RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY,

LUCKNOW
B.A.L.L.B., SEMESTER-3
End Sem Project Submission

Contract Act II

Topic: Specific Performance in Contracts for Sale of Immovable

Property

Submitted By Submitted To
Kritika Chaudhary Professor Manoj Kumar
Enrolment No. 230101077 Contract Act II
Section- A Ram Manohar Lohiya National Law
University
Ram Manohar Lohiya National Law
University
CONTENTS
CONTENTS ............................................................................................................................... 2
Introduction ................................................................................................................................ 3
Legal Framework of Specific Performance ............................................................................... 3
A. Definition and Scope ......................................................................................................... 3
B. Provisions of the Specific Relief Act, 1963 (Prior to 2018 Amendment) ......................... 3
C. 2018 Amendment to the Specific Relief Act ..................................................................... 3
Relevance of Specific Performance in Sale of Immovable Property ......................................... 4
Key Conditions for Granting Specific Performance .................................................................. 4
A. Existence of a Valid Contract ............................................................................................ 4
B. Adequacy of Monetary Compensation .............................................................................. 4
C. Readiness and Willingness to Perform .............................................................................. 4
D. Absence of Hardship or Unfair Advantage ....................................................................... 5
Case Law Analysis ..................................................................................................................... 5
A. Laxmi Raj Shetty v. State of Tamil Nadu ......................................................................... 5
Facts of the Case: ............................................................................................................... 5
The Court’s Decision: ........................................................................................................ 5
Significance: ...................................................................................................................... 5
B. Satyabrata Ghose v. Mugneeram Bangur & Co. ............................................................... 6
Facts of The Case: .............................................................................................................. 6
The Court’s Decision: ........................................................................................................ 6
Significance: ...................................................................................................................... 6
Impact and Significance of These Cases on Today’s Legal Standards ...................................... 6
Impact of the 2018 Amendment on Specific Performance in Property Contracts ..................... 7
A. Key Changes in Specific Performance.............................................................................. 7
B. Case Implications Post-2018 Amendment ........................................................................ 7
Comparative Analysis: Pre-Amendment and Post-Amendment Trends .................................... 8
Limitations and Challenges in Enforcing Specific Performance ............................................... 8
Conclusion ................................................................................................................................. 9
Bibliography ............................................................................................................................ 10
INTRODUCTION

Specific performance is an equitable remedy in contract law, compelling a party to fulfill

their contractual obligations. It is most commonly sought in contracts involving immovable
property, where the unique nature of the property makes monetary damages an inadequate
remedy. In Indian law, specific performance of contracts for the sale of immovable property
is governed by the Specific Relief Act, 1963. Following the 2018 amendment to this Act, the
approach to specific performance has shifted, making it a more accessible remedy by
removing judicial discretion to a large extent and making specific performance the default
relief for immovable property transactions.

This project will explore the relevance of specific performance in the sale of immovable
property, examine the legal requirements, and analyze landmark cases, including Laxmi Raj
Shetty v. State of Tamil Nadu and Satyabrata Ghose v. Mugneeram Bangur & Co., to
understand the judicial interpretation of specific performance before and after the 2018
amendment.

LEGAL FRAMEWORK OF SPECIFIC PERFORMANCE

A. DEFINITION AND SCOPE

Specific performance requires a party to fulfill the exact terms of a contract rather than
paying damages for non-performance. In contracts involving immovable property, specific
performance is particularly relevant because every piece of real estate is considered unique,
and substitution with monetary damages may not compensate the buyer adequately.

B. PROVISIONS OF THE SPECIFIC RELIEF ACT, 1963 (PRIOR TO 2018 AMENDMENT)

Under the original Specific Relief Act, the grant of specific performance was discretionary.
Sections relevant to this concept include:

• Section 10: Originally provided that specific performance may be granted if there was
no standard for ascertaining actual damage.

• Section 20: Gave courts discretion to deny specific performance even if it was legally
available.

C. 2018 AMENDMENT TO THE SPECIFIC RELIEF ACT

The 2018 amendment significantly modified the approach to specific performance:

 • Section 10 was amended to make specific performance a statutory right in cases
where contracts are enforceable.

• Section 20 was modified to limit the court’s discretion, making specific performance
mandatory unless specific grounds for refusal are present.

