Analysis of Section 20 of the Specific Relief Act, 1963

Judicial Discretion in Specific Performance: An Analysis of Section 20 of the Specific Relief Act, 1963 (Pre-2018 Amendment)

Introduction

The remedy of specific performance, compelling a party to perform their contractual obligations, has traditionally been rooted in equity. In Indian jurisprudence, prior to the Specific Relief (Amendment) Act, 2018, Section 20 of the Specific Relief Act, 1963 (hereinafter "the Act") played a pivotal role in governing this remedy. It vested courts with a significant degree of discretion in granting or refusing specific performance, ensuring that the relief was moulded to the specific facts and equitable considerations of each case. This article undertakes a comprehensive analysis of Section 20 of the Act as it stood before the 2018 amendment, examining its statutory contours and the principles evolved through judicial pronouncements. The analysis draws heavily upon the provided reference materials, which predominantly interpret this pre-amendment provision. The profound impact of the 2018 amendment, which has substantially altered the landscape of specific performance, will also be addressed.

The Statutory Framework of Section 20 (Pre-Amendment 2018)

Section 20 of the Specific Relief Act, 1963, before its substitution by the 2018 Amendment, was central to the discretionary nature of specific performance. The Kerala High Court in K.O. Antony & Another v. M.K. Krishnankutty Menoki & Others[1] and the Punjab & Haryana High Court in SHARDA SHARMA v. BHAGWAN DASS[2] have quoted the provision extensively. It read as follows:

20. 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.

(2) The following are cases in which the court may properly exercise discretion not to decree specific performance:—

(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or

(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff; or

(c) where the defendant entered into the contract under circumstances which, though not rendering the contract voidable, makes it inequitable to enforce specific performance.

Explanation 1.—Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b).

Explanation 2.—The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.

(3) The court may properly exercise discretion to decree specific performance in any case 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.

This section underscored that specific performance was not an automatic right but an equitable relief. The discretion was to be exercised judiciously, considering various enumerated and unenumerated factors aimed at achieving fairness.

Judicial Interpretation of Discretion under Section 20

The judiciary has, through numerous pronouncements, elucidated the principles governing the exercise of discretion under the pre-amendment Section 20.

The Nature of Judicial Discretion

Subsection (1) of Section 20 explicitly stated that the jurisdiction to decree specific performance is discretionary. Courts consistently held that this discretion must not be arbitrary, vague, or fanciful, but sound and reasonable, guided by established judicial principles, and subject to correction by an appellate court.[1], [2] As observed by the Delhi High Court in Ved Parkash Kharbanda v. Vimal Bindal, "The Court is not bound to grant specific relief merely because it is lawful to do so. The relief sought under Section 20 is not automatic as the Court is required to see the totality of the circumstances which are to be assessed by the Court in the light of facts and circumstances of each case."[3] The Supreme Court in A.C Arulappan v. Ahalya Naik (Smt) reiterated this principle, emphasizing that merely because it is lawful to grant specific relief, the court need not grant the order.[4] The Kerala High Court in A.Noorjahan v. Ayisumma And Others went further to state that it is the "duty of every court dealing with a suit for specific performance to consider whether on the facts of the given case, the plaintiff is entitled to the discretionary relief... having regard to the provisions contained in Section 20."[5]

Factors Influencing the Exercise of Discretion

Section 20(2) provided illustrative, not exhaustive, circumstances where the court might properly refuse specific performance.

Conduct of the Parties: The conduct of the plaintiff was a paramount consideration. The Supreme Court in Lourdu Mari David And Others v. Louis Chinnaya Arogiaswamy And Others affirmed the maxim that "the party who seeks to avail of the equitable jurisdiction of a court and specific performance being equitable relief, must come to the court with clean hands."[6] False allegations or unconscionable conduct could disentitle the plaintiff to relief.[4], [6] Significant and unexplained delay or laches on the part of the plaintiff in seeking relief was also a crucial factor, as highlighted in K.S Vidyanadam And Others v. Vairavan, where the Supreme Court denied specific performance due to the plaintiff's inaction for over two and a half years.[7] The motive behind the litigation was also considered relevant; the court should ensure the remedy is not used as an instrument of oppression.[4] (citing Parakunnan Veetill Joseph's Son Mathew v. Nedumbara Kuruvila'S Son And Others[8]).

