Contract Paper -1 test Assignment

Contract Paper -1 test Assignment

Q1.
Q. 1 What is specific relief? Explain the law with regard to recovery of possession of
movable property.
Answer:
The Specific Relief Act 1963 (“the Act”) sets out the remedies available to parties whose
contractual or civil rights have been hampered. The Act comes into play when an actual
damage for non-performance of a contractual obligation cannot be measured or the
monetary compensation would not suffice.
The Party affected can move to the court for directing the other Party to fulfil the
obligations or requirements under the contract.
The Act provides for a Specific performance of a contract in absence of monetary relief,
which makes it an Alternative remedy. Till now the courts had a discretionary power,
whether to grant such relief of specific performance or not. This used to increase the
uncertainty of contracts and contractual reliefs.
1. extent and commencement:
(1) This Act may be called the Specific Relief Act, 1963.
(2) It extends to the whole of India except the State of Jammu and Kashmir.
(3) It shall come into force on such date1 as the Central Government may, by notification in
the Official Gazette, appoint.
2. Definitions. —In this Act, unless the context otherwise requires:
(a) “obligation” includes every duty enforceable by law;
(b) “settlement” means an instrument [other than a will or codicil as defined by the Indian
Succession Act, 1925 (39 of 1925)] whereby the destination or devolution of successive
interests movable or immovable property is disposed of or is agreed to be disposed of;
(c) “trust” has the same meaning as in section 3 of the Indian Trusts Act, 1882 (2 of 1882),
and includes an obligation in the nature of a trust within the meaning of Chapter IX of that
Act;
(d) “trustee” includes every person holding property in trust;
(e) all other words and expressions used herein but not defined, and defined in the Indian
Contract Act, 1872 (9 of 1872), have the meanings respectively assigned to them in that Act.
3. Savings: Except as otherwise provided herein, nothing in this Act shall be deemed—
(a) to deprive any person of any right to relief, other than specific performance, which he
may have under any contract; or
(b) to affect the operation of the Indian Registration Act, 1908, on documents.
4. Specific relief to be granted only for enforcing individual civil rights and not for enforcing
penal laws. Specific relief can be granted only for the purpose of enforcing individual civil
rights and not for the mere purpose of enforcing a penal law.
Main highlights of Specific Relief Act 1963:
Recovery of Immovable Property:
Recovery of Specific movable Property:
Specific Performance of Contract:
Rectification of Instruments:
Rescission:
Declaratory Decrees:
Preventive Relief:
Compensation:

Specific relief 1963, law with regard to recovery of possession of movable property:

Recovery of specific movable property: A person entitled to the possession of specific

movable property may recover it in the manner provided by the Code of Civil Procedure,
1908. Explanation
1. A trustee may sue under this section for the possession of movable property to the
beneficial interest in which the person for whom he is trustee is entitled. Explanation
2. A special or temporary right to the present possession of movable property is sufficient to
support a suit under this section.

Recovery of Specific movable Property: Similarly, any person entitled to possession of

specific movable property, even if such right is special or temporary, may file suit for
recovery of such article in manner provided in Code of Civil Procedure. When a person is in
the possession or control of the article of which he is not the owner, may be compelled to
deliver such article to the person entitled to its immediate possession in following cases:
When the article is held by the defendant as the trustee or agent of the Plaintiff
When compensation in money is not an adequate relief.
When it is difficult to ascertain actual damage caused to the person.
When the possession of the article has been wrongfully transferred from the person so
entitled

Recovery of possession of Movable property:

