, Vol. 1, p. 931; Kriskanasami v. Sundrappayyar, (1894) 18 Mad 415.
2. Mir Sarwarjan v. Fakhruddin, (1911) 39 Cal 232 PC.
In the aforesaid decision their Lordships of the Judicial Committee1 did not examine the provisions of the Specific Relief Act nor consider the question whether there was any reason for applying the doctrine of mutuality under it. After this decision, the question has come up for consideration before the High Courts on several occasions, particularly with reference to contracts for the purchase or sale of immovable property entered into by guardians on behalf of minors. The decisions are, by no means, uniform and the attempt of the courts has, of late, been to avoid as far as possible the application of the doctrine.
In cases governed by Hindu Law after a later decision of the Judicial Committee,1 it is settled that a guardian is competent to alienate the property of a minor for purposes of legal necessity or for the benefit of the estate, and that, accordingly, such a contract is specifically enforceable both by and against the minor.2 The Full Bench of the Andhra High Court has extended this doctrine to contracts for purchase of property entered into on behalf of a Hindu minor, though the Court conceded that "It may perhaps be more difficult in the case of a purchase by a guardian on behalf of a minor to sustain it on the ground of necessity or benefit..."
1. Subrahmanyam v. Subba Rao, AIR 1948 PC 95.
2. Sitarama Rao v. Venkatarama Reddiar, AIR , 1956 Mad 261 (FB); Suryaprakasam v. Gangaraju, AIR 1956 AP 33 (40)(FB).
1. Babu Ram v. Saidunnissa, (1913) 35 All 499.
Now contracts made by the guardian of a Hindu minor, whether for purposes of legal necessity or not, have ceased to create any problem which might necessitate the application of the doctrine of mutuality, for, the Hindu Minority and Guardianship Act, 1956 (XXXII of 1956) lays down the conditions under which only the guardian can bind the minor's property, and further enacts a specific prohibition that in no case can the guardian bind the minor by a personal covenant. [Section 8(1)1.
1. Imambandi v. Mutsaddi, AIR 1918 PC 11.
1. Amir Ahmmad v. Meer, AIR 1952 Hyder 120 (FB).
2. Sarwarjan v. Fakhruddin, (1911) 39 Cal 232 (PC).
"The fact that the remedy of specific enforcement is not available to one party is not a sufficient reason for refusing it to the other party".
There will thus be no room for the application of the doctrine of mutuality in any suit for specific performance.
52. Section 23, clause (b).—The words 'his part' in the concluding portion of clause (b) of section 23 are ambiguous and have led to a difference of opinion amongst commentators. While according to Banerji,1 the representative or principal of the contracting party can, in the case of a contract personal in nature, sue only if the party had himself performed his part of the contract, Nelson's2 view is that the representative or principal could sue after performing what was to be performed by the party. But in a contract of a personal nature, it would be unfair to impose on the other party a performance by a third party except where he has accepted such substituted performance. We have suggested that suitable changes should be made in the clause to make this clear.
1. Banerji Law of Specific Relief, 2nd Edn., p. 339 (The same view appears to have been taken in Mahendra v. Samu, 7 CWN 229.
2. Nelson Specific Relief Act, p. 203.
53. Clauses (c)-(f).—In our coming report on the Contract Act, we intend to recommend a general rule that a third party to a contract who is entitled to a benefit there under or has an interest therein is entitled to sue upon the contract, subject to certain limitations. Once such a general provision is made, it will be unnecessary to retain the provisions contained in clauses (c) to (f) of section 23 of the Specific Relief Act. We suggest that these clauses be replaced by one clause,—referring to the relevant provision of the Contract Act.
A similar change should also be made in clause (d) of section 27.
55. Clause (h).—Clause (h) of section 23 and clause (e) of section 27 deal with the 'pre-incorporation contracts of companies'.
1. Earl of Shrewsbury v. North Staffordshire Ry. Co., (1865-66) 1 Eq. 593.
Later English decisions have taken the view that a company is neither bound by1 nor entitled to take the benefit of2 the pre-formation contracts made by its promoters.
1. English & Colonial Produce Co. Ltd. (in re:), (1906) 2 Ch 435 (CA).
2. Natal Land Co. v. Pauline Colliery Syndicate Ltd., (1904) AC 120; Newborne v. Sensolid Ltd., (1953) 1 All ER 708 (CA).
The provisions of the Specific Relief Act have, however, been applied in India even recently,1 without referring to the change in judicial opinion in England. Though a company cannot technically ratify a contract made before its incorporation, there would appear to be no reason why the company should not be entitled to choose to take the benefit or the burden of a contract made on its behalf by its promoters, by communicating its acceptance of the benefit or the burden to the other party to the contract. There is no provision in the Companies Act, 1956 Which prevents a company from accepting the benefit or burden of a pre-incorporation contract.
1. Commissioner Of I.T. V. Bhurangiya Coal Co., AIR 1953 Pat 298 (300).
We, therefore, recommend that clause (h) of section 23 and clause (e) of section 27 be retained, with suitable verbal changes indicating that the contract would be enforceable by or against a company if the company accepts the contract and signifies its acceptance to the other party to the contract.
1. Collet, Law of Specific Relief, 3rd Edn., p. 207; Banerji Law of Specific Relief, 2nd Edn., Appendix, p. 79.
We, therefore, recommend that in clause (a) of section 24 the words 'would not be entitled to' be substituted for the words 'could not'.
57. Clause (b).—It has been laid down in England as well as in India that the plaintiff in an action for specific performance of a contract is disentitled to the remedy not only where he has violated any of its essential terms but also where he has acted in contravention of it, without violating any of its terms.
1. Specific Performance, 6th Edn. section 957, p. 450.
"We shall now consider the closely allied cases where he (the plaintiff) has disentitled himself, not by default merely, but by acts in fraud or contravention of the contract, or at variance with it, or tending to its rescission and the subversion of the relation established by it. For where the party to a contract, who asks the intervention of the Court, for its specific execution, has been guilty of such conduct, that circumstance may be put forward as a defence to the action".
"the conduct of Krishna was at variance with, and amounted to a subversion of, the relation intended to be established by the compromise".
In our view this principle should be incorporated into the section by adding suitable words at the end of clause (b) of section 24.
58. Clause (c).—We are of the opinion that clause (c) is unnecessary in view of the provisions of Order II, rule 2 of the Code of Civil Procedure. If a person has obtained a decree for compensation for breach of contract he cannot again sue for specific performance, whether satisfaction of the decree is obtained or not, as his cause of action gets merged in the decree. The cause of action in breach of contract, whether the relief claimed is damages or specific performance, is the same and if the plaintiff is entitled to more than one relief, either singly or in the alternative, he must sue for the same in the same suit and cannot reserve it except with the leave of the Court [ Order II, rule 2(3), C.P.C.].
59. Clause (d).—Clause (d) of section 24 and clause (c) of section 25 may be omitted as both of them are founded on the English law as it stood under 3 Statute of the 16th century, which has since been altered by legislation. A conveyance without valuable consideration was voidable at the suit of a supervening purchaser for value with notice. This has ceased to be the law in England since the Voluntary Conveyance Act, 1873 (56 & 57 Vict.)—now replaced by the Law of Property Act, 1925 (section 173). Again, under our Law, a prior settlement of property divests the title of the settler immediately and any conveyance thereafter from the settler to another, even if it be for consideration, would be ineffective to convey any title.