Unfair Advantage to Plaintiff (Section 20(2)(a)): If the terms of the contract, the conduct of parties at the time of contracting, or other circumstances gave the plaintiff an unfair advantage, though the contract was not voidable, specific performance could be refused.[1], [4] The court in Parakunnan Veetill Joseph's Son Mathew cautioned against the relief being used to gain an unfair advantage.[8]

Hardship to the Defendant (Section 20(2)(b)): Performance involving unforeseen hardship on the defendant, where non-performance would cause no such hardship to the plaintiff, was a ground for refusal.[1], [4] The doctrine of comparative hardship was recognized in this context.[9] (citing K. Narendra v. Riviera Apartments (P) Ltd.). However, Explanation 1 clarified that mere inadequacy of consideration or the contract being onerous or improvident did not, by itself, constitute unfair advantage or hardship.[1], [4] Explanation 2 stipulated that hardship should generally be assessed based on circumstances existing at the time of the contract, unless the hardship resulted from a subsequent act of the plaintiff.[2], [10] While a mere rise in property prices was generally not considered a sole ground for refusing specific performance, especially if the plaintiff was not blameworthy for the delay, it could be a contributing factor when coupled with plaintiff's laches.[3], [7]

Inequitable Enforcement (Section 20(2)(c)): Where the defendant entered into the contract under circumstances, not rendering it voidable, but making specific enforcement inequitable, the court could decline the relief.[1], [2] This provision allowed courts to consider overall fairness and equity.[4], [11]

Plaintiff's Substantial Acts or Losses (Section 20(3))

Conversely, Section 20(3) provided that the court may properly exercise its discretion to decree specific performance where the plaintiff has performed substantial acts or suffered losses in consequence of a contract capable of specific performance.[1], [2] Payment of substantial sale consideration and delivery of possession were cited as instances favouring the grant of specific performance.[3]

Contract Not Enforceable by Other Party (Section 20(4))

Section 20(4) addressed the issue of mutuality, stating that specific performance should not be refused merely because the contract was not enforceable at the instance of the other party.[1], [2] This diluted the traditional strict requirement of mutuality.

Analysis of Pre-Requisites and Related Doctrines from Reference Materials

Before the court's discretion under Section 20 could be invoked, certain pre-requisites had to be met by the plaintiff. Most notably, Section 16(c) of the Act required the plaintiff to plead and prove their continuous readiness and willingness to perform their part of the contract. Cases like N.P Thirugnanam (Dead) By Lrs. v. Dr. R. Jagan Mohan Rao And Others[12] and Man Kaur (Dead) By Lrs. v. Hartar Singh Sangha[13] underscore this fundamental requirement. Failure to establish readiness and willingness would non-suit the plaintiff, and the question of exercising discretion under Section 20 would not arise.

Similarly, whether time was of the essence in the contract, as discussed in Saradamani Kandappan v. S. Rajalakshmi And Others[14] and Chand Rani (Smt) (Dead) By Lrs. v. Kamal Rani (Smt) (Dead) By Lrs.[15], could determine if a breach had occurred that would even warrant a suit for specific performance. If time was essential and the plaintiff defaulted, specific performance would typically be denied without needing to delve deep into Section 20 discretion, unless waiver or extension of time was established.

The Supreme Court in M.L Devender Singh And Others v. Syed Khaja clarified that the presence of a liquidated damages clause in a contract (governed by Section 23 of the 1963 Act, formerly Section 20 of the 1877 Act) does not, by itself, bar the remedy of specific performance.[16] Even if such a clause exists, the court could still decree specific performance, and in doing so, its discretion under Section 20 of the 1963 Act would come into play to assess the overall equities.

The case of Sardar Singh v. Krishna Devi (Smt) And Another, dealing with the registration requirements for arbitration awards affecting immovable property, has limited direct bearing on the interpretation of Section 20 of the Specific Relief Act.[17] While equitable principles might broadly inform disputes arising from arbitration awards, the judgment primarily focuses on the mandates of the Registration Act, 1908.

The Specific Relief (Amendment) Act, 2018: A Paradigm Shift

The Specific Relief (Amendment) Act, 2018, brought about a fundamental transformation in the approach to specific performance in India. Section 10 of the Act was amended to state 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. This marked a shift from a discretionary remedy to a more mandatory one.

Crucially, the erstwhile Section 20, which formed the bedrock of judicial discretion, was substituted entirely. The new Section 20 is titled "Substituted performance of contract" and deals with a party's right to have the contract performed by a third party or by his own agency at the cost of the defaulting party, after giving due notice. This new provision does not concern itself with the court's discretion in granting specific performance of the original contract.

The effect of this amendment is a significant curtailment of the wide discretionary powers previously exercised by courts under the old Section 20. The legislative intent appears to be to provide greater certainty and efficacy in the enforcement of contracts. However, the Allahabad High Court in Mukesh Singh And Others v. Saurabh Chaudhary And Another, while discussing the effect of repeal by substitution and Section 6 of the General Clauses Act, suggested that rights accrued under the old regime might be protected.[18] This implies that for suits instituted prior to the 2018 amendment, the principles governing discretion under the pre-amendment Section 20 might continue to apply, a matter that will likely see further judicial clarification.