Section 7 and 8 of the Specific Relief Act, 1963 contains provisions for recovery of
possession of some specific movable property. Section 7 of Act with the head ‘recovery of
Specific movable property’ provides that, “a person entitled to the possession of the specific
movable property may recover it in the manner provided by the Code of Criminal
Procedure, 1908 (5 of 1908).
Explanation 1: A trustee may sue under this section for possession of the movable property
to the beneficial interest he is entitled.
Explanation 2: A temporary or special right to the present possession is sufficient to support
a suit under this section.”
The main ingredients of section 7 are as follows.
First, the plaintiff must be entitled to the possession of the movable property. A person may
be entitled to the possession of a thing either by ownership or by virtue of a temporary or a
special right as provided under explanation 2 of section 7. A special or temporary right to an
individual may arise by either act of the owner of goods i.e. bailment, pawn etc. or not by
the act of the owner of goods i.e. a person may be the finder of goods and finder of goods
enjoys special right to possession except against true owner.
Only those persons can maintain a suit under section 7, who has the present possession of
the movable property. A person who does not have present possession of the movable
property cannot maintain a suit under this section.
Illustration: ‘A’ pledges some jewels to ‘B’ to secure for the loan he had taken. ‘B’ disposes
those jewels to ‘C’ before he is entitled to do so. ‘A’ without having paid the amount of loan
sues ‘C’ for possession of jewels. The suit shall be dismissed as he is not entitled to
immediate possession of jewels.
Further, the property in question must be specific movable property means that property
should be ascertained or ascertainable. Specific property means the very property not any
property equivalent to it. The disputed specific movable property must be capable of being
delivered and seized. Where the goods have been ceased to be recoverable or are not in
control of the defendant, the plaintiff is not entitled to a decree for recovery.
Article 91(b) of the Limitation Act, 1963 provides a period of three years for the filing of suit
computable from the date when the property is wrongfully taken or when the possession
becomes unlawful.
Section 8 of the Specific Relief Act, constitutes the provision related to Liability of a person
in possession not as owner, to deliver to a person entitled to immediate possession. It reads
as;

“Any person having the possession or control of a particular article of movable property, of
which he is not the owner, may be compelled specifically to deliver it to the person entitled
to the immediate possession of, in any of the following cases:

(a) When the thing claimed is held by the defendant as the agent or trustee of the plaintiff.
(b) When compensation in money would not afford the adequate relief for the loss of the
thing claimed.
(c) When it would be extremely difficult to ascertain the actual damage caused by its loss.
(d) When the possession of the thing claimed has been wrongfully transferred from the
plaintiff.
Explanation- Unless the contrary is proved, the court shall in respect of any article of
movable property claimed under clause (b) or clause (c) of this section, presume-
(a) That compensation in money would not afford the adequate relief for the loss;
(b) that it would be extremely difficult to ascertain the actual damage caused by its loss.”
The following ingredients must coexist in order to bring section 8 into operation:
The defendant has full control or possession of the article claimed.
Such an article is movable property.
The person claiming the possession must be entitled to immediate possession;
The defendant is not the owner of the article.
The thing claimed is held by the defendant as an agent or when compensation in money
would not afford adequate relief for the loss or when it is extremely difficult to ascertain the
actual damage of the thing claimed.
Under clause (a) the burden is on the plaintiff to prove the fiduciary relationship, and under
clause (d) also it is the burden on part of the plaintiff to prove wrongful transfer.
Illustrations: In case, where the idol of the family temple is in custody of a retired priest as
he is bound to return it to the family because the actual damage is unascertainable.

Difference between Section 7 and 8

Under section 8 no suit can be brought against the owner, while under section 7 a person
enjoying special or temporary right to present possession can bring suit even against the
owner and under section 7 a decree is for the return of movable property or for the money
value in alternative while under section 8 decree is only for return of specific article.