1. Ardeshir Mama v. Flora Sasson, 52 Bom 597.
2. Manen v. Kamldahri, AIR 1930 Pat 121-127.
terms, the performance of which has became impossible without the plaintiff's fault.
We consider that the doctrine of readiness and willingness so formulated should be incorporated into our Act.
61. There is, however, a conflict of judicial opinion as to the exact scope of the plaintiff's readiness and willingness required by the doctrine.
In England, it has been held1 that a plaintiff claiming specific performance, who insists on a wrong interpretation of the contract, does not lose his right to specific performance in accordance with its right interpretation where the defendant offers to perform the contract as rightly interpreted.
1. Berners v. Fleming, (1925) Ch 264 (CA); Rustomali v. Ahider, 45 CWN 837.
1. Parul v. Saroj, AIR 1948 Cal 147;l Rustomali v. Ahider, 45 CWN 837.
2. Shamjibhai v. Faeoo, 1949 Nag 581 (607-10).
3. Rustomali v. Ahider, 45 CWN 837.
4. Shamjibhai v. Faeoo, 1949 Nag 581 (607-10).
1. Arjuna v. Lakshmi, AIR 1949 Mad 265.
We are, inclined to prefer the Madras view and recommend that the plaintiff should be entitled to specific performance if he avers performance or readiness and willingness to perform the contract according to its true construction.
62. In connection with contracts for sale, a question has arisen whether in order to establish his readiness and willingness the plaintiff should have made a tender of the money due from him to the defendant. The further question which has been raised is whether the purchaser must, in order to show his readiness and willingness, tender the money on the date fixed by the contract for completion. In a Calcutta case1, it was held that such a tender must be made, while in a Bombay case,2 it was held that an actual tender was not necessary for a suit for specific performance, and it was enough if payment was made as directed by the Court. The Bombay view seems to have support in the observations of the Privy Council in Bank of India v. Chinoy, AIR 1950 PC 90 (96), where it has held that the plaintiff in such a suit need not deposit the money in court or prove his financial competence.
1. Arjun v. Lakshmi, AIR 1949 Mad 265.
2. Manik v. Abhoy, 37 IC 257.
1. Vide Expl. (i) to section 24, Appendix I.
63. Section 25. — Section 18 speaks of property generally and section 25 refers to movable and immovable property. It is, however, not clear how far the provisions of these two sections apply to contracts for the letting of movable property. Nor do the reported decisions throw any light on this point.
It may not be strictly accurate to describe contracts for the letting and hire of movable property as contracts of lease. Letting and hiring of movables is really a contract of bailment which is governed by Chapter IX (sections 148 to 170) of the Indian Contract Act, 1872. If the bailor does not deliver the movable property which is the subject-matter of the contract, the bailee may have his remedy against the bailor for recovery of possession of the property. There is no provision in the Indian Contract Act for the enforcement of such a contract. The matter must, therefore, be governed by sections 10 and 11 of the Specific Relief Act. After the termination of the period of letting or hiring the bailor would be entitled to a return of the property and a corresponding duty is imposed on the bailee by sections 160 and 161 of the Indian Contract Act 1872.
Even in the case of contracts for the sale of movables the scope for the application of sections 18 and 25 is rather narrow inasmuch as it is only in the case of articles of special value that contracts for the sale of movables are specifically enforced.
We, therefore, recommend that, for the sake of clarity, sections 18 and 25 should deal only with immovable property and, that, a residuary section should be enacted, extending the provisions of these two sections, mutatis mutandis, to movables, so that possible cases calling for the application of either of those provisions may be covered.
64. We have already recommended the omission of clause (c), of section 25 [para 59, ante].
1. Tagore Law Lectures on Fraud, p. 74.
"The use of the word 'surprise' now seldom if ever heard in an English Court,...may be taken as no more than a piece of abundant caution." Banerji1 observes that at one time the word 'surprise' was used as almost synonymous with 'fraud'. Collett's view is that 'surprise' takes place "when something has been done which operated to mislead or confuse the party in the sudden".2 'Surprise', accordingly, does not go beyond the concept of fraud. We have not been able to find any Indian decision where specific performance has been granted with a variation on the ground of surprise.
1. Specific Relief, 2nd Edn., p. 342.
2. Collect Law of Specific Relief, 3rd Edn., p. 220.
As regard 'misapprehension', Collett1 suggests that it means mistake in regard to the effect or consequence of the contract as contrasted with mistake in regard to the terms of the contract. Banerji,2 further, says that the addition of the word 'reasonable' to qualify 'misapprehension' does not make much material difference in its meaning. While clause (a) deals with a mistake as to the terms of contract, clause (b) seems to deal with a mistake as to the effects off the contract.
1. Ibid., 3rd Edn., pp. 220, 244-5.
2. Specific Relief, 2nd Edn., p. 343.
If so, it is possible to incorporate clause (b) with clause (a), with suitable drafting changes.
66. Clause (c).—As Banerji1 points out, clause (c) means nothing more than that the terms of the contract in writing do not embody the whole agreement between the parties, and that the plaintiff must fulfil his entire engagement before he can have specific performance.
That being so, clause (c) also may be amalgamated with clause (a), with suitable drafting changes.
1. Ibid, Appendix, p. 87.
In other words, the discrepancy in the written instrument may not be due to any fraud, mistake or misrepresentation of either party but may be due to the ignorance or carelessness of the draftsman, and that is why clause (d) does not start with the words "where by fraud or mistake........", as clauses (a) and (d) do.
We do not propose to alter clause (d).
68. Clause (e).—Only a drafting change has been suggested in clause (e).
69. Section 27.—In section 27, clause (e) has to be omitted in view of the present state of the law relating to promoter contracts (vide Para. 55, ante). In clause (d), the word 'public' should be omitted inasmuch as the principle embodied in the clause is applicable to all companies.
70. Section 27A.—In our report on the Registration Act,1 we have recommended the exclusion of 'agreement to lease' from the definition of lease in section 2 and the omission of clause (c) from section 49. The result of these changes will be that an agreement to lease, even if in writing, will not require registration; and, even an unregistered deed of lease will be admissible in evidence to prove an agreement to lease.
1. Sixth Report of the Law Commission, para. 21.
In the result, a person will be entitled to enforce specific performance of an agreement to lease even if it has to be gathered from an unregistered lease deed. Hence, section 27A of the Specific Relief Act will be unnecessary, whether it is interpreted to be applicable to an unregistered agreement for lease or an unregistered deed of lease.
We therefore recommend that section 27A be omitted.
1. Specific Relief Act, 8th Edn., p. 823.
Having regard to this comment we recommend the incorporation of the provision into section 22,—making it clear that even where the mistake or misrepresentation is not such as to render the contract voidable, the Court may refuse to enforce specific performance where it would be inequitable on the part of the plaintiff to obtain the relief [See section 21(2) (c) of Appendix I].
Section 28 may, therefore, be omitted.
72. Section 29.—As we have included in the Act specific provisions enabling a plaintiff to ask for reliefs such as a refund of earnest money, in a suit for specific performance, we recommend that, by way of abundant caution, it should be made clear that the dismissal of a suit for specific performance will not bar a suit for any relief other than damages. We have suggested suitable alterations in section 29 in this behalf.
73. Section 30.—Section 30 provides, inter alia, that the provisions of Chapter II relating to specific performance of contracts will also apply to a suit for the enforcement of an award. When this provision was made there was no enactment in force in India relating to arbitration.
