Bill would make it easier to attain contract performance

Amendments to the Specific Relief Act, 1963, proposed in the Specific Relief (Amendment) Bill, 2017, would make enforcing contracts much easier in India. The lower house of parliament recently passed the bill, which seeks to limit the discretion of courts in matters relating to business agreements and provides for a non-discretionary remedy of enforcement of contracts in cases of breach.

Under the 1963 law, parties who allege violation of their contractual rights may seek: (i) performance of the business contract (specific performance); or (ii) monetary compensation. Specific performance would be granted by a court in its discretion only if monetary compensation is not a sufficient remedy or if the quantum of monetary compensation cannot be ascertained.

The bill seeks to make specific performance a right not subject to courts’ discretion and it being replaced by monetary compensation in the exercise of such discretion. To further strengthen the regime to ensure performance of obligations under a contract, the bill also provides for “substituted performance” of a contract. Under this provision, the affected party is required to give 30 days’ clear notice seeking specific performance of the contract by the party in breach. If the other party does not remedy the alleged breach by performing its obligations, the affected party would then have the right to have the contract performed by its own agency or by a third party.