Recent Developments in Sale and Purchase Sector

 

Team LawDocs

Sale and Purchase Agreements- Amendments to the Specific Relief Act, 1963

In Section 6 of the Act, the Parliament has widened its scope. By specifying that a suit for recovery of possession under Section 6 of the Act. May file either by the person who was dispossess without his consent or any person. “through whom he has been in possession” or any person claiming through that person. Hence, the amendment has widened the scope of persons who may file a suit under Section 6. Before the amendment, only the person who had wrongly dispossessed. Or any person claiming through him could have filed this type of suit. Now, even a person through whom the aggrieved person had in possession of the immovable property, may file a suit under Section 6 of the Act.

The second amendment is in Section 10 of the Act. It is one of the most important amendments in the legislation as it has made specific performance of a contract the rule instead of being an alternative in cases where the actual damage for non-performance could not be ascertained or where the compensation for non-performance would not be an adequate relief. Section 10 of the Act has been substituted and instead the newly inserted Section 10 states that 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 the Act.

The third amendment is made in Section 11 of the Act which deal with specific performance of contracts connect with trust. The proposed amendment is similar to that in Section 10. Here again, the words “contract shall” instead of “contract may, in the discretion of the court” have been substituted. The amendment seeks to take away the discretion of courts and is aim to guide the courts to mandatorily enforce specific performance.

The fourth amendment is in Section 14 of the Act which specifies the contracts which are not specifically enforceable. The old Section is substituted by the new one which aims to retain only some of the unamended clauses. It states that only such contracts are not specifically enforceable where either (i) substituted performance in accordance with Section 20 of the Act has been obtained, or (ii) where the performance is of continuous duty which the courts cannot supervise; or (iii) where the contract is dependent on personal qualifications of parties that the court cannot enforce it of its material terms; and (iv) where the contract is determinable.

The fifth amendment is insertion of a new Section 14A which deals with power of Courts to engage experts to assist the court on any specific issue involved in the suit. The provision to empower civil courts to engage an expert whose opinion or report will form part of the record of the suit and can examine on the same. Court may further direct any person to give relevant information, or produce or provide to the expert access to any relevant document, goods or property for inspection. However, it would be interesting to see how courts will use this provision for achieving the ends. Also, the provision saves the other provisions of the Code of Civil Procedure, 1908 on this aspect.

The sixth amendment is in Section 15 of the Act which deals with the persons who may obtain specific performance. It now includes a limited liability partnership (LLP) formed from the amalgamation of two existing LLPs, one of which may have entered into a contract before the amalgamation.

Section 16 of the Act has amended as a consequence of the Parliament’s approach to enforce specific performance irrespective of grant of damages or compensation as an alternative for breach or non-performance. Also, the requirement stated in clause (c) of Section 16 to aver that the party is ready and willing to perform the essential terms of the contract has been done away with. Now, the party seeking specific performance only needs to prove the same and is not require to aver in the pleadings. It would be interesting to note the effect of this amendment on the suits seeking specific performance as the courts were use to denying the relief of specific performance when the plaintiff failed to aver its readiness and willingness to perform the contract.

The eighth amendment is in Section 19 of the Act whereby provision has been made by inserting clause (ca) which enables specific performance of a contract to enforce against limited liability partnership which arises out of amalgamation when the limited liability partnership which had entered into a contract had got subsequently amalgamated with another limited liability partnership.

The ninth amendment is in Section 20 of the Act. Whereby, the concept of substitute performance of contracts has introduced. The whole unamended Section 20 which provide for discretion to decree specific performance has been substituted by a new section. This new provision gives an option to the party which has suffered a breach to go for substituted performance. Through a third party or by its own agency and recover the expenses and other costs actually incurred. Spent or suffered by such party from the party which had committed the breach. However, sub-section(2) of Section 20 requires the party who has suffered. Such breach to give a written notice of not less than 30 days to the party in breach.

Also, the proviso to this sub-section makes it clear that the party who has suffered. Such breach would be entitled to recovery of such expenses and costs only if the contract has been performed. Through a third party or by its own agency. Sub-section(3) makes it further clear that once substitute performance has opted, the party suffering breach would not entitle to claim relief of specific performance against the party in breach. However, sub-section(4) protects claims of compensation from the party in breach.

The Amendment Act of 2018 has further introduced Sections 20A, 20B and 20C to the Act. Section 20A has made special provisions for contracts relating to infrastructure projects. Which have specified in the Schedule inserted in the Act by the Amendment Act of 2018. It prohibits a civil court to grant an injunction in relation to such infrastructure projects. Where grant of such injunction would cause impediment or delay in progress or completion of such projects. Section 20B provides for designation of Special Courts to try a suit under the Act. In respect of contracts relating to infrastructure projects. Section 20C provides for expeditious disposal of suits filed under the provisions of the Act. To dispose of within 12 months from the date of service of summons to the defendant. Which may extend for a further period not exceeding six months in aggregate.

There is a small amendment in Section 21 (which deals with power to award compensation) wherein sub-section(1). The words “in addition to” have substitute for the words “either in addition to, or in substitution of”. This amendment is manifestation of the intention of the Legislature. To promote specific performance of contracts rather than claiming compensation in substitution of specific performance.

The amendment in Section 25 is a consequence of the introduction of the Arbitration and Conciliation Act, 1996. And repeal of the old Arbitration Act, 1940.

There is a further amendment in Section 41 of the Act. Which, enlists the situations in which an injunction cannot be granted. Clause (ha) has inserted which provides that an injunction cannot be granted. If it would impede or delay the progress or completion of any infrastructure project. Or, interfere with the continued provision of relevant facility. Related to such project or services being the subject-matter of such project.