Case Law
Wood v Rowcliffe(3): In this case, a person leaving abroad leaves his furniture under the
care of his friend. The friend is the trustee of the articles and is bound to return them in the
same condition when demanded.
Conclusion
The remedies provided by the Specific Relief Act become essential because the Indian
Contract Act, 1872 provide relief only in the form of compensation in case of breach of
contract. In the case where the damage is not ascertainable and where compensation in the
form of relief is not adequate to the loss, the plaintiff had no remedy for specific
performance.
Through the provisions of section 5 and 6, a person entitled to the possession of immovable
property or having a special right to the possession may recover it through the due process
of law. Similarly, section 7 and 8 empowers the person to recover possession of the movable
property.
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Q2.
Q. 2 Explain the law with regard to recovery of possession of immovable property.
Answer:
Recovery of Immovable Property: Any person entitled to possession of specific immovable
property, even if such right of possession is temporary, may file suit for recovering such
possession as per Code of Civil Procedure. If a person has been dispossessed or divested
from the property against his will without due process of law, then that person can file a suit
for recovery of possession, even if he does not have title or legal right to continue in
possession. For example, if a tenant in possession, whose tenancy has been terminated is
forcefully evicted by owner, without due process of law, he can seek restoration of
possession. Owner can subsequently seek possession in civil court following due process of
law.

There are certain essential requirements for fulfilment of recovery under this section that
are as follows:
The person suing for dispossession must have been in possession of that property.
The person must be dispossessed from the property and such removal from the property
must be unlawfully done
The dispossession must be without the consent of the person suing.
Suit must be filed by a person before the expiry of 6 months from the date of dispossession.
No suit by a person can be brought against the government.

Recovery of possession of Immovable property

Section 5 and 6 of the Specific Relief Act, 1963 provide methods for recovery of possession
of the certain specific immovable property. Section 5 of Specific Relief Act, 1963 provides
that a person entitled to the possession of any specific immovable property can recover it in
the manner prescribed by the Code of Civil Procedure, 1908 (5 of 1908).

Section 5 provides the manner for recovery of specific immovable property. It reads as, “A
person entitled to the possession of the specific immovable property can recover it in the
manner provided by the Code of Civil Procedure, 1908”.

The essence of this section is ‘title,’ i.e. the person who has better title is a person entitled
to the possession. The title may be of ownership or possession. Thus, if ‘A’ enters into
peaceful possession of land claiming his own although he might have no title, still he has the
right to sue another who has ousted him forcibly from possession because he might have no
legal title but at least has a possessory title.

It is a principle of law that a person, who has been in a long continuous possession of the
immovable property, can protect the same by seeking an injunction against any person in
the world other than the true owner. It is also a settled principle of law that owner of the
property can get back his possession only by resorting to due process of law. It states that a
suit for possession must be filed having regard to the provision of the Code of Civil
Procedure.

Section 6 of the Specific Relief Act deals with the provision related to suit by person
dispossessed of immovable property. It reads as,
“(1) If any person is dispossessed without his consent of immovable property otherwise
than in due course of law, he or any person claiming through him, may by suit recover
possession thereof.
(2) No suit under this section shall be brought-
After the expiry of six months from the date of dispossession.
Against the Government.
(3) No appeal shall lie from any order or decree passed in any suit instituted under this
section, nor shall any review of the decree under this section is allowed.
(4) Nothing in this section shall bar any person from suit to establish his title to such
property and to recover possession thereof.”
Section 6 is only applicable if the plaintiff proves:
That he is in juridical possession of the immovable property in dispute.
That he had been dispossessed of without his consent and without due process of law.
That dispossession took place within six months from the date of suit.
Section 5 and 6 both give alternative remedies and are mutually exclusive. Under section 5,
a person dispossessed can get possession on the basis of title, whereas in section 6, a
person dispossessed may recover possession by proving previous possession and further
wrongful dispossession.

Possession in the context of section 6 means legal possession which may exist with or
without actual possession and with or without rightful origin. The plaintiff in a suit under
section 6 need not establish title.
Long-standing peaceful possession of is enough to prove actual possession. In K.K. Verma v
Union of India(1) it was held that after the expiry of the tenancy agreement, the tenant
continues to hold juridical possession and cannot be dispossessed unless the owner gets a
decree of eviction against him.
The objects of section 6 are as follows.
To discourage people from taking the law into their hands (however good their title may
be).
To provide a cheap and useful remedy to a person dispossessed of immovable property in
due course of law.
Further, it should be noted that where the grant of possession is purely gratuitous, the
owner has the right to reclaim possession even without the knowledge of a person in
possession. The only prayer in a suit under section 6 can be a prayer for recovery of
possession. Consequently, a claim for damages cannot be combined with that for
possession. Section 14 of the Limitation Act, 1963 applies to the proceedings against
dispossession.

