Articles, Commercial Litigation
Before August 2018, specific performance of a contract in India was a discretionary remedy-courts could grant or refuse it depending on the circumstances, and routinely substituted monetary damages for performance. The Specific Relief (Amendment) Act, 2018 fundamentally altered this position. The amendment to the Specific Relief Act, 1963 made specific performance of contracts generally mandatory rather than discretionary, shifting India’s contractual enforcement regime towards actual performance. This article examines when courts can grant specific performance of a contract under the amended law, what exceptions remain, and how the shift to near-mandatory specific performance affects real estate, equipment supply, and commercial contracts.
The Pre-2018 Position: Discretionary Specific Performance
Before the Specific Relief (Amendment) Act, 2018 came into force (effective 1 October 2018), Section 10 of the Specific Relief Act, 1963 stated that courts “may, in the discretion of the court” enforce specific performance of a contract. Section 20 of the pre-amendment Act specifically preserved the court’s discretion to refuse specific performance even when a prima facie case was made out.
This discretionary approach meant that in many cases, particularly commercial contracts, courts would decline to grant specific performance on the ground that monetary compensation was “an adequate relief” and would award damages instead.
The 2018 Amendment: Specific Performance Becomes Mandatory
The Specific Relief (Amendment) Act, 2018 substituted the word “shall” for the phrase “may, in the discretion of the court” in Section 10. The amended Section 10 now reads:
“The specific performance of a contract shall be enforced by the Court subject to the provisions contained in sub-section (2) of section 11, section 14 and section 16 of this Act.”
Key effects of the amendment:
- Specific performance is now the default remedy for breach of a contract that qualifies under the Act-it must be granted unless the case falls within one of the enumerated exceptions under Sections 11(2), 14, or 16.
- The earlier Section 20 (discretion to refuse specific performance) was repealed by the 2018 Amendment, removing the general discretion to refuse.
- Section 21 (which previously allowed compensation in lieu of or in addition to specific performance) was amended to provide that compensation can now be awarded only in addition to, not in substitution of, specific performance. The court cannot substitute damages for specific performance except where the contract falls within the non-specifically-enforceable category under Section 14.
The Supreme Court has confirmed that the amended Section 10 applies retrospectively to all pending proceedings: in Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy and Others (2025), the Court held that the amended Section 10’s mandatory specific performance standard applies to all proceedings, including suits filed before the 2018 amendment.
Section 14: Contracts That Cannot Be Specifically Enforced
Section 14 of the Specific Relief Act, 1963 (as amended in 2018) lists contracts that courts cannot specifically enforce, even under the new mandatory standard. These remain the principal exceptions:
1. Contracts Where Monetary Compensation Is Adequate
Where the act agreed to be done is such that compensation in money for its non-performance is an adequate relief, the contract cannot be specifically enforced. This exception is interpreted narrowly post-2018-courts require the party opposing specific performance to demonstrate that monetary compensation would fully compensate for the loss, and that argument is harder to sustain given the amendment’s thrust.
2. Contracts That Are Determinable (Terminable at Will)
A contract that either party can terminate at will-such as an employment contract, an at-will service agreement, or a contract expressly stated to be terminable on notice-cannot be specifically enforced. The logic is that ordering performance of a contract that either party can immediately terminate would serve no practical purpose.
3. Contracts Involving Performance of Personal Services
Contracts for personal services (requiring specific personal skill, talent, or the exercise of personal judgment) cannot be specifically enforced. Courts will not compel a surgeon to perform an operation, an artist to create a work, or an employee to perform services. This exception reflects the fundamental principle that courts do not compel personal service.
Important distinction: This exception applies to contracts requiring the personal performance of the defendant. A contract for the delivery of goods by a company, or the construction of a building, is not a “personal service” contract merely because it requires the company’s management to be involved.
4. Contracts Involving Continuous Duty Beyond Court Supervision
Where the performance would involve the court in ongoing supervision of detailed minute-by-minute conduct that is practically impossible to supervise, specific performance may be refused. Courts are reluctant to appoint themselves as permanent supervisors of a contractual relationship.