This change was intended to improve contract enforceability, especially for property buyers
who may otherwise face issues with sellers reneging on agreements.

RELEVANCE OF SPECIFIC PERFORMANCE IN SALE OF IMMOVABLE

PROPERTY

Specific performance is especially important in property sales because each property is

considered unique, and buyers often have specific intentions tied to the location and
characteristics of a particular property. Monetary compensation may not suffice in cases
where a buyer has chosen a property for personal reasons, such as its proximity to work or
unique features. In Indian real estate markets, specific performance acts as a protective
mechanism, ensuring that property transactions are completed in good faith and preventing
arbitrary contract cancellations.

KEY CONDITIONS FOR GRANTING SPECIFIC PERFORMANCE

For a court to grant specific performance in immovable property transactions, the following
conditions generally must be met:

A. EXISTENCE OF A VALID CONTRACT

• The contract must be enforceable by law, meaning it must have all the essential
elements of a valid contract under the Indian Contract Act, 1872, such as offer,
acceptance, lawful consideration, and lawful object.

B. ADEQUACY OF MONETARY COMPENSATION

• The buyer must show that monetary compensation would not be adequate to substitute
the specific property in question, which is generally presumed in cases of immovable
property.

C. READINESS AND WILLINGNESS TO PERFORM

• The party seeking specific performance must demonstrate that they have been ready
and willing to perform their part of the contract throughout.
D. ABSENCE OF HARDSHIP OR UNFAIR ADVANTAGE

• If enforcing the contract would result in undue hardship to the defendant or provide an
unfair advantage to the plaintiff, the court may consider these factors even after the
2018 amendment.

CASE LAW ANALYSIS

A. LAXMI RAJ SHETTY V. STATE OF TAMIL NADU

Facts of the Case:

In Laxmi Raj Shetty v. State of Tamil Nadu, the dispute centered around a contract where the
State of Tamil Nadu had agreed to sell a particular plot of land to Laxmi Raj Shetty. However,
issues arose about whether the contract could be specifically enforced, with Laxmi Raj Shetty
insisting that monetary compensation wouldn’t be enough to replace the property he intended
to buy. The state argued that specific performance wasn’t necessary and that compensation
would be sufficient to settle the matter.

The Court’s Decision:

The court took the position that contracts involving immovable property are unique, meaning
that each piece of land is one-of-a-kind and, therefore, difficult to substitute with money
alone. Upholding the buyer's request for specific performance, the court emphasized that the
buyer’s legitimate expectation to purchase the property should be honored. It acknowledged
that monetary damages might fall short of fulfilling what the buyer initially sought in the
transaction.

Significance:

This case set a significant precedent, emphasizing that in property contracts, specific
performance should often be the default remedy. The judgment underscored that a buyer’s
interest in a particular property typically goes beyond its market value—considering location,
intended use, or personal significance, all of which are hard to replace. This approach also
hinted at the rationale behind the 2018 amendment to the Specific Relief Act, which later
restricted judicial discretion and made specific performance more of a right than a request in
property transactions.
B. SATYABRATA GHOSE V. MUGNEERAM BANGUR & CO.

Facts of The Case:

In Satyabrata Ghose v. Mugneeram Bangur & Co., the situation was unique due to
government intervention. Mugneeram Bangur & Co. had agreed to sell a piece of land to
Satyabrata Ghose, but the land was requisitioned by the government during World War II,
making it temporarily unavailable for sale. The seller argued that this government action
frustrated the contract, effectively ending their obligation to fulfill it under the doctrine of
frustration.

The Court’s Decision:

The Supreme Court, however, disagreed. They ruled that the contract was not “frustrated”
since the government’s hold on the land was only temporary. The Court clarified that a
contract only becomes impossible to perform if the obstacle is permanent. Since the land
could still be sold once the requisition period ended, the buyer’s claim for specific
performance remained valid.

Significance:

This judgment has been pivotal in shaping how courts interpret “impossibility” in property
contracts. It set a precedent that temporary issues, even significant ones, aren’t enough to
void a contract if fulfillment is possible at a later time. This ruling is valuable for property
buyers because it reinforces that contracts are generally enforceable unless there’s a
permanent obstacle. In essence, the court showed a preference for protecting buyers’ rights,
encouraging sellers to honor contracts even if external events delay performance.