Since the enactment of a comprehensive law of arbitration in the Arbitration Act, 1940, the scope of the application of section 30 has become very limited. Under section 14(2) of the Arbitration Act, an award made by arbitrators without intervention of Court may be filed in Court for enforcement, by application made by either party to the arbitration agreement, within 90 days of the date of the service of notice of the making of the award (Article 178, Limitation Act). Thereupon follows an executable decree under section 15, if the Court sees no reason to remit or set aside the award. Hence, if the procedure under section 14(2) of the Arbitration Act be followed, there would be no need for any of the parties to resort to a suit for specific performance.
But under the provisions of section 30 of the Specific Relief Act a party to an award may also bring a regular suit to enforce such award without adopting the procedure laid down in the Arbitration Act. Prior to the enactment of the Arbitration Act, 1940, it was held that the procedure laid down in Schedule II of the Civil Procedure Code was not exclusive and it was not imperative upon a plaintiff who sought to enforce an award, to resort to that procedures1.
1. Subbaraya Chetti v. Sadasiva Chetti, 20 Mad 490.
"Notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act".
The Madras1 and Patna2 High Courts have held that by reason of the words 'notwithstanding any law' in the above section, the only procedure for enforcing an award now is an application under section 14 of the Arbitration Act and that a suit is no longer maintainable.
1. Moolchand v. Rashid, AIR 1946 Mad 346.
2. Ramchander v. Munshimian, AIR 1950 Pat 48 (50).
The Nagpur1 and Calcutta2 High Courts, on the other hand, maintain that section 32 of the Arbitration Act bars a suit challenging an award and not a suit for enforcing the award and that section 32 of the Arbitration Act has not abolished the right to bring a suit under section 30 of the Specific Relief Act.
1. Nanhelal v. Singhai, AIR 1944 Nag 24.
2. Munishilal v. Modi Bros., (1947) 51 CWN 563.
The Arbitration Act is a consolidating enactment and its territorial application is co-extensive with that of the Specific Relief Act. The enforcement of the award under the Arbitration Act takes place through the Court which has jurisdiction, in the same proceeding, to remit, modify or set aside the award. All the reliefs relating to the award are, accordingly, available in the proceeding under the Arbitration Act.
We are, therefore, of the view, that no separate suit should lie in cases where the Arbitration Act is applicable and that the scope of section 30 of the Specific Relief Act should be confined to cases of arbitration under other laws, the operation of which is saved by sections 46 and 47 of Arbitration Act.
Add the words "to which the Arbitration Act, 1940 does not apply" after the word 'awards'.
Insert the word "enforced" after the words "nor shall any arbitration agreement or award be", and amend the marginal note in the section accordingly.
74. Section 23.—In England, the Court of Appeal has held1 that the articles of association of a company cannot be rectified by a court even though they do not conform to the concurrent intention of the signatories to the articles and that the only mode of altering them is the passing of a special resolution in the manner provided by the Companies Act [vide section 23 of the Companies Act, 1948 (11 and 12 Geo. 6, c. 38)]. Since there is a corresponding provision in section 31 of our Companies Act, 1956, articles of association may be excluded from section 31 of the Specific Relief Act, following the principle laid down in the English decision.
1. Scott v. Frank F. Scott (Lond.) Ltd., 1940 Ch 794 (804) CA.
75. The words "may institute a suit" are not quite happy and seem to suggest as if the relief of rectification can be granted only if a separate suit is brought for the purpose. It has been held that in a suit for damages for breach of contract, the court may allow the plaintiff to ask for the necessary rectification by amending the plaint,1 subject of course to the law of limitation.
1. Raipur Mfg. Co. v. Venkatasubba Rao & Co., AIR 1921 Mad 664.
1. Kota v. Kannekant, AIR 1916 Mad 795.
2. 45 Am. Juris., pp. 589-90.
"According to strict practice, in a law action in which an equitable cause for reformation is not asserted, the written contract will be given full force and effect and a plaintiff will not be heard to say that it does not express the real agreement of the parties.....But in jurisdictions......in which the distinctions between law and equity are abolished, or in which both forms of relief are administered by the same court, in an action at law upon an instrument the court may, in a proper case, construe the contract as it was intended by the parties, or supply matters omitted either by mutual mistake or fraud, and render a proper judgment on the basis thereof, as if there had been first a reformation of the contract. The judgment may confer only the final legal remedy, the preliminary equitable relief being assumed as a pre­requisite, but not in terms awarded."
There is greater reason for the exercise of such a power in India where there exists no distinction between law and equity. It is, therefore, proposed that it should be provided that the relief of rectification may be obtained not only in a suit specifically brought for the purpose but also in a suit in which any right arising under the instrument is in issue.
76. It is not quite clear from the Statute itself whether a plea by way of rectification can be taken in defence and, if so, what are the conditions subject to which it is available.
"The Court or Judge shall have power to grant to any defendant in respect of any equitable estate or right or other matter of equity and also in respect of any legal estate right or title claimed or asserted by him—(a) all such relief against any plaintiff—or petitioner as the defendant has properly claimed by his pleading, and as the court or judge might have granted in any suit instituted for that purpose by that defendant against the same plaintiff or petitioner:"
In India, it has been held by the High Courts of Bombay,1 Calcutta2 Madras3 and Nagpur4 that even where under the law of procedure the defendant is not entitled to make a counter-claim, the defendant should on the principle of 'justice, equity and good conscience',5 be allowed to raise in defence any plea that would have enabled him to obtain rectification in a suit, instead of being driven to a separate suit. So long as the remedy of counter-claim is not available in all courts, it would be desirable to enact the principle established by the cases just cited.
1. Shiddappa v. Rudrappa, AIR 1954 Bom 463; Dagdu v. Bhana, 1904 (28) Bom 420 (426).
2. Binns v. W.&T. Avery Ltd., (1934) 61 Cal 548.
3. Rangasami v. Souri, (1916) 39 Mad 792.
4. Rajaram v. Manink, AIR 1952 Nag 90.
5. pollock and Mulla support this view (Contract and Specific Relief Act, 8th Edn., pp. 831-832). It is also in conformity with section 92(1) of the Evidence Act.
77. The question then arises, under what conditions should the defendant be permitted to raise this plea. In the case of Shiddappa v. Rudrappa, AIR 1954 Bom 463, the defendant's right to bring a suit for rectification was not barred by limitation and emphasis was laid on that fact.
But there are cases1 in which it has been held that the defendant should be allowed to raise the plea even though his right to sue for rectification is barred by limitation.
1. Kesho Singh v. Roopan Singh, AIR 1927 All 355.
We are of the view that the conditions in the case of the plaintiff and the defendant should be the same. This result could be secured by providing that either the plaintiff or the defendant may have relief by way of rectification, but only if it is specifically asked for in his pleading, whether initially or by amendment.
78. Sections 32-35.—We propose to omit both sections 32 and 33.
So far as section 32 is concerned, it is an ambiguous provision which has led to speculation amongst commentators and we have not been able to find any lecision where this section has been applied or interpreted.
1. Pollock on Fraud (TLL), p. 122.
"The 32nd section is a striking example of the misguided ambition that pervades the New York draft.........What is the 'equitable and conscientious agreement' which the Court must be satisfied that the parties intended to make? Is it something more than a lawful agreement? And if so, what are the additional elements? On what authority this section is supposed to be founded I know not".
Banerji1 thinks that the section was enacted so that the court may not be compelled to "go through the useless formality of rectifying the written expression of a contract which it will not enforce specifically."
