Specific Performance of Contract: Sale Agreement Suits

Specific performance of contract is a remedy by which a civil court orders a party to actually carry out his promise, for example to execute a sale deed under an agreement of sale, instead of only paying damages. It is governed by the Specific Relief Act, 1963, as amended in 2018. This guide explains when the remedy is available, what the plaintiff must prove and how the suit proceeds.

Specific performance of contract: what changed in 2018

Before the Specific Relief (Amendment) Act, 2018, specific performance was a discretionary remedy. After the amendment, the court shall enforce the contract, subject to the exceptions in the Act. This was a major shift. The remedy is now the general rule, and refusal is the exception. The Act also introduced substituted performance in Section 20, under which a person can have the contract performed through a third party at the cost of the defaulter, after notice.

When is specific performance not available

Section 14 lists cases where the court cannot enforce the contract, for example:

• Where the party has already obtained substituted performance under Section 20.
• Contracts that are determinable by nature.
• Contracts that depend on the personal qualifications of the parties, or on their personal volition.
• Contracts that involve a continuous duty which the court cannot supervise.

Readiness and willingness: the key requirement

Under Section 16(c), the plaintiff must aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract. This is a continuous requirement from the date of the agreement to the date of the decree. The Supreme Court has repeatedly dismissed suits where the buyer failed to show financial capacity, did not tender the balance price in time, or delayed the suit without explanation.

Proving readiness usually involves:

• Bank statements or sanction letters showing the ability to pay.
• Notices sent to the seller asking to execute the deed.
• Proof of presence at the Sub-Registrar’s office on the date fixed.
• Prompt filing of the suit after the seller’s refusal.

Is time the essence of the contract

In contracts for sale of immovable property, courts generally presume that time is not of the essence unless the contract says so, or the circumstances show it. Even then, the buyer must complete his part within a reasonable time.

Limitation

Article 54 of the Limitation Act, 1963 requires the suit to be filed within three years from the date fixed for performance. If no date is fixed, the period runs from the date the plaintiff has notice that performance is refused. Read more in our guide on limitation period for civil suits in India.

Reliefs the court can grant

• A decree directing the seller to execute the sale deed and deliver possession on payment of the balance price.
• Compensation in addition to, or in substitution of, specific performance under Section 21.
• Refund of earnest money or advance with interest under Section 22, where specific performance is not granted. The plaintiff should ask for this alternative relief in the plaint.
• An injunction restraining the seller from selling the property to a third party during the suit. For interim reliefs, see our guide on temporary injunction under Order 39 CPC.

Defences commonly raised

• The plaintiff was not ready and willing.
• The contract is void, unenforceable or obtained by fraud or mistake.
• The seller does not have a clear title.
• Subsequent purchaser for value without notice. Section 19 protects a bona fide purchaser.
• The suit is barred by limitation.

Step-by-step procedure

• Send a legal notice and call upon the other side to perform.
• File the suit before the court having territorial and pecuniary jurisdiction, with the agreement and proof of readiness.
• Deposit the balance when the court directs, as a sign of bona fides.
• Complete the pleadings and evidence, and conduct the trial.
• If a decree is passed, apply for execution if the defendant does not comply. See our guide on execution of decree under Order 21 CPC.

The Act can be read on India Code.

Frequently Asked Questions

What is specific performance of contract?

It is a court order compelling a party to perform his obligations under a valid contract, such as executing a sale deed, instead of paying only damages.

Is specific performance a matter of right after 2018?

After the 2018 amendment, the court shall enforce the contract subject to the statutory exceptions. It is no longer a purely discretionary remedy.

What is the limitation for a suit for specific performance?

Three years from the date fixed for performance, or from the date the plaintiff has notice of refusal if no date is fixed.

What does readiness and willingness mean?

It means that the plaintiff has the capacity and the intention to perform his part of the contract at all times, and he must prove it with evidence.

Can I get my advance back instead?

Yes. The court can order refund of earnest money or advance with interest if specific performance is refused, and you should ask for this alternative relief in the plaint.

Does the buyer have to deposit the balance price?

Not always at the start, but the court may direct a deposit. Depositing or tendering the balance supports the plea of readiness and willingness.

Can the seller sell to someone else during the suit?

The buyer can seek an injunction to prevent it. A sale during the pendency of the suit is subject to the doctrine of lis pendens under Section 52 of the Transfer of Property Act.

This article is general legal information and not a substitute for advice on your specific case. Consult an advocate before acting.