Case Law:
K. Krishna v A.N Paramkusha Bai In this case, a tenant was dispossessed forcibly by the
owner but he himself get forcible repossession. The Court, in this case, held that “tenant
could institute suit for repossession immediately when he was forcibly ousted, but as soon
as he takes forcible repossession, he became trespasser and therefore could not be
regarded to be in lawful possession.
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Q3.
Q. 3 When contracts can be and cannot be specifically enforced?
Answer:
The law recognizes that certain type of Contract cannot be specifically enforced. These
include Contracts:

where a party to the Contract has obtained substituted performance,

which involves performance of continuous duty which the court cannot supervise<
which is so dependent on personal qualification of the parties that the court cannot enforce
specific performance of its material terms
contract, which is in nature determinable
In Indian Oil Vs Amritsar Gas (1991 SCC (1), Hon'ble Supreme Court declined to specifically
enforce the Dealership Agreement as same was terminable in nature.

Further, person seeking specific performance of contract must prove that he has performed
or has always been ready and willing to perform the essential terms on his part. However,
where such obligation includes payment of money, there is no need to actually tender the
amount or deposit the same in Court, unless directed by the Court. Person who has become
incapable of performing or violates any essential term or acts in fraud or variance with
terms of contract cannot seek specific performance. Similarly, Vendor or lessor with
defective title of property cannot seek specific performance of contract. In Sitaram vs
Radheyshyam 2008 AIR SC 143, Court held that for seeking specific performance, Plaintiff
has to show that his conduct has been without blemish throughout

Section 14 of the Act lays down the types of contracts which cannot be specifically
enforceable.
The amendment seeks to substitute Section 14 as under:
“Section 14: Contracts not specifically enforceable
1. The following contracts cannot be specifically enforced, namely:
(a) Where a party to the contract has obtained substituted performance of contract in
accordance with the provisions of section 20;
(b) A contract, the performance of which involves the performance of a continuous duty
which the court cannot supervise;
(c) A contract which is so dependent on the personal qualifications of the parties that the
court cannot enforce specific performance of its material terms; and

(d) A contract which is in its nature determinable.”

(2) A contract made by a trustee in excess of his powers or in breach of trust cannot be
specifically enforced.

14. Contracts not specifically enforceable. —

(1) The following contracts cannot be specifically enforced, namely: —
(a) a contract for the non-performance of which compensation in money is an adequate
relief;
(b) a contract which runs into such minute or numerous details or which is so dependent on
the personal qualifications or volition of the parties, or otherwise from its nature is such,
that the court cannot enforce specific performance of its material terms;
(c) a contract which is in its nature determinable;
(d) a contract the performance of which involves the performance of a continuous duty
which the court cannot supervise.
(2) Save as provided by the Arbitration Act, 1940 (10 of 1940), no contract to refer present
or future differences to arbitration shall be specifically enforced; but if any person who has
made such a contract (other than an arbitration agreement to which the provisions of the
said Act apply) and has refused to perform it, sues in respect of any subject which he has
contracted to refer, the existence of such contract shall bar the suit.
(3) Notwithstanding anything contained in clause (a) or clause (c) or clause (d) of sub-section
(1), the court may enforce specific performance in the following cases: —
(a) where the suit is for the enforcement of a contract, —
(i) to execute a mortgage or furnish any other security for securing the repayment of any
loan which the borrower is not willing to repay at once: Provided that where only a part of
the loan has been advanced the lendor is willing to advance the remaining part of the loan
in terms of the contract; or
(ii) to take up and pay for any debentures of a company;
(b) where the suit is for, —
(i) the execution of a formal deed of partnership, the parties having commenced to carry on
the business of the partnership; or
(ii) the purchase of a share of a partner in a firm;
(c) where the suit is for the enforcement of a contract for the construction of any building or
the execution of any other work on land: Provided that the following conditions are fulfilled,
namely: —
(i) the building or other work is described in the contract in terms sufficiently precise to
enable the court to determine the exact nature of the building or work;
(ii) the plaintiff has a substantial interest in the performance of the contract and the interest
is of such a nature that compensation in money for non-performance of the contract is not
an adequate relief; and
(iii) the defendant has, in pursuance of the contract, obtained possession of the whole or
any part of the land on which the building is to be constructed or other work is to be
executed.

