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LexCognito

This issue of LexCognito, which in Latin means 'awareness about law', seeks to provide you an insight into significant legal and regulatory developments that have taken place very recently in India.


Date: 25 July 2018
Indian Contract Law & Specific Relief – Parliament Passes Pathbreaking Amendments

The Parliament of India has passed the Specific Relief (Amendment) Bill, 2018 on 23 July 2018 (the "Amendment Bill"), proposing to bring significant amendments to Specific Relief Act, 1963. These amendments, upon coming into force, will bring path-breaking changes as to how the contracts will now be enforced by courts in India.

The Statement of Objects and Reasons of the Amendment Bill itself admits that the Act (i.e. The Specific Relief Act) is not in tune with the rapid economic growth happening in our country and the expansion of infrastructure activities that are needed for the overall development of the country. 

The amendment will come into force with effect from the date of notification of the same by the Central Government in the official gazette after the Amendment Bill gets Presidential Assent.

Award of Specific Performance of Contracts Made Compulsory:

The Amendment Bill abolishes the discretionary power of courts in awarding specific performance of a contract. Thus, specific performance of contracts will now be compulsorily enforced by the Court if pleaded by the plaintiff. Presently, because of the peculiar language of the law, the courts often award damages for breach of contract as a general rule and they grant specific performance as an exception.

The amendment will now enable the plaintiffs to seek specific performance of contracts as a matter of course, without having to prove special circumstances.

Compensation/Damages In Adition To Specific Performance:

The Amendment Bill has also changed the provisions relating to claim of compensation/damages for breach of contracts. The present law allows plaintiffs to claim damages either in addition to or in substitution of specific performance. The Amendment Bill now enables award of damages in addition to specific performance. In other words, now compensation/damages need not be sought for as an alternate relief, and it can be claimed in addition to specific performance.

Introduction of Concept of ‘Substituted Performance’:

Another significant change is that the Amendment Bill introduces the concept of ‘substituted performance’. Accordingly, a party who is affected by the breach of contract will now have the option to get the contract performed by either a third party or by its own agency, at the cost of the other contracting party at default. The affected party has to give prior notice of thirty (30) days to the defaulting party expressing his intention to seek substituted performance. It has, however, been provided that a party by obtaining substituted performance forfeits his right to get specific performance of contract enforced through court.

Specific Pleading of Readiness and willingness to Perform Contractual Obligations by Plaintiff No Longer Mandatory:

Further, the amendments will no longer require the plaintiff to specifically plead readiness and willingness to perform his contractual obligations while approaching court seeking specific performance. The present law provides that a party has to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him and the courts have been very strict regarding this requirement of the Specific Relief Act and in the absence of a plea in the plaint regarding such readiness and willingness, no Court would grant decree for specific performance to the plaintiff. Several cases have got dismissed in past solely because of the failure to make such a plea in the plaint.

The amendment has provided a relief by relaxing this requirement and now the plaintiff merely needs to prove his readiness and willingness and it will no longer be mandatory to specifically plead the same in the plaint.

Significant Relief for Infrastructure Projects:

Another path breaking amendment is introduction of a special category of ‘infrastructure projects’.  The new Schedule to the Specific Relief Act introduced by the amendment contains the list of activities which will be treated as ‘infrastructure projects’.  Such activities are in the sectors of transportation, energy, water & sanitation, communication and social & commercial infrastructure. The Department of Economic Affairs (DOE) has been designated as the nodal agency for specifying various categories of projects and infrastructure sub-sectors, as provided in Schedule, and DOE has been empowered to amend the Schedule relating to any such category or sub-sectors

The new Section 20A introduced by the amendment restrains Courts from granting injunction in a suit involving contract relating to an infrastructure project, where granting injunction is likely to cause impediment or delay in the progress or completion of such infrastructure project. Further, Special Courts are proposed for determination of suits relating to infrastructure projects.

Introduction of time limit of twelve months for case disposal:

The new Section 20C of the Amendment Bill fixes a time limit of twelve months for disposal of cases under the Specific Relief Act.

Court can engage experts:

The newly introduced Section 14A confers power on the courts to engage experts to seek opinion on any issues in the suit.
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Chambers of Rajan & Indraneel 
T: +91 11 41000224, 41030225| Fax:+91 11 29239074 
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Chambers of Rajan & Indraneel is a premier full service law firm headquartered at New Delhi, India. The Firm represents amalgamation of vast experiences and practices of two eminent lawyers. Indranil Ghosh is highly reputed as a disputes lawyer. He was a senior partner and head of litigation practice in one of the oldest Indian law firm Fox Mandal for several decades before setting up his own practice. Rajan D Gupta is a rank holder Chartered Accountant turned Corporate Lawyer. He is also a licensed Insolvency Resolution Professional. He has been associated with internationally renowned big law firms in past and has held senior level positions in firms like PwC, Fox Mandal, Khaitan & Co. and SRGR Law, etc. before starting the Firm.

We have a team of experienced Lawyers, Chartered Accountants, Company Secretaries and Insolvency Resolution Professionals with access to network of high quality experienced lawyers in all major commercial cities of India.

The Firm offers a wide range of expert legal services in the areas of corporate and commercial laws and specializes in representing major foreign and domestic corporations with diverse business interests in India. The Firm is professionally equipped to handle large sized and complex corporate transactions like Mergers & Acquisitions, Corporate Restructuring, Joint Ventures, Inbound & Outbound Investments, Private Equity and Venture Capital Investment Transactions, Real Estate Transactions, Infrastructure Projects, Project Finance, Power Projects, Non-Conventional Energy Projects, Highways & Road Projects and Corporate Taxation as well as GST, etc. The Firm also offers proven capabilities in litigation and dispute resolution practice areas, especially in handling international and domestic arbitrations as well as litigation in Supreme Court, various High Courts of India and various judicial and quasi-judicial tribunals/forums including at National Client Law Tribunal, Appellate Tribunals, Tax Tribunals, Competition Commission, Electricity Tribunal, Telecom Disputes Tribunal, Designated Authorities and other adjudicatory bodies.


We have set up a Japan Business Desk (JBD) in order to serve our Japanese clients in a better way. The endeavour of the JBD is to act as a bridge between our professionals and clients from Japan so as to ensure that there are no barriers as to linguistic and cultural differences. This will indeed facilitate Japanese corporates doing business in India. 
 
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This newsletter contains general information available in public domain at the time of its preparation. It is intended as a general news update and is not intended to be comprehensive nor to provide specific business, financial, investment, legal, tax or other professional advice or opinion or services. This newsletter is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Before making any decision or taking any action that may affect you or your business, you should consult a qualified professional adviser and refer to the source pronouncement/documents on which this business alert is based. It is also expressly clarified that this newsletter is neither a solicitation nor an invitation of any sort whatsoever or a source of advertising from our firm or any of its partners or lawyers or other professionals to create any adviser-client relationship. Whilst every effort has been made to ensure the accuracy of the information contained in this news alert, this cannot be guaranteed, and neither our firm nor any related person/entity shall have any liability to any person or entity that relies on the information contained in this publication. Any such reliance is solely at the user's risk.
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