Conclusion

Section 20 of the Specific Relief Act, 1963, in its pre-amendment form, was a cornerstone of equitable jurisprudence in Indian contract law. It empowered courts to look beyond the mere legality of a contract and to consider overarching principles of fairness, justice, and good conscience before compelling specific performance. The extensive body of case law interpreting this provision, as reflected in the reference materials, demonstrates a nuanced judicial approach, balancing the sanctity of contracts with the need to prevent hardship and unfair advantage. While the Specific Relief (Amendment) Act, 2018, has ushered in a new era aiming for greater contractual certainty by making specific performance a more standard remedy, the rich jurisprudence developed under the erstwhile Section 20 remains vital for understanding the historical evolution of this equitable relief and for adjudicating cases that may still fall under its ambit.

References

  1. K.O. Antony & Another v. M.K. Krishnankutty Menoki & Others (Kerala High Court, 2016) [Reference Material 11]
  2. SHARDA SHARMA v. BHAGWAN DASS (Punjab & Haryana High Court, 2018) [Reference Material 16]
  3. Ved Parkash Kharbanda v. Vimal Bindal (Delhi High Court, 2013) [Reference Material 9]
  4. A.C Arulappan v. Ahalya Naik (Smt) (2001 SCC 6 600, Supreme Court Of India, 2001) [Reference Materials 8, 22]
  5. A.Noorjahan v. Ayisumma And Others (Kerala High Court, 2016) [Reference Material 26]
  6. Lourdu Mari David And Others v. Louis Chinnaya Arogiaswamy And Others (1996 SCC 5 589, Supreme Court Of India, 1996) [Reference Material 21]
  7. K.S Vidyanadam And Others v. Vairavan (1997 SCC 3 1, Supreme Court Of India, 1997) [Reference Material 4]
  8. Parakunnan Veetill Joseph'S Son Mathew v. Nedumbara Kuruvila'S Son And Others (1987 SCC SUPP 1 340, Supreme Court Of India, 1987) [Reference Material 19]
  9. Farooque Dadabhoy…Plaintiff; v. Dr. Usha S. Bhat…Defendant. (Madras High Court, 2014) [Reference Material 25]
  10. Amar Chand v. Jagan Nath (Himachal Pradesh High Court, 2019) [Reference Material 13]
  11. Anappath Parakkattu Vasudevakurup v. C. Haridasan (Kerala High Court, 2021) [Reference Material 12]
  12. N.P Thirugnanam (Dead) By Lrs. v. Dr. R. Jagan Mohan Rao And Others (1995 SCC 5 115, Supreme Court Of India, 1995) [Reference Material 1]
  13. Man Kaur (Dead) By Lrs. v. Hartar Singh Sangha (2010 SCC 10 512, Supreme Court Of India, 2010) [Reference Material 7]
  14. Saradamani Kandappan v. S. Rajalakshmi And Others (2011 SCC 12 18, Supreme Court Of India, 2011) [Reference Material 2]
  15. Chand Rani (Smt) (Dead) By Lrs. v. Kamal Rani (Smt) (Dead) By Lrs. (1993 SCC 1 519, Supreme Court Of India, 1992) [Reference Material 3]
  16. M.L Devender Singh And Others v. Syed Khaja (1973 SCC 2 515, Supreme Court Of India, 1973) [Reference Material 5]
  17. Sardar Singh v. Krishna Devi (Smt) And Another (1994 SCC 4 18, Supreme Court Of India, 1994) [Reference Material 6]
  18. Mukesh Singh And Others v. Saurabh Chaudhary And Another (Allahabad High Court, 2019) [Reference Material 15]
  19. Antony v. Krishnankutty Menoki (Kerala High Court, 2016) [Reference Material 10]
  20. K. Nanjappa v. R.A. Hameed, (2016) 1 SCC 762 (as cited in Amar Chand [Ref 13] and Duni Chand v. Shyam Lal (Himachal Pradesh High Court, 2020) [Ref 17])
  21. Sri R. Narayanaswamy v. Sri A.V. Narayana Swamy (Karnataka High Court, 2016) [Reference Material 14]
  22. Sher Singh Through Lrs Amarjit Kaur And Others v. Krishan Kumar (2011 SCC ONLINE P&H 10489, Punjab & Haryana High Court, 2011) [Reference Material 18]
  23. MANICKA SACHINDRANATH, (DIED) (LRS IMPLEADED) v. SANKUNNI,(DIED) (LEGAL HEIRS SOUGHT TO BE IMPLEADED) (2024 SCC ONLINE KER 446, Kerala High Court, 2024) [Reference Material 20]
  24. SRI NAGARAJ S/O LATE KEMPAIAH v. SMT UMA W/O LATE A LAKSHMI NARAYANA (Karnataka High Court, 2016) [Reference Material 23] (citing VIMLESHWAR NAGAPPA SHET VS NOOR AHMAD SHERIFF AND ORS - AIR 2011 SC 2057)
  25. Chandan Pharmaceuticals Corporation v. R.K. Jalan (Madras High Court, 2018) [Reference Material 24]
  26. Ram Dass v. Jagat Singh (Allahabad High Court, 2014) [Reference Material 27] (citing Ram Singh and Ors. Vs. Sughar Singh, 2011 Alld Civil Journal)