29. Alternative prayer for rescission in suit for specific performance.—A plaintiff instituting a
suit for the specific performance of a contract in writing may pray in the alternative that, if
the contract cannot be specifically enforced, it may be rescinded and delivered up to be
cancelled; and the court, if it refuses to enforce the contract specifically, may direct it to be
rescinded and delivered up accordingly.
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Q4.
Q. 4 Explain person for against whom contracts may be specifically enforced?
Answer:
Person for or against whom contracts may be specifically enforced
Section 15 talks about who may obtain specific performance:
Except as otherwise provided by this Chapter, the specific performance of a contract may be
obtained by
(a) any party thereto;
(b) the representative in interest or the principal, of any party thereto:
Provided that where the learning, skill, solvency or any personal quality of such party is a
material ingredient in the contract, or where the contract provides that his interest shall not
be
assigned, his representative in interest of his principal shall not be entitled to specific
performance of the contract, unless such party has already performed his part of the
contract, or
the performance thereof by his representative in interest, or his principal, has been
accepted by
the other party;
(c) where the contract is a settlement on marriage, or a compromise of doubtful rights
between members of the same family, any person beneficially entitled thereunder;
(d) where the contract has been entered into by a tenant for life in due exercise of a power,
the remainderman;
(e) a reversioner in possession, where the agreement is a covenant entered into with his
predecessor in title and the reversioner is entitled to the benefit of such covenant;
(f) a reversioner in remainder, where the agreement is such a covenant, and the reversioner
is entitled to the benefit thereof and will sustain material injury by reason of its breach;
(g) when a company has entered into a contract and subsequently becomes amalgamated
with another company, the new company which arises out of the amalgamation;
(h) when the promoters of a company have, before its incorporation, entered into a
contract
for the purposes of the company, and such contract is warranted by the terms of the
incorporation, the company:
Provided that the company has accepted the contract and has communicated such
acceptance to
the other party to the contract.
Specific Performance of Contracts:
Specific performance means enforcement of exact terms of the contract. Under it the
plaintiff claims for the specific thing of which he is entitled as per the terms of contract. For
example, if A agrees to sell certain shares to B of a specific company which are limited in
number and after the payment made by B, if A refuses to sell the shares then B is entitled to
recovery of those shares.
Specific performance of the contract is enforceable:
When there exists no standard for ascertaining actual damage: It is the situation in which
the plaintiff is unable to determine the amount of loss suffered by him. Where the damage
caused by the breach of contract is ascertainable then the remedy of specific performance is
not available to the plaintiff. For example, a person enters into a contract for the purchase
of a painting of dead painter which is only one in the market and its value is unascertainable
then he is entitled to the same.
When compensation of money is not adequate relief: In following cases compensation of
money would not provide adequate relief:
Where the subject matter of the contract is an immovable property.
Where the subject matter of the contract is movable property and,
Such property or goods are not an ordinary article of commerce i.e. which could be sold or
purchased in the market.
The article is of special value or interest to the plaintiff.
The article is of such nature that is not easily available in the market.
The property or goods held by the defendant as an agent or trustee of the plaintiff.

(3) A contract in writing may first be rectified, and then if the party claiming rectification has
so prayed in his pleading and the court thinks fit, may be specifically enforced.
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Q5.
Q. 5 Explain in detail substituted performance of contract
((not attended this question/ Not Answered))