Specific performance of contracts

1. Defences and the rule: sections 9 and 10

Section 9: a defendant in a suit for specific performance may plead any defence available under the law of contract: incapacity, absence of consideration, fraud, mistake, undue influence, illegality.

Section 10, as substituted in 2018: “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.” The old Explanation, which presumed that damages were inadequate for breach of a contract to transfer immovable property, has gone, because adequacy of damages is no longer a test at all.

Section 11: a contract connected with a trust may be specifically enforced (section 11(1)), but a contract made by a trustee in excess of his powers or in breach of trust cannot be (section 11(2)). Section 12 deals with part performance: where the unperformed part is small and can be compensated in money, either party may get specific performance with compensation; where it is large, the defaulting party cannot, but the other party may if he pays the full price and gives up all claims. Section 13 gives the purchaser rights against a vendor with imperfect title who later acquires a good one.

2. Contracts not specifically enforceable: section 14

Section 14 was rewritten in 2018. The following contracts cannot be specifically enforced:

• (a) where a party has obtained substituted performance under section 20;
• (b) a contract involving a continuous duty which the court cannot supervise (a building contract over years, a contract to run a business);
• (c) a contract so dependent on the personal qualifications of the parties that the court cannot enforce its material terms (to paint a portrait, to sing at a concert);
• (d) a contract which is in its nature determinable (a partnership at will, an agency terminable on notice).

The old clauses on adequacy of damages, minute or numerous details, and the long list of section 14(3) exceptions were removed. Section 14A, also new, lets the court engage experts.

3. Substituted performance and infrastructure: sections 20 to 20C

The old section 20 (discretion) was replaced by substituted performance. Where a contract is broken, the party who suffers the breach may have it performed through a third party or his own agency and recover the expenses and costs from the party in breach. He must first give at least thirty days' written notice. Once he has taken substituted performance he cannot also claim specific performance, though he may still claim compensation. Sections 20A to 20C deal with contracts for infrastructure projects listed in the Schedule: no injunction that would impede or delay the project (section 20A), designated Special Courts (section 20B), and disposal of suits within twelve months of service of summons, extendable by six months (section 20C).

4. Who may obtain it, and against whom: sections 15 and 19

Section 15: any party to the contract; his representative in interest or principal; a beneficiary of a marriage settlement or family compromise; a remainderman or reversioner in the cases stated; the new company on amalgamation; the new limited liability partnership on amalgamation (clause (fa), added in 2018); and a company that has accepted a pre-incorporation contract made by its promoters.

Section 19: relief may be enforced against the parties and anyone claiming under them by a later title, except a transferee for value who paid in good faith without notice of the original contract. A buyer who purchases with notice of an earlier agreement to sell takes subject to it.

5. Personal bars: section 16, readiness and willingness

As amended in 2018, section 16 says specific performance cannot be enforced in favour of a person:

• (a) who has obtained substituted performance under section 20;
• (b) who has become incapable of performing, or violates an essential term, or acts in fraud of the contract, or wilfully acts at variance with or in subversion of the relation it was meant to create;
• (c) who fails to prove that he has performed or has always been ready and willing to perform the essential terms to be performed by him, other than terms prevented or waived by the defendant. The 2018 amendment removed the word “aver”, so the emphasis is on proof.

Under the Explanation, a plaintiff need not actually tender money unless the court directs, but must prove readiness and willingness according to the true construction of the contract.

• N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao, 1995 INSC 394, (1995) 5 SCC 115: continuous readiness and willingness, from the date of the contract to the hearing, is a condition precedent; the court looks at the plaintiff's conduct throughout, including whether he had the means to pay.
• Man Kaur v. Hartar Singh Sangha, 2010 INSC 672, (2010) 10 SCC 512: readiness and willingness must be proved by someone with personal knowledge; a power of attorney holder cannot depose to the plaintiff's own readiness.
• Kamal Kumar v. Premlata Joshi, 2019 INSC 16, (2019) 3 SCC 704: readiness and willingness is the most important issue in such a suit, along with the existence of a valid agreement and the plaintiff's entitlement to relief.

6. Time, and the 2018 amendment in pending cases

In contracts for the sale of immovable property, time is ordinarily not of the essence: Chand Rani v. Kamal Rani, 1992 INSC 351, (1993) 1 SCC 519 (Constitution Bench). But Saradamani Kandappan v. S. Rajalakshmi, 2011 INSC 446, (2011) 12 SCC 18, warned that with rising prices courts should expect performance within a reasonable time.

Is the amendment retrospective? In Katta Sujatha Reddy v. Siddamsetty Infra Projects Pvt. Ltd., 2022 INSC 865, (2023) 1 SCC 355 (decided 25 August 2022), a three-judge Bench held that the 2018 amendment is prospective and does not govern transactions and suits before 1 October 2018. That judgment was reviewed and recalled in Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy, 2024 INSC 861 (8 November 2024), which held that the agreement fixed no time for performance and decided the suit on limitation and the merits. In Annamalai v. Vasanthi, 2025 INSC 1267 (29 October 2025), the Court explained that the review judgment did not specifically hold that the amended provisions govern suits filed before the amendment; it proceeded on the assumption that relief stayed discretionary for such suits. The safe statement: for pre-2018 suits courts continue to apply the old discretionary law.

7. Compensation and the bar of a second suit: sections 21 and 24

Section 21: in a suit for specific performance the plaintiff may also claim compensation, in addition to or in place of performance. If the court finds specific performance should not be granted but the contract has been broken, it awards compensation; if it grants performance but that is not enough, it adds compensation. The amount follows section 73 of the Contract Act. No compensation is awarded unless the plaintiff claims it in the plaint, though he may amend at any stage (section 21(5)).

Section 24: dismissal of a suit for specific performance bars the plaintiff's right to sue for compensation for breach of that contract, but not his right to sue for any other relief arising from the breach. So the claim for compensation must be made in the same suit under section 21. Section 22 similarly requires possession, partition or refund of earnest money to be claimed in the suit.

8. Problem

In 2023 A agrees to sell his house to B for Rs 60 lakh; B pays Rs 10 lakh as advance. Before the sale deed, house prices rise and A refuses to perform, offering to return the advance. B has the balance ready. Can B get specific performance?

Issue. Whether A can avoid specific performance by offering money.

Law. The contract was made after 1 October 2018, so amended section 10 applies: specific performance shall be enforced subject only to sections 11(2), 14 and 16. Adequacy of damages is no longer a defence. Section 16(c) requires B to prove continuous readiness and willingness (Thirugnanam).

Application. The contract is not one in section 14: no substituted performance, no continuous supervision, nothing personal, not determinable. B had the balance and stayed willing. A rise in price is no ground under the amended Act.

Conclusion. B will get a decree directing A to execute the sale deed on payment of the balance. B should also claim compensation in the alternative under section 21, because section 24 would bar a later suit for it.

How this is examined

As an essay: “When can specific performance be granted? Discuss the changes made by the 2018 amendment”, or “Contracts which cannot be specifically enforced”. Order: nature, sections 10 and 14 old and new, section 16 with Thirugnanam, then Katta Sujatha Reddy and its review. Short notes: readiness and willingness, substituted performance (section 20), section 21 compensation. The house-sale problem is answered as above.