1. Law of Specific Relief, 2dnd Edn., App., op. 102.
It is doubtful, however, whether the scope of rectification should be so narrowed down. For, a plaintiff suing or intending to sue for damages, may be in need of rectification. In the USA,1 it has been held that the Court will not rectify an instrument which will remain invalid or inoperative even if it is brought into conformity with the alleged intention of the parties.
1. 45 Am. Juris, p. 586.
In our view, there is no need for a provision that the Court will not rectify an invalid agreement; for, the word 'contract' in section 31 means an enforceable agreement.
As to section 33, its object is only to enjoin the Court to discover the real intention of the parties instead of inferring the intention from the language of the instrument itself. But no separate section is necessary for this purpose. We propose to make this duty of the court clear by verbal changes in section 31, after dividing it into subsections.
79. Section 34.—We recommend no change in section 34 except that it may be amalgamated with section 31, as a sub-section thereof.
1. Fry, 6th Edn., pp. 546-7.
2. Akshayalingam v. Avayambala & Ammal, AIR 1933 Mad 386.
1. Ramji v. Chinai, 82 IC 73; Kurpal v. Shamrao, AIR 1923 Bom 211.
2. Collet Specific RElief Act, 3rd Edn., p. 277.
3. Per Maccleod, C.J. in Krupal v. Shamrao, 47 Bom 589 (592).
The question is, whether the vendor or lessor should have the option of bringing a separate suit for rescission, in a case coming under clause (c). As the section stands, he has the option of bringing a separate suit under the first paragraph of section 35 or to apply for rescission in the same suit under the third paragraph of the section.
But, as Banerji1 observes, there is no reason why the vendor or lessor should be allowed to harass the other party in a separate proceeding when the remedy of rescission can be made available in the same suit.
1. Law of Specific Relief, 2nd Edn., pp. 468-70.
We, therefore propose a new section1 which will enable the vendor or lessor to apply for rescission in the suit for specific performance, if the purchaser or lessee fails to comply with the terms of the decree. In view of this new provision, clause (c) of section 35 and the two succeeding paragraphs become unnecessary and should be omitted.
1. Section 26, Appendix I.
81. While section 35(c) deals with the consequences which will follow from the default of the purchaser or lessee to comply with the terms of a decree for specific performance, there is no provision in the Act as to what would happen if the purchaser or lessee makes the payments due from him but the vendor or lessor does not comply with the decree by executing a conveyance or how the purchaser or lessee should obtain possession of the property. At present, the latter contingency is dealt with in proceedings for the execution of the decree. But, if in the former case, the vendor or lessor may obtain relief by way of rescission in the same suit, there is no reason why the other party may not have his reliefs against the vendor or lessor in the suit itself, inasmuch as the principle of avoidance of multiplicity of proceedings is equally applicable to both cases.
We have already provided1 that consequential reliefs like possession or partition can be claimed in the suit for specific performance itself and included in the decree. We are now speaking of the enforcement of such reliefs included in the decree which are at present available only by executing the decree, in separate execution proceedings.
1. Section 19 of Appendix I.
We recommend1 that complete relief in terms of the decree in a suit for specific performance shall be available by application in the suit itself, without having to resort to separate execution proceedings and that appropriate provisions should be made in the Code of Civil Procedure enabling such applications to be made and orders thereon and also for appeals.
1. Cf. section 26(3) of Appendix I.
1. Fry, 6th Edn., p. 348; Clough v. L.N.W. Ru. Co., 1871 LR 7 Ex 26 (34); Rangasami Gounden v. Nathiappa Gounden, (1918) 42 Mad 523 (538) PC; Ramgowda v. Bhausahed, (1927) 52 Bom 1 PC.
1. Fry, pp. 346-352; Hardei v. Bhagwan Singh, 24 CWM 105.
1. Ohid v. Dorshu, AIR 1926 Cal 959; Jnder v. Campbell, 7 Cal 474.
1. Fry, 6th Edn., p. 348;l Clough v. L.N.W. Ry. Co., 1871 LR 7 Ex 26 (35).
It is proposed that the above propositions be included in a new sub-section to section 35.
83. The requirement of 'writing' at the beginning of section 35 has long been omitted by the Transfer of Property Act, 1882, as regards the territories where that Act is in force. We have made this clear by inserting an Explanation at the end of the section.
1. Specific Relfef Act, 8th Edn., p. 836.
We recommend that section 36 be omitted.
85. Section 37.—No change is considered necessary in section 37.
1. Lodge v. National Union Investment Co., (1907) 1 Ch 300., (Cf. Nagappa v. Brahadambai, 39) CWN 1940 PC).
We suggest that section 38 be amended accordingly.
87. Sections 39-40.—No change is recommended in sections 39 and 40.
88. Section 41.—We recommend that in section 41, the obligation to restore any benefit obtained under the instrument in question should be provided for, for the reasons we have already given in connection with section 38 [para. 86, ante].
89. Under sections 38 and 41, a plaintiff who obtains relief on the ground that a contract to which he was a party is void or voidable, may be required by the Court to make compensation to the defendant. To this we have added the obligation of restoring any benefit which the plaintiff may have obtained under the instrument.
The question is whether the equitable principle should not similarly apply in favour of the plaintiff in a case where the defendant successfully resists the suit of the plaintiff on the ground (a) that the instrument is void or (b) that it is voidable and he has avoided it.
1. Nisar Ahmad v. Mohan Mancuha, AIR 1940 PC 2004.
2. Mohan Manucha v. Manzoor Ahmad, AIR 1943 PC 29 (34).
"A defendant who when sued for money lent pleads that the contract was void can hardly regard with surprise a demand that he restore what he received thereunder."
A further question which arises is whether the same principle should be made applicable to the case of voidable contracts. The modern principle of unjust enrichment does not make any distinction between void and voidable contracts. There is an obiter dictum of the Privy Council1 to the effect that section 65 of the Contract Act extends also to voidable contracts.
1. Satgur Prasad v. Har Narain, AIR 1932 PC 89 (91).
As however section 65 uses the word 'void' and the observation of the Privy Council is in the nature of an obiter dictum, we propose, by way of abundant caution, that the principle underlying section 65 should be expressly made applicable to avoidable contracts, where the defendant relies on the voidability of the contract.
A specific provision to this effect may be added at the end of the Chapter on Cancellation [vide section 36(1) of App. I].
1. Mohori Bibee v. Dharmadas, (1903) 30 Cal 539 PC.
2. Ajudhia v. Chandan, AIR 1937 All 610 (613-4) FB; Tikkilal v. Komal, ILR 1940 Nag 632; Punjabai v. Bhagvandas, AIR 1929 Bom 89.
1. Appaswami v. Narayanasami, AIR 1930 Mad 945; Mahadeo v. Nana Banaji, AIR 1946 Nag 359.
But as regards the application of section 41 as against a minor defendant, there is a sharp difference of opinion between the Lahore1 High Court on the one hand and the Allahabad2 and Andhra3 High Courts on the other. According to the Lahore High Court,1 the equitable principle underlying the section should be equally applicable to the plaintiff and the defendant, and that, accordingly, when a minor enters into a contract on a false representation as to his age, and in a suit on the contract refuses to perform it on the ground of his minority, he must restore the proprietary or pecuniary benefit derived by him from the contract, whether he is the plaintiff or the defendant in the suit.
1. Khan Gul v. Lakha Singh, AIR 1928 Lah 609 (617-8) FB.
2. Ajudhai v. Chandan, AIR 1937 All 610 (618) FB.
3. Lutch Arao v. Bhimayya, AIR 1956 Andh 182.
In other words, according to the Lahore High Court, the minor defendant should be bound not only to restore the property, if any, but also the monetary consideration obtained under the contract.
1. Ajudhia v. Chandan, AIR 1937 All 610 (618) FB.
2. Ajudhia v. Chandan, AIR 1937 All 610 (617) FB.
3. Lutcharao v. Bhimayya, AIR 1956 Andh 182 (187).
Having considered the rival points of view we are inclined to prefer the view of Shadi Lal, C.J., in the Lahore case.1 We have already recommended the acceptance of the doctrine of unjust enrichment.2 According to that doctrine, the obligation to restore an unjust benefit should not depend upon the mere accident of a person coming before the Court as a plaintiff or defendant. We also agree with the view that restoration of status quo ante would not amount to the enforcement of the void contract against the defendant. The principle applicable to a minor will also apply to the case of a person of unsound mind.
2. Vide Report on the Limitation Act [Third Report of the Law Commission].
We recommend, therefore, that a sub-section should be included in the new provision suggested by us1 to the effect that when a defendant successfully resists a suit on the ground that the contract is void, owing to his incapacity at the time of the contract, he must restore any benefit, whether proprietary or monetary, which he has actually received under the contract. But no question of liability to make any compensation, would arise in such a case.
1. Section 36 of Appendix I.
91. Section 42.—We are of the opinion that in view of the development of this highly efficacious remedy both in England and in the USA, the scope of section 42 of our Act requires to be enlarged. The increasing importance of this remedy in modern times is best expressed in the following words of Prof. Jennings. "The declaratory judgment is the symbol of twentieth century conception of law1".
1. Jennings Declaratory Judgments against Public Authorities, (1932) 41 Yale LJ, p. 407, 416.
92. The first point on which our law differs from the present day English and American law is that a mere declaration is not available where further relief is not asked for, the plaintiff being able to claim it.
"No action or proceeding shall be open to objection, on the ground that a merely declaratory judgment or order is sought thereby, and the Court may make binding declarations of right whether any consequential relief is or could be claimed, or not."
Similarly, the Federal Ad and the Uniform Declaratory Judgments law in the USA. empower courts to declare rights, status and other legal relations, whether or not further relief is or could be claimed.
In the USA, the provision relating to further relief is an enabling provision.1 It is left to the option of the plaintiff whether he should ask for further relief in the declaratory suit itself or reserve it for a separate action.
1. 62 Harvard Law Review, p. 826.
1. Ibid., pp. 788, 789.
2. (1955) 18 MLR 138.
But the Proviso to section 42 of our Act expressly prohibits such a decree where the plaintiff, being able to seek further relief, has omitted to do so.
"No suit shall be open to objection on the ground that a merely declaratory decree or order is sought thereby and it shall be lawful for the civil courts to make binding declarations of right without granting consequential relief."
The Proviso was introduced by the Specific Relief Act with the object of preventing multiplicity of proceedings.1 The Proviso has, however, given rise to a mass of case-law as to what is 'further relief's and whether 'further relief'2 is such relief as could be sought for in the suit in which or in the court before which the declaration is sought. It leads to injustice in many cases and it only results in an addition to the revenue to a certain extent.
1. Kombi v. Aundi., (1890) 13 Mad 75, per Muthuswami Iyer, J. p. 78.
2. In Some cases (e.g., Midnapore Zemindary Co. Ltd. v. Secretary of State, (1917) 44 Cal 352, it has been held that a second declaration asked on the basis of the first declaration was a further relief [contra Tewary v. Bhupat, (1919) 50 IC 298 Pat].
1. Abdulkadar v. Mahomed, (1892) 15 Mad 15 (18).
Our intention is not to affect the principle of 0. II, r. 2 of the Code in cases where it is properly attracted except as regards suits for declaration as to the validity or the invalidity of statutes.
This object will be achieved if we omit the Proviso to section 42 and make the first paragraph of the section subject to the provisions of 0. II, r. 2.
93. Under the existing law, a declaratory decree can be obtained, apart from cases involving a legal character, only in respect of a proprietary right. But there is no reason, except an apprehension as to multiplicity of declaratory suits, why this beneficial remedy should not extend to all legal rights.
1. Cf. Ashwander v. Tennessee Valley Authority, 297 US 288 (325): L ED 688 (699).
2. Cf. 62 harvard Law Review, pp. 875-6.
1. Gopaldas v. Mul Raj, AIR 1937 Lah 389.
2. Ramakrishan v. Narayana, (1914) 39 Mad 80.
In our view, if the relief is extended to legal rights of all kinds, it might, instead of multiplying litigation, lead to its reduction. Doubtless, a large number of persons would give up a contest as soon as the dispute as to the existence of the right is settled by a Court of law. Moreover, certainty and security with respect to ordinary legal rights are as important as in the case of proprietary rights. The purpose of laws similar to section 42 is, as the Uniform Declaratory Judgments Act puts it, to afford relief from uncertainty and insecurity with respect to rights.
We, therefore, recommend that the word 'as to any property' in the first paragraph of section 42 be omitted.
94. Section 42 is also deficient in its omission to make any express provision for a declaration as to the constitutionality of a law.
Under the Constitution, the Supreme Court has decreed a declaratory suit on appeal1 and declared the impugned law to be unconstitutional. The basis of the declaratory action was, of course, not determined in this case, but since the Court held that the plaintiff's fundamental right tinder Article 31 had been violated, the suit fell clearly within the language of section 42 because a 'right as to property had been denied. The Court observed' that only a person "whose own right or interest" had been violated or threatened could impugn the law.
1. Dwarkadas v. Sholapur Spinning Co., 1954 SCR 674 (721-2).
On principle, there is no reason why a person whose rights, are affected or likely to be affected by an unconstitutional statute or bye-law should not be entitled to obtain a declaration from the Court that it is invalid. Even under the existing law, it has been held1 that when a person's rights are affected by an ultra vires governmental act, he need not ask for any relief other than a declaration that the executive act or order is null and void. The State being the defendant, it is presumed that once the order is declared null and void, the plaintiff's rights will be restored. We think this principle should apply with a greater force where the law under which the executive has purported to act, is itself unconstitutional and void. Thus, if an individual's possession has been disturbed under an unconstitutional statute, he may ask for a declaration that the statute is invalid and has not affected his right, without specifically asking for the restoration of possession.
1. Fisher v. Secy. of State, (1898) 22 Mad 270 PC.
We propose to insert a sub-section in section 42 embodying the foregoing principle. We want to make it clear that a plaintiff who seeks to have a law declared invalid need not seek any further relief than that the law is invalid and that his right is not affected by it.
In order to prevent frivolous actions, we have provided that no suit for declaring the constitutionality of a law will lie unless the plaintiffs right or legal character which depends on the validity or invalidity of such law has been invaded or threatened to be invaded by the defendant.
95. Section 43.—No change is necessary in section 43.
96. Section 44.—The mode and effect of appointment of a Receiver, his rights, duties, powers and liabilities are regulated by Order 40, rules 1-5 of the C.P.C. While Order 40, rule 1 of the Code provides for appointment of a Receiver both before and after the decree, section 44 of the Specific Relief Act deals only with the appointment of a Receiver before decree.
We are of the view that the section serves no useful purpose and, therefore, recommend its omission.
97. Sections 45-51.—Chapter VIII (sections 45-51) provides for an order in the nature of mandamus. In view of Article 226 of the Constitution, there would appear to be no need for retaining this Chapter. The scope of section 45 of the Act is narrower than that of Article 226. In fact, clauses (f) and (g) of the Proviso to section 45 are inconsistent with Article 226 and section 50 which was substituted by the Adaptation Order 1950, practically renders these clauses nugatory.
"All questions arising for determination under this chapter shall ordinarily be decided upon affidavits, but the Court may direct that such questions as it may consider necessary be decided on such other evidence as it may deem fit. Where the Court orders that certain matters in controversy between the parties shall be decided on such evidence, the procedure prescribed in the Code of Civil Procedure, 1908, for the trial of suits shall, so far as applicable, be followed."
We recommend that sections 45-51 be omitted, and questions such as that of taking evidence, should be left to the rule-making power of the High Courts, and that Rules similar to the aforesaid Rule of the Orissa High Court may be framed by those High Courts which have not made similar rules.
98. Sections 52-53.—No change is necessary in sections 52 and 53.
99. Section 54.—The use of the word 'applicant' in the first paragraph of section 54 is not appropriate, for, a perpetual injunction cannot be had upon an application as distinguished from a suit. Later in the section, the word 'plaintiff' is used. Accordingly, the word 'applicant' in the section should be replaced by the word 'plaintiff'.
100. Clause (d).—Clause (d) of section 54 should be omitted for the reasons for which we have recommended the omission of clause (d) of section 12 [para 22, ante].
101. Section 55.—No change is considered necessary in section 55.
1. Vide Halsbury's Laws of England, 2nd Edn., Vol. 18, para. 33, p. 23.
The same view has been taken in India1 even though the principle adopted in section 19 was not extended by the trainers of the Act to an action for an injunction.
1. Kaliandas's case, AIR 1954 Sau 139; Callianji Hiralal v. Narsi, 19 Bom 764; Kalliadas v. Tulsi, 23 Bom 786.
In the circumstances, it is advisable to make a specific provision in the Act for this purpose. We recommend that a new provision on the lines of section 19 of the Act be added, to cover cases arising under sections 54 and 55 of the Specific Relief Act.
103. Section 56.—The expression used in clauses (a), (b) and (e) of section 56 is "to stay" "proceedings". This has led to a controversy as to whether an injunction can be directed to the Court itself before which the proceeding is pending. We agree with the view taken by the Patna High Court,1 that an injunction is a remedy in personam which is directed against the litigant and not against the Court.
1. Rameshwar v. Baldeo, AIR 1938 Pat 606.
We recommend that suitable changes be made in clauses (a), (b) and (e) of section 56, to remove doubts on this point.
104. Clause (d).—Clause (d) may be omitted. The first part of the clause, referring to any Government department in India, is inconsistent with the principle embodied in the second Proviso to Article 361(1) of our Constitution. The second part is unnecessary because the immunity of a foreign sovereign in respect of his sovereign acts is well accepted.
105. No alteration is necessary in the remaining clauses of section 56, except verbal changes.
106. Section 57.—It has been suggested to us that section 57, which is based on the decision in Lumley v. Wagner, (1852) 91 RR 193; 42 ER 687. requires to be modified in view of the subsequent decisions in England.
Upon a careful examination of the authorities, however, we find that the actual decision in that case has not been the subject of adverse comment in the later case. What has been objected to is the extension of the principle involved in that case.
1. Lumley v. Wagner, (1852) 91 RR 193; 42 ER 687.
2. Kerr on Injunctions, 6th Edn., p 422-3.
1. Lumely v. Wanner, (1852) 91 RR 193: 43 ER 687 (693).
"......the engagement to perform at one theatre must necessarily exclude the right to perform at the same time at another theatre..........I am of opinion that if she had attempted, even in the absence of any negative stipulation, to perform at another theatre, she would have broken the spirit and true meaning of the contract as much as she would now do with reference .to the contract into which she had actually entered".
The above observation was, followed in subsequent cases as implying negative covenants liberally almost in every case and in Montague v. Flockton,1 Malins V.C. observed: "A negative covenant is as necessarily implied as if it had been plainly expressed".
1. Montague v. Flockton, (1873) 16 Eq 189 (201).
1. Halsbury's, 2nd Edn., Vol. 18, para. 87.
1. (1920) 1 Ch 571.
1. Law of Specific Relief, 2nd Edn., p. 626.
We are also in agreement with Maclean, C.J., of the Calcutta High Court1 that if upon a consideration of all the circumstances, the Court finds that an injunction should issue, it is no argument to say that the defendant would then starve. As Maclean, C.J., put it, "he (the defendant) ought to have thought of that before he deliberately broke his contract2".
1. Lumle v. Wagner, (1852) 91 RR 193; 42 ER 687 (693).
2. Burn & Co. v. McDonald, (1908) 36 Cal 354 (365).
In our opinion, the section requires no change.
107. With a view to presenting a clear picture of the recommendations made by us in this Report we have made alterations giving effect to them in the text of the existing Act as shown in Appendix I.
Appendix II contains two comparative Tables— Table A showing the sections in the existing Act with the corresponding sections in Appendix I, and Table B showing the sections in Appendix I and the corresponding sections in the existing Act.
Appendix III contains the suggestions made by us in respect of other Acts.
*. Dr. Sen Gupta has signed the report, subject to the Note appended at the end.
(This is, however, not to be treated as a Draft Bill).
(e) all other words and expressions used but not defined in this Act, and defined in the Indian Contract Act, 1872 (9 of 1872), have the meanings respectively assigned to them in that Act.
(b) to affect the operation of the Indian Registration Act, 1908 (16 of 1908), on documents.
4. Specific relief granted only to enforce civil rights.—Specific relief under-this Act can be granted only for the enforcement of individual civil rights and not for the mere purpose of enforcing a penal law.
5. Recovery of specific immovable property.—A person entitled to the possession of specific immovable property may recover it in the manner provided by the Code of Civil Procedure, 1908 (5 of 1908).
6. Recovery of specific movable property.—A person entitled to the possession of specific movable property may recover the same in the manner provided by the Code of Civil Procedure, 1908 (5 of 1908).
Explanation 1.— A trustee may sue under this section for the possession of property to the beneficial interest in which the person for whom he is trustee is entitled.
Explanation 2.— A special or temporary right to the present possession of property is sufficient to support a suit under this section.
(d) when the possession of the thing claimed has been wrongfully transferred from the plaintiff.
Explanation.—The burden of proving that the case does not fall under clause (b) or (c) shall be on the defendant.
8. Defence relating to the existence or validity of the contract.—All defences open under the law relating to contracts to a person contesting the existence, validity or enforceability of a contract shall be open to him under this Act.
(b) When the act agreed to be done is such that pecuniary compensation for its non­performance would not afford adequate relief.
12. Contracts connected with trust.—(1) Except as otherwise provided in this Act, specific performance of a contract may in the discretion of the court be enforced when the act agreed to be done is in the performance, wholly or partly, of a trust.
(2) A contract made by a trustee either in excess of his powers or in breach of his trust cannot be specifically enforced.
(ii) where it is a contract with a company to take up and pay for any debentures of the company.
Notwithstanding anything contained in this clause, the court may?
Notwithstanding anything contained in this clause, the court may enforce specific performance of a contract to build or execute other work on land, provided the following conditions are fulfilled?
(iii) the defendant has under the contract obtained possession, in whole or in part, of the land on which the building or work is to be executed.
(2) Save as provided by the Arbitration Act, 1940 (10 of 1940), no contract to refer present or future differences to arbitration shall be specifically enforced, but if any person who has made such a contract (other than an arbitration agreement to which the provision of the said Act apply) and has refused to perform it sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit.
14. Specific performance of part of contract.—(1) The court shall not direct the specific performance of a part of a contract except as provided by this section.
(2) Where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed bears only a small proportion to the whole in value, and admits of compensation in money, the court may, at the suit of either party, direct the specific performance of so much of the contract as can be performed, and award compensation in money for the deficiency.
(b) does not admit of compensation in money, he is not entitled to obtain a decree for specific performance. But the court may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the contract as he can perform?
(ii) in the case referred to in clause (b) above, provided the plaintiff pays or has paid the consideration promised by him without any abatement and also relinquishes all claim to further performance and all right to compensation as specified in sub-clause (i).
(4) When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed, the court may direct specific performance of the former part.
Explanation—For the purposes of this section, a party to a contract shall be deemed to be unable to perform the whole of his part of it if a portion of its subject-matter, existing at the date of the contract, has ceased to exist at the time of the performance.
(d) where the vendor or lessor sues for specific performance of the contract, and the suit is dismissed on the ground of his imperfect title or want of title, the defendant has a right to a return of his deposit (if any) with interest thereon, to his costs of the suit, and to a lien for such deposit, interest and costs on the interest of the vendor or lessor in the property agreed to be sold or let.
(b) who, though he entered into the contract believing that he had a good title to the property, cannot at the time fixed by the parties or by the court for the completion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt.
17. Application of certain sections to contracts for sale or hire of movable property.—The provisions of sections 15 and 16 as to contracts for the sale or letting of immovable property shall, mutatis mutandis, apply to contracts for the sale or hire of movable property.
(b) if.....the court decides that specific performance ought to be granted, but that it is not sufficient to satisfy the justice of the case, and that some compensation for breach of the contract should also be made to the plaintiff, it shall award him such compensation accordingly.
(2) Compensation for the breach of a contract, in addition to or in substitution for specific performance of the contract, shall not be awarded unless it has been as specifically asked for; but the court shall at any stage grant leave to amend the plaint for including a prayer for such compensation on such terms as may be just.
(3) Compensation awarded under this section may be assessed according to the principles laid down in section 73 of the Indian Contract Act, 1872 (9 of 1872), and under such procedure as the court mail direct.
Explanation—The circumstance that the contract has become incapable of specific performance does not preclude the court from exercising the jurisdiction conferred by this section.
(b) any other relief to which he may be entitled, including refund of earnest money or deposit, in case his claim for specific performance is refused.
(2) If in any such suit the court decrees specific performance and finds that the plaintiff is entitled to any of the reliefs mentioned in clause (a) of sub-section (1), it may also award him the same accordingly.
(3) If in any such suit the court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant and that the plaintiff is entitled to any of the reliefs mentioned in clause (b) of sub-section (1), it shall award him the same accordingly.
(4) Relief under clause (a) or (b) of sub-section (1) shall not be granted unless it has been specifically claimed: but the court shall at any stage grant leave to amend the plaint for including a prayer for such relief on such terms as may be just.
(5) The power to award relief under clause (b) of sub-section (1) is without prejudice to the power to award compensation under section 18.
Provided that the court, when enforcing specific performance, shall not also decree payment of the sum so named in the contract.
21. Discretion as to decreeing specific performance.—(1) The jurisdiction to decree specific performance is discretionary and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal.
(c) where the defendant entered into the contract under circumstances which, though not rendering the contract voidable, make it inequitable to enforce specific performance.
Explanation I.—The question of hardship is to be determined with reference to the circumstances existing at the time of the contract, except in the case of hardship which has resulted from the subsequent acts of the plaintiff.
Explanation 2.— Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b).
Where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party.
(e) when the promoters of a........company have, before its incorporation, entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation, the company, provided the company has accepted the contract and communicated such acceptance to the other party to the contract.
(c) who fails to aver and prove that he has performed, or has been ready and willing from the date of the contract till the hearing of the suit to perform, the essential terms of the contract to be performed by him, except terms the performance of which has been waived by the defendant.
(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.
(c) where the parties have, subsequently to the execution of the contract, varied its terms.
26. Rescission of contracts for sale or lease on failure of performance by plaintiff.—(1) Where a decree for specific performance of a contract for the sale or lease of immovable property has been made, all subsequent proceedings hereafter mentioned in this section shall be taken only in the suit in which the decree is made, in the manner provided by the Code of Civil Procedure, 1908 (5 of 1908).
(2).....If the purchaser or lessee does not, within the time allowed by the decree or extended by an order of the court made on the application of either party, pay the purchase-money or other sum which the court has ordered him to pay, the vendor or lessor may apply to have the contract rescinded and.......the court may, by order in the suit,...rescind the contract, either so far as regards the party in default or altogether, as the justice of the case may require.
(b) may, if the justice of the case so requires, direct the vendor or lessor to refund any sum paid by the vendee or lessee as earnest money of deposit.
(b) delivery of possession, or partition and separate possession, of the property on execution of the conveyance or lease.
(5) The costs of proceedings under this section shall be in the discretion of the court.
27. Bar of suit for breach after dismissal.—The dismissal of a suit for specific performance of a contract or part thereof shall bar the plaintiff's right to sue for compensation for the breach of such contract or part, as the case may be, but shall not bar his right to sue for any other relief to which he may be entitled by reason of such breach.
28. Application of preceding provisions to awards and testamentary directions to execute settlement.—The provisions of this Chapter as to contracts shall, mutatis mutandis, apply to awards to which the Arbitration Act, 1940 (10 of 1940), does not apply and to directions in a will in of 1940 or codicil to execute a particular settlement.
(c) a defendant in any such suit as is referred to in clause (b) may, in addition to any other defence that he may put forth, ask for rectification of the instrument.
(2) If, in any suit in which a contract or other instrument is sought to be rectified under clauses (a), (b) or (c) of sub-section (1), the court finds that the contract or other instrument, through fraud or mistake in framing it, does not express the real intention of the parties......., the court may in its discretion direct rectification of the contract or other instrument so as to express that intention, so far as this can be done without prejudice to rights acquired by third persons in good faith and for value.
(3) The court shall not, in any such suit, direct rectification of the contract or other instrument unless the same has been specifically asked for in the pleading of the party concerned; but the court shall at any stage grant leave to amend the pleading by asking for rectification on such terms as may be just.
(4) A contract in writing may be first rectified, and then, if the plaintiff has so prayed in his plaint and the court thinks fit, specifically enforced.
(b) where the contract is unlawful for causes not apparent on its face and the defendant is more to blame than the plaintiff.
(d) where only a part of the contract is sought to be rescinded and such part is not severable from the rest of the contract.
Explanation.—In this section, "contract" means a contract in writing, except in the territories to which the Transfer of Property Act, 1882 (4 of 1882), extends for the time being.
31. Alternative prayer for rescission in a suit for specific performance.—A plaintiff instituting a suit for the specific performance of a contract in writing may pray in the alternative that, if the contract cannot be specifically enforced, it may be rescinded and delivered up to be cancelled, and the court, if it refuses to enforce the contract specifically, may direct it to be rescinded and delivered up accordingly.
32. The court may require a party rescinding to do equity.—On adjudging the rescission of a contract, the court may require the party to whom such relief is granted, if he has received any benefit under the contract from the other party, to restore such benefit, so far as may be, to that party and to make any compensation to him which justice may require.
33. When cancellation may be ordered. — (1) Any person against whom a written instrument is void or voidable, who has reasonable apprehension that such instrument, if left outstanding, may cause him serious injury, may sue to have it adjudged void or voidable; and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled.
(2) If the instrument has been registered under the Indian Registration Act, 1908, the court shall also send a copy of its decree to the officer in whose office the instrument has been so registered; and such officer shall note on the copy of the instrument contained in his books the fact of its cancellation.
34. What instruments may be partially cancelled. — Where an instrument is evidence of different rights or different obligations, the court may, in a proper case, cancel it in part and allow it to stand for the rest.
35. Power to require party for whom instrument is cancelled to make compensation. — On adjudging the cancellation of an instrument, the court may require the party to whom such relief is granted, if he has received any benefit under the instrument from the other party, to restore such benefit, so far as may be, to that party and to make any compensation to the other which justice may require.
36. Power to require defendant to restore benefit when instrument is void or voidable. — (1) Where a defendant successfully resists any suit on the ground that the instrument sought to be enforced against him in the suit is voidable, the court may, if the defendant has received any benefit under the instrument from the other party, require him to restore such benefit, so far as may be, to that party, or to make compensation for it.
(2) Where a defendant successfully resists any suit on the ground that the agreement sought to be enforced against him in the suit is void by reason of his not having been competent to contract under section 11 of the Indian Contract Act, 1872 (9 of 1872), the court may, if the defendant has received any benefit under the agreement from the other party, require him to restore such benefit, so far as may be, to that party, to the extent to which he or his estate has benefited thereby.
37. Discretion of court as to declaration of status or rights. — (1) Any person entitled to any legal character, or....right......may institute a suit against any person denying, or interested to deny, his title to such character or right, and the court may in its discretion make therein a declaration that he is so entitled; and the plaintiff in such suit need not ask for any further relief, though he is able to seek such relief.
Explanation. — A trustee of property is a "person interested to deny" a title, adverse to the title of some on who is not in existence, and for whom, if in existence, he would be a trustee.
(2) Without prejudice to the generality of the provisions of sub-section (1), any person entitled to any legal character or right, the existence, extent or nature of which depends on the validity or invalidity of any law, may institute a suit against any person or authority (including, in appropriate cases, the Government) denying his title to such character or right or threatening to invade such right, for a declaration about the validity or invalidity of the law and about his legal character or right without asking for any further relief and the court may, in its discretion, make therein such a declaration.
Explanation.—In this sub-section, "law" includes an enactment, ordinance, regulation, order, by-law, rule, scheme, notification or other instrument having or intended to have the force of law in the whole or in any part of the territory of India.
(3) The provisions of sub-section (1) shall, but the provisions of sub-section (2) shall not, be subject to those of Rule 2 of Order II of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908).
38. Effect of declaration. — A declaration made under this Chapter is binding only on the parties to the suit, persons claiming through them respectively, and, where any of the parties are trustees, on the persons for whom, if in existence at the date of the declaration, such parties would be trustees.
39. Preventive relief how granted. — Preventive relief is granted at the discretion of the court by injunction temporary or perpetual.
40. Temporary injunction. — (1) Temporary injunctions are such as are to continue until a specified time, or until the further order of the court. They may be granted at any period of a suit, and are regulated by the Code of Civil Procedure, 1908 (5 of 1908).
(2) A perpetual injunction can only be granted by the decree made at the hearing and upon the merits of the suit; the defendant is thereby perpetually enjoined from the assertion of a right, or from the commission of an act which would be contrary to the rights of the plaintiff.
41. Perpetual injunction when granted. — (1) Subject to the other provisions contained in, or referred to by, this Chapter, a perpetual injunction may be granted to prevent the breach of an obligation existing in favour of the plaintiff, whether expressly or by implication.
(2) When such obligation arises from contract, the court shall be guided by the rules and provisions contained in Chapter II of this Part.
(d) where the injunction is necessary to prevent a multiplicity of judicial proceedings. Explanation.—For the purpose of this section a trademark is property.
42. Mandatory injunction. — When, to prevent the breach of an obligation, it is necessary to compel the performance of certain acts which the court is capable of enforcing, the court may in its discretion grant an injunction to prevent the breach complained of, and also to compel performance of the requisite acts.
43. Damages in lieu of or in addition to injunction. — (1) In any suit in which the court has jurisdiction to grant an injunction under sections 41 or 42, the court may, if it thinks fit, award damages to the plaintiff for any injury, either in addition to or in substitution for such injunction.
(2) No damages shall be awarded under this section unless specifically asked for.
(j) where the plaintiff has no personal interest in the matter.
45. Injunction to perform negative agreement. — Notwithstanding anything contained in clause (e) of section 44, where a contract comprises an affirmative agreement to do a certain act, coupled with a negative agreement, express or implied, not to do a certain act, the circumstance that the court is unable to compel specific performance of the affirmative agreement shall not preclude it from granting an injunction to perform the negative agreement: provided that the plaintiff has not failed to perform the contract so far as it is binding on him.
46. Repeal. — The Specific Relief Act, 1877 (1 of 1877), is hereby repealed.
Showing The Provisions In The Existing Act And The Corresponding Provisions, If Any, In Appendix I.
I generally agree with the provisions of the report regarding the Specific Relief Act and have only a few points to refer to.
Regarding section 4, clause (a) has been recommended to be deleted. It has been said that "There is no question of any specific relief being granted in respect of a mere agreement." As a statement of the law, it is hardly precise and it depends first of all on the definition of 'Contract' in the Contract Act and its distinction from an agreement. Secondly, even assuming the present definition of 'Agreement' and 'Contract' to be retained, which I should say should not be done, this is not precisely correct. There are some agreements which are enforcible, although they are not contracts. The most apposite case is that of an agreement under section 53A of the Transfer of Property Act. Such an agreement is ordinarily negatively enforcible as a defence. But as interpreted by the Calcutta High Court, the right of the landlord, as provided by the agreement, shall be enforcible, notwithstanding section 53A being defensive. Therefore, this should remain in any case. This paragraph has to be taken along with the provisions in section 53A.
With regard to section 5, the propositions may be elementary. Then this section serves as the definition of "Specific Relief". There is nothing else to indicate what in this Act specific relief means. This section may be substituted by the section defining "Specific Relief".
Section 9—For reasons already indicated by me in my note on the Indian Limitation Act, I think it is necessary to retain the provisions of section 9.
I must say that there is some justification for the complaint that a suit under section 9 does not serve the purpose of expediting litigation but often results in a further litigation on title. Nevertheless, as the question of title should not be made an issue in the suit, the party in possession who is dispossessed gets an initial advantage by getting back possession and throws the burden on the disseisor to prove his title, this advantage should not be taken away. A title suit would ordinarily be a long drawn one followed by more than one appeal and it would be iniquitous to allow a trespasser who has taken the law into his own hands to keep his possession for all the time that the suit formed as a title suit would take. In a plaint in a title suit the plaintiff will have to aver and prove his title though he has a clear case of possession, and thus bears an initial burden of proof of title. There is no positive law which would in such a case place the burden on the disseisor. It is conceivable that where a plaintiff alleges dispossession while in possession the case may be tried in two stages, first on the issue of possession and dispossession, the burden would shift on the defendant who would then have to prove his title. But that would not simplify the litigation, while it will keep the unlawful disseisor much longer in possession. In any case this matter may be considered in connection with burden of proof in the Evidence Act.

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