IMPACT AND SIGNIFICANCE OF THESE CASES ON TODAY’S LEGAL

STANDARDS

Both Laxmi Raj Shetty v. State of Tamil Nadu and Satyabrata Ghose v. Mugneeram Bangur &
Co. have had a lasting impact on how specific performance is viewed in Indian property law.
These cases solidified the idea that property contracts are unique, with monetary damages
often falling short as a remedy. Courts have consistently recognized that each piece of land
holds specific value for a buyer, which isn’t easily replaced by financial compensation.
These cases also laid the groundwork for the 2018 amendments to the Specific Relief Act,
which shifted specific performance from a discretionary to a nearly guaranteed remedy. Now,
specific performance is treated as a default response in property disputes unless an
exceptional situation warrants otherwise, reflecting the principles established in these
landmark cases. Today, buyers in real estate transactions have greater legal assurance that
their contracts will be upheld, ensuring a more reliable and fair property market.

IMPACT OF THE 2018 AMENDMENT ON SPECIFIC PERFORMANCE IN

PROPERTY CONTRACTS

The 2018 amendment marked a shift in the treatment of specific performance, making it the
default remedy unless exceptions are explicitly provided. This change was driven by the need
to improve the enforceability of contracts, especially in India’s real estate sector, where
buyers frequently face delays or cancellations from developers.

A. KEY CHANGES IN SPECIFIC PERFORMANCE

• Reduced Discretion: Courts now have limited discretion to deny specific

performance if the contract is valid and enforceable.

• Increased Confidence for Buyers: Buyers in real estate transactions now have
stronger legal backing to compel performance, ensuring they are protected against
arbitrary breaches by sellers.

B. CASE IMPLICATIONS POST-2018 AMENDMENT

The amendment aligns with cases like Laxmi Raj Shetty, where specific performance was
prioritized due to property’s unique nature, indicating that the law’s evolution supports a
more buyer-centric approach in property transactions.
COMPARATIVE ANALYSIS: PRE-AMENDMENT AND POST-AMENDMENT
TRENDS

Before the 2018 amendment, Indian courts often exercised discretion based on equity
principles, considering factors like undue hardship to the defendant. This led to a mixed
approach, with some buyers unable to enforce contracts despite fulfilling their obligations.

Post-amendment, specific performance has become a statutory right, reducing the variability
in judicial decisions and providing a more uniform standard. This shift has particularly
benefitted property transactions, offering buyers a more predictable legal outcome.

LIMITATIONS AND CHALLENGES IN ENFORCING SPECIFIC PERFORMANCE

Despite the strengthened legal framework, challenges remain in enforcing specific

performance in property contracts:

• Litigation Delays: Real estate disputes often face prolonged litigation, delaying
buyers’ access to relief.

• Proof of Readiness and Willingness: Buyers must show continuous readiness to

perform, a requirement that can be challenging over long legal disputes.

• Exceptions for Public Policy: Courts still retain the discretion to deny specific
performance on grounds of public interest, as in cases involving government
requisition or essential services.

These limitations underscore the need for more efficient legal processes and possibly further
reforms to make specific performance a more accessible and timely remedy.
CONCLUSION

The 2018 amendment to the Specific Relief Act has transformed the legal landscape for
specific performance in contracts, especially in the context of immovable property. By
making specific performance a statutory right, the amendment enhances buyers' confidence in
property transactions, ensuring they are protected against arbitrary breaches by sellers.
Through landmark cases like Laxmi Raj Shetty and Satyabrata Ghose, courts have reinforced
the importance of specific performance in property sales, emphasizing the unique value of
immovable property and the inadequacy of monetary damages as a substitute.

This change aligns with India’s goal of making property transactions more transparent and
enforceable, offering a balanced approach that protects buyers while allowing exceptions in
cases of public policy. The amended provisions of the Specific Relief Act represent a
significant step forward, aligning India’s legal framework with international standards and
ensuring fairness in the property market.
BIBLIOGRAPHY

• Statutory Sources

o Specific Relief Act, 1963 (as amended in 2018)

o Indian Contract Act, 1872

• Case Law References

o Laxmi Raj Shetty v. State of Tamil Nadu, (1988) 3 SCC 319

o Satyabrata Ghose v. Mugneeram Bangur & Co., AIR 1954 SC 44