Can a court grant part performance on option of: (i) plaintiff; (ii) both parties; (iii) defendant only? At what stage can part performance be accepted?

Specific Performance of Part of a Contract: Section 12

The foundational rule of the law of specific performance is that a court must enforce a contract in its entirety, or not at all. A court cannot compel a party to do one part of what it promised while leaving the rest to chance. This principle, now embodied in section 12(1) of the Specific Relief Act, 1963, reflects the ancient equitable idea that bargains are struck as a whole — the consideration paid, and the benefit received, are inextricably linked. Section 12 constitutes, in the words of the Privy Council in William Graham v. Krishna Chandra Dey (AIR 1925 PC 45), a complete code, outside of which no claim for part performance can be successfully mounted.

Yet the law recognises that there are situations where insistence on complete performance would produce results more unjust than part enforcement. Sections 14 to 17 of the old Specific Relief Act, 1877 addressed these exceptional situations in separate provisions. The present Act has, on the recommendation of the Law Commission in its 9th Report, amalgamated all those provisions into a single, carefully structured section 12, without disturbing the underlying principles.

The General Rule and Its Exceptions

Section 12(1) states categorically that a court shall not direct specific performance of a part of a contract. The word "shall not" was deliberately chosen to emphasise the mandatory nature of this prohibition. The Madras High Court, in Subramani v. Kannappa Reddiar (AIR 1973 Mad 393), reaffirmed that the four sub-sections of section 12 together provide an exhaustive list of exceptions, and no claim for partial enforcement can be brought outside their terms.

The exceptions are structured around a central factual question: why is full performance impossible? If a party to the contract finds itself unable to perform the entirety of its obligations — whether due to a deficiency in quantity, a defect in title, a legal prohibition, or the destruction of part of the subject matter — the law provides carefully calibrated remedies depending on the nature and scale of the shortfall.

Sub-section 2: Small Deficiency — Either Party May Sue

Where the part left unperformed bears only a small proportion to the whole in value, and admits of compensation in money, section 12(2) permits the court to direct specific performance of the part that can be performed, and to award compensation for the deficiency. The crucial feature of this sub-section is its even-handedness: the suit may be brought at the instance of either party — the vendor or the purchaser — and neither needs to be the one who is "not in default."

The Privy Council explained the practical operation of this provision lucidly in Rutherford v. Acton-Adams (AIR 1915 PC 113). If the vendor sues and can convey substantially what the purchaser bargained for, the court will decree performance with compensation for any small and immaterial deficiency. If the purchaser sues, he has an even wider right — subject to considerations of hardship, he may elect to take all he can get and claim proportionate abatement of the purchase price. The compensation under this sub-section essentially takes the form of an abatement in the consideration, calculated as the difference between the value of what was promised and the value of what can actually be conveyed.

Two conditions must co-exist before this sub-section can be invoked. First, the unperformed part must be so small in value that it is truly insignificant — not merely smaller than the other portion, but inconsiderable. In AL Parthasarathi Mudaliar v. Venkata Kondiah Chettiar (AIR 1965 Mad 188), it was held that 1 acre and 41 cents constituted a "large" part of 4 acres and 26 cents, and therefore fell outside sub-section (2) and within sub-section (3). Second, the deficiency must admit of money compensation — there must exist some basis from which a court can calculate a fair monetary equivalent for what is missing.

Sub-section 3: Considerable Deficiency — Only the Other Party May Sue

This is the most complex and litigated provision in the section, and it addresses the situation where the part left unperformed is not small but considerable. Sub-section (3) draws a sharp distinction between the party in default and the party not in default. The defaulting party — the one who is unable to perform the whole — cannot seek the benefit of part performance under this sub-section. The law does not permit a party to take advantage of its own incapacity. This position flows from the general principle in section 16(b), which disentitles from specific relief any person who violates an essential term of the contract.

Only the other party — the innocent party, the one who is not in default — can invoke sub-section (3) and seek a decree compelling the defaulting party to perform as much as it can. In Venkiteswara Pai Rama Pai v. Luis (AIR 1964 Ker 123), it was clarified that the expression "party in default" in sub-section (3) refers to the party who is unable to perform, not the party whose fault caused that inability.

The conditions for invoking sub-section (3) are demanding. The innocent party must:

• (i) Pay or have paid the agreed consideration for the whole contract, reduced proportionately for the unperformed part (if that part admits of money compensation under clause (a)); or pay the whole consideration without abatement if the unperformed part does not admit of compensation (clause (b)); and

• (ii) Unconditionally relinquish all claims to the performance of the remaining part of the contract and all rights to compensation, whether for the deficiency or for any loss suffered through the default.

This last condition — relinquishment — deserves particular attention and will be addressed separately below.

Sub-section 4: Divisible Contract — Either Party May Sue

A completely different situation arises under sub-section (4), which deals with contracts that are severable into genuinely independent parts. Where one part of the contract, taken by itself, can and ought to be specifically performed, and that part stands on a separate and independent footing from another part which cannot or ought not to be performed, the court may direct specific performance of the enforceable part alone.

The Madras High Court, in AL Parthasarathi Mudaliar v. Venkata Kondiah Chettiar (AIR 1965 Mad 188), set out three conditions for the application of this sub-section: first, the contract must be capable of being split into distinct parts; second, one part must independently qualify for specific enforcement; and third, that part must be genuinely separate and not dependent upon the unenforceable part. The Privy Council, in William Graham v. Krishna Chandra Dey (AIR 1925 PC 45), warned that courts cannot use this provision to make a new contract for the parties or to enforce upon them an agreement which, in substance, they had not themselves made. The "separate and independent footing" must be found in the contract as it stands, not invented by the court. Whether a contract is divisible is always a question of fact, to be decided on the terms of the contract and the nature of the subject matter.

The Critical Question: Who May Seek Part Performance?

These sub-sections, read together, produce the following chart of who is entitled to seek part performance:

The defendant — the party in default — has no right under sub-section (3) to seek a decree for part performance of a contract which he himself is unable to perform in full. This was made explicit in the comparison between the language of sub-sections (2) and (3): sub-section (2) uses the phrase "at the suit of either party," while sub-section (3) deliberately uses "at the suit of the other party."

Relinquishment: The Price of Part Performance

The condition of relinquishment under section 12(3)(ii) is the most demanding aspect of the provision. The innocent party who seeks part performance must give up, entirely and unconditionally, all claims to the balance performance that the defaulting party cannot render, and all rights to compensation for that deficiency or any loss suffered on that account. This relinquishment is not a formality — it is a condition precedent to the relief. As the Supreme Court held in Surjit Kaur v. Naurata Singh (AIR 2000 SC 2927), once a party has categorically and unambiguously elected not to accept part performance, it cannot subsequently turn around and claim it. If vendees were permitted to first refuse part performance, file years of litigation, and then ultimately accept what was available, vendors would be kept out of their money for unconscionably long periods. That would be inequitable.

However, the court drew an important distinction: a mere insistence on full performance in the plaint, or even the filing of a suit for specific performance of the whole contract without explicitly averring willingness to accept part performance, does not