As against civil law countries, specific performance in India is discretionary remedy. What are its parameters? Should discretion be extended to movable goods in commercial setup?

The Philosophical Divide: Civil Law and Common Law

At the heart of the contrast between civil law and common law systems lies a fundamentally different answer to the question: what does a creditor deserve when a contract is broken? In civil law systems — the French Code Civil, the Spanish Civil Code, the German BGB, the Ethiopian Civil Code, the Quebec Civil Code — the answer has always been straightforward: he is entitled to what he was promised. Article 1096 and 1098 of the Spanish Civil Code and Article 1602 of the Quebec Civil Code all provide, in substance, that specific performance is the presumptive remedy upon breach. The creditor may demand actual performance. If the debtor refuses, the court may deliver it through seizure of goods, substitute performance at the debtor's expense, or through coercive daily fines — the astreinte in French law — until compliance is achieved. The law treats the sanctity of promise as paramount, and holds the promisor to the very thing he agreed to do.

The UNIDROIT Principles of International Commercial Contracts, which represent a modern synthesis of civil law and common law tendencies, broadly follow the civil law approach: Article 7.2.1 provides that where a party who is obliged to pay money does not pay it, the other party may require payment; and with respect to non-monetary obligations, the right to require performance is stated as the general rule, subject to stated exceptions.

The common law tradition takes the opposite path. Damages is the presumptive remedy; specific performance is the extraordinary exception. This approach is deeply rooted in history. The remedy of specific performance was not a creature of the ordinary courts of common law but was born in the Court of Chancery, whose intervention was justified only where the common law remedy of damages was inadequate. The Vice-Chancellor in Falcke v. Gray (1859, 4 Drewry 651) articulated the foundational rationale: "A Court of law gives damages for the non-performance, but a Court of Equity says that is not sufficient; justice is not satisfied by that remedy and, therefore, a Court of Equity will decree specific performance, because a mere compensation in damages is not a sufficient remedy and satisfaction for the loss of the performance of the contract." This was not a statement of the primacy of specific performance — it was a justification for the exception.

The common law's preference for damages is justified on multiple theoretical grounds: that specific performance may become impossible or useless pending litigation; that it restricts the personal liberty of the promisor; that failure to comply exposes the defendant to contempt of court — a sanction considered disproportionate in a civil dispute; and importantly, that the law of efficient breach — which holds that a promisor should be free to break a contract and pay damages when the cost of performance exceeds the value of performance — requires that damages be the default remedy. As against these arguments, the civil law response is that the efficient breach theory ignores the moral obligation of promise and gives insufficient weight to the promisee's interest in actual performance.

The Indian Position Before 2018: Qualified Discretion

India, as a common law jurisdiction, inherited the discretionary tradition through the Specific Relief Acts of 1877 and 1963. Under the unamended section 10, specific performance could be granted only when there was no standard for ascertaining actual damage caused by non-performance, or when compensation in money would not afford adequate relief. The section embodied two foundational presumptions: first, that breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money; and second, that breach of a contract to transfer movable property can ordinarily be so relieved.

Crucially, even where these tests were satisfied, the remedy was expressly stated to be "in the discretion of the court" — the unamended section 10 used the word "may," and the unamended section 20 spelled out the parameters of that discretion with precision. These parameters, which we have examined in detail, included: the absence of unfair advantage to the plaintiff, absence of unforeseeable hardship to the defendant, and the general inequitability of enforcement. Underlying all of them was the adequacy test — the inherited common law requirement that the plaintiff demonstrate that damages are an insufficient remedy.

The result of this framework in practice, as the Statement of Objects and Reasons for the 2018 Amendment candidly acknowledged, was that "courts in the majority of cases award damages as a general rule and grant specific performance as an exception." This was precisely the common law hierarchy — and it was being applied in a country whose economic ambitions had far outgrown the framework.

The 2018 Amendment: India's Turn Toward Civil Law

The Specific Relief (Amendment) Act, 2018 represents a deliberate and decisive legislative shift in India's approach. The word "may" in section 10 was replaced with "shall." The adequacy test was abolished. The discretionary framework of the unamended section 20 was replaced entirely by the new provision for substituted performance. The court is now bound to enforce specific performance of a contract, subject only to the express bars in sections 11(2), 14, and 16. The philosophical foundations of this shift are captured in the Statement of Objects and Reasons: "tremendous economic development since the enactment of the Act have brought in enormous commercial activities in India including foreign direct investments, public private partnerships, public utilities infrastructure developments, etc. It has been felt that the Act is not in tune with the rapid economic growth happening in our country." Special courts under section 20B were created to try infrastructure-related suits with a 12-month disposal target under section 20C. The trajectory is unmistakable — India is moving toward the civil law model for the sake of commerce and growth.

It is important, however, to note that the 2018 Amendment is not retrospective in operation. Since it is neither declaratory nor clarificatory but substantive and remedial in nature, following the principle laid down in Union of India v. IndusInd Bank, it operates prospectively. All pending suits and pre-amendment contracts continue to be governed by the unamended provisions, which means the old discretionary parameters remain very much alive in Indian courts today.

The Treatment of Movable Property: A Special Problem

This brings us to the second and sharper part of the question — should the discretion of the court extend to contracts for the sale of movable goods in a commercial setting?

Under the unamended section 10, the Explanation raised a clear presumption against specific performance for movable property. The breach of a contract to transfer movable property was presumed to be adequately compensable in money, except in two situations: first, where the property is not an ordinary article of commerce, or is of special value or interest to the plaintiff, or consists of goods not easily obtainable in the market; and second, where the property is held by the defendant as agent or trustee of the plaintiff. This presumption was grounded in the common law reasoning that where goods are purchasable in the market, the disappointed buyer can take the damages awarded and purchase equivalent goods — and is thus made whole.

For ordinary commercial transactions in goods, this reasoning has great force, and it remains valid. A commodity trader who contracts to buy 500 bales of cotton and finds the seller in breach is not helpless — the market exists, cover is available, and damages measured by the market price differential will, in most cases, fully compensate him. The court's reluctance to step in and order physical delivery is perfectly rational.

But the question becomes far more complex in the modern commercial world. Consider a pharmaceutical company that has contracted for a patented Active Pharmaceutical Ingredient (API) that only one manufacturer in the world produces. Consider an airline that has contracted for a bespoke aviation component for which there is no ready market. Consider a software company that has contracted for source codes specifically developed for its proprietary systems. In each of these cases, the goods are not ordinary articles of commerce, damage is difficult to ascertain, and the market cannot supply a substitute. Under the unamended section 10 itself, these contracts would have qualified for specific performance under the exception for goods "not easily obtainable in the market." The New York Court of Appeals in Van Wagner Advertising Corp. v. S & M Enterprises (1986) captured this reasoning well, though in the context of a lease: the test for specific performance is not simply whether the subject matter is unique but whether the uniqueness is such that monetary relief cannot compensate the plaintiff.

The objection to extending specific performance to movable goods in commercial settings is principally one of practicability. Courts in common law countries have long been wary of supervising continuing contracts for the supply of goods, services, or materials. The concern is that an order compelling delivery of 10,000 tonnes of steel, for instance, is easy to pass but difficult to monitor and enforce — and that non-compliance may drag the defendant into contempt proceedings, which are a disproportionate response in a commercial dispute. This was the basis on which specific performance was refused in Jabalpur Cable Network Pvt. Ltd. v. ESPN Software India Pvt. Ltd., where the Delhi High Court declined to compel ESPN to continue transmitting satellite signals on the ground that the arrangement was in the nature of a continuing contractual service and the defendant had shown genuine grounds for termination.

In this context, the new remedy of substituted performance under the amended section 20 is a thoughtful legislative answer. Where a seller of goods refuses to deliver, the buyer may now procure the same or equivalent goods from a third party and recover the differential cost from the defaulting seller. This combines the civil law's insistence on actual fulfilment of the contract's purpose with the common law's pragmatism about supervision and enforcement. The buyer is made whole — not through a court order compelling physical delivery but through a market transaction whose cost is borne by the promisor. The remedy is particularly well suited for commercial contracts for movable goods, since the buyer can act swiftly, minimise losses, and present a concrete bill to the court rather than engaging in speculative damages calculations.

The Case for Selective Extension of Discretion

Having said all this, one must squarely address the normative question: should specific performance of contracts for movable goods in commercial settings be a matter of right or discretion?

The principled answer is that the "contract as right" philosophy of civil law — now adopted by the 2018 Amendment for all contracts — is correct in its general orientation, but that some residual judicial discretion is indispensable in commercial disputes involving goods. The reasons for this view are worth stating carefully.

First, the uniform application of mandatory specific performance to commercial contracts for goods without any adequacy filter may produce absurd results. A buyer who could have obtained cover easily in the market has no good reason to demand actual delivery from a specific seller — damages are a complete remedy, and compelling delivery serves no legitimate interest of the plaintiff. It merely gives him a litigating advantage.

Second, the hardship defence — abolished by the 2018 Amendment — deserved retention. As was observed in K. Narendra v. Riviera Apartments Pvt. Ltd. (AIR 1999 SC 2309), where legislation passed after the contract made performance impossible or extremely burdensome, the court could refuse specific performance. The 2018 Amendment's removal of this defence has been criticised as producing a result where a party may be ordered to perform a contract even when doing so would cause hardship of a kind neither party foresaw. In commercial contracts for goods — which are often long-term, price-sensitive, and subject to market disruptions — this is a particularly serious concern.

Third, the civil law model itself is not as absolute as it may appear. The UNIDROIT Principles, Article 7.2.2, carve out exceptions to the right to performance: specific performance is not available where performance is impossible, where performance would be unreasonably burdensome or expensive, where the party entitled to performance can reasonably obtain performance from another source, or where the performance is of an exclusively personal character. These are, in substance, the same considerations that informed the Indian court's discretion under the unamended sections — and they remain intellectually valid.

The ideal resolution, for commercial contracts in movable goods, is perhaps the model now partially adopted by India: specific performance as a general rule, with substituted performance as an alternative, and with a narrowly defined set of grounds on which the court may, in truly exceptional cases, decline to enforce. The broad discretion of the unamended section 20 may have been too wide, allowing courts to deny specific performance on grounds that were often more sympathetic than principled. But the 2018 Amendment may have swung the pendulum too far in the other direction, removing even the hardship defence without adequate legislative debate.

The enduring insight of this entire debate is expressed most cleanly in the contrast between two ancient maxims. The common law took as its starting point: ubi jus ibi remedium — where there is a right, there is a remedy — but assumed that the remedy was ordinarily money. The civil law took as its starting point: pacta sunt servanda — agreements must be kept — and insisted on keeping them. The 2018 Amendment signals that India, a country where the rule of law and commercial certainty are still being consolidated, has chosen the second maxim as the organizing principle of its law of contracts. Whether that choice will be vindicated by the commercial court system's capacity to enforce it promptly and justly is a question that only time and judicial practice will answer.