Introduction
In civil and commercial transactions, parties enter into contracts expecting that commitments will be honoured. But what happens when one party backs out? While damages are a common remedy for breach of contract, there are situations where monetary compensation is simply not adequate.
In such cases, courts may step in and order the defaulting party to actually perform the contract. This remedy is known as Specific Performance.
With the rising number of property, commercial, and joint-venture disputes, understanding when courts can compel contractual performance has become essential for businesses, lawyers, and individuals alike.
What is Specific Performance?
Specific performance is an equitable remedy where the court directs a party to perform their contractual obligations exactly as promised, instead of merely paying damages.
It is governed primarily by the Specific Relief Act, 1963, as amended by the Specific Relief (Amendment) Act, 2018.
After the 2018 amendment, this remedy shifted from being discretionary to being almost the norm in certain types of contracts, especially commercial contracts.
When Can Courts Order Specific Performance?
1. When the Contract is Valid and Enforceable
A contract must:
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be in writing (for certain types, such as property sale agreements),
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be signed by the parties,
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have lawful consideration, and
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fulfil the requirements under the Indian Contract Act.
If the contract is uncertain or ambiguous, courts will not enforce it.
2. When Damages Are Not an Adequate Remedy
Courts examine whether monetary compensation would suffice. If the subject matter is:
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unique (e.g., immovable property, rare goods),
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irreplaceable,
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commercially sensitive,
then damages are considered inadequate, and specific performance becomes appropriate.
Example:
A buyer enters into an agreement to purchase a specific piece of land. Since every land parcel is unique, the court generally grants specific performance.
3. When the Plaintiff Has Performed (or is Ready and Willing to Perform) Their Part
The plaintiff must show:
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continuous readiness and willingness to perform their obligations,
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compliance with contractual timelines (unless waived),
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that they are not in breach.
This requirement is mandatory under Section 16 of the Specific Relief Act.
Important: Even slight or unexplained delays by the plaintiff can weaken their case.
4. When the Contract Can Actually Be Enforced
Courts will not order performance of:
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contracts dependent on personal qualifications (e.g., artistic performance),
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contracts involving continuous supervision by the court,
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vague or uncertain agreements,
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contracts that are revocable at will.
5. When the Defendant Has No Valid Legal Defence
Specific performance may be ordered when the defendant:
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wrongfully backs out,
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tries to resile due to increased market value (common in property sales),
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breaches the agreement without lawful justification.
However, if the defendant proves fraud, misrepresentation, coercion, or the plaintiff’s default, the court may refuse this remedy.
Situations Where Specific Performance Is Commonly Granted
1. Sale of Immovable Property
This is the most frequent category.
Courts presume that damages cannot adequately compensate for loss of property, so specific performance is the default remedy.
2. Commercial Contracts After the 2018 Amendment
The amendment made specific performance mandatory for many commercial contracts unless the contract falls within restricted categories.
This was done to improve India’s “ease of doing business” and promote contract enforcement.
3. Infrastructure and Public Utility Projects
Courts may enforce contracts involving:
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public-private partnerships,
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infrastructure obligations,
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concession agreements.
This ensures that public projects are not stalled due to contractual disputes.
When Courts Refuse Specific Performance
Courts can refuse relief when:
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The plaintiff is in breach or fails to show readiness and willingness.
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The contract is unfair, one-sided, or unconscionable.
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Time was clearly “of the essence” and plaintiff caused delay.
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The contract is impossible to perform.
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The contract involves personal services (e.g., artistic skills).
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Performance requires continuous court supervision.
If specific performance is denied, courts may award refund, compensation, or damages under the Contract Act.
Practical Tips for Seeking Specific Performance
For Plaintiffs:
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Maintain documentary evidence of readiness (bank statements, communications, drafts).
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Avoid delays in issuing notices or filing suits.
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Perform contractual obligations promptly.
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Seek interim injunctions to prevent sale to third parties.
For Defendants:
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Highlight any breach or delay by the plaintiff.
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Show impossibility or hardship.
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Demonstrate lack of mutuality or unfairness.
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Challenge vague or incomplete agreements.
Conclusion
Specific performance has evolved significantly under Indian law. While traditionally discretionary, it has now become a strong and predictable remedy, especially in:
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property disputes,
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commercial transactions, and
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infrastructure contracts.
Courts compel contract execution when monetary damages fall short, ensuring contractual certainty and fairness.
Understanding when this remedy applies helps parties manage contracts, avoid risks, and enforce rights effectively.