Section 16: Who Can Claim Specific Performance
Section 16 of the Specific Relief Act, 1963 sets out the categories of persons who are personally barred from claiming specific performance:
- A person who has failed to perform the conditions precedent to specific performance (e.g., a buyer seeking specific performance of a sale agreement who has not paid or tendered the full purchase price)
- A person who has not performed or is not prepared to perform their part of the contract (the “readiness and willingness” requirement)
The Supreme Court in *Saradamani Kandappan v. S. Rajalakshmi and Others* (2011) (decided before the 2018 amendment, but the “readiness and willingness” principle remains applicable) emphasised that a plaintiff in a specific performance suit must plead and prove continuous readiness and willingness to perform the contract throughout-from the date of the contract to the date of the decree.
Under the amended Specific Relief Act, the “readiness and willingness” requirement under Section 16(c) continues to be an essential element of the plaintiff’s case. A plaintiff seeking specific performance must demonstrate that:
- They have always been ready and willing to perform their side of the contract
- They have performed, or offered to perform, their obligations under the contract
Section 20: Substituted Performance (New Provision, 2018)
The 2018 Amendment introduced a new Section 20 (replacing the old discretionary refusal provision) called “Substituted Performance.” This is a significant new remedy:
When a party fails to perform a contract, the party suffering from such breach may:
- Get the contract performed by a third party (through the courts or independently)
- Recover the costs of such substituted performance from the defaulting party
The aggrieved party must first give prior notice of a reasonable time (not less than 30 days) to the defaulting party to perform the contract. If the defaulting party still fails to perform within the notice period, the aggrieved party may arrange substituted performance.
Practical significance: For commercial contracts involving supply, construction, or services, the aggrieved party now has a statutory right to procure substituted performance-getting the contract performed by someone else at the defaulting party’s expense-without necessarily going to court. This remedy is particularly powerful for time-sensitive commercial contracts.
Section 22: Power to Grant Possession
Section 22 of the Specific Relief Act, 1963 empowers courts granting a decree of specific performance of a contract for the sale or lease of immovable property to also order the defendant to hand over possession of the property to the plaintiff simultaneously with the performance of the contract.
In real estate contracts, this means that a decree for specific performance of a sale agreement carries with it the court’s power to compel the seller to both execute the conveyance deed and hand over physical possession-a comprehensive remedy.
Impact on Real Estate, Equipment Supply, and Exclusive Agreements
Real estate contracts: The shift to mandatory specific performance has its greatest practical impact on real estate sale agreements. Under the pre-2018 position, courts often refused specific performance of real estate sale agreements where the seller had already re-sold the property to a third party (bona fide purchaser for value without notice), offering damages instead. Post-2018, courts must grant specific performance unless an exception applies-the burden shifts to the party opposing performance.
Equipment supply contracts: Long-term exclusive supply contracts and specialised equipment supply agreements are now more forcefully enforceable through specific performance rather than merely damages. Post-2018, a buyer can seek specific performance (compel the seller to actually supply the contracted goods) rather than being limited to claiming damages for breach.
Exclusive agreements (distribution, licence): Contracts granting exclusive rights (exclusive licence, exclusive distributorship) may now be more amenable to specific performance, particularly where the loss from non-performance is difficult to quantify and substitute performance is not readily available.
Key Takeaways
- The Specific Relief (Amendment) Act, 2018 replaced discretionary specific performance with a near-mandatory standard: courts must grant specific performance unless the contract falls within the exceptions in Sections 11(2), 14, or 16.
- Specific performance cannot be granted for: contracts where money is an adequate remedy, contracts determinable at will, contracts for personal services, and contracts requiring impractical continuous court supervision.
- The new Section 20 (Substituted Performance) allows an aggrieved party to arrange contractual performance through a third party at the defaulting party’s cost after giving 30 days’ notice-a powerful non-court remedy for commercial contract defaults.
This article is for informational purposes only and does not constitute legal advice. Readers should seek appropriate professional counsel for their specific circumstances.
META TITLE: Specific Performance Contract India: Specific Relief Act 2018
META DESCRIPTION: When courts grant specific performance in India-Specific Relief (Amendment) Act 2018 mandatory standard, Section 14 exceptions, substituted performance, and impact on real estate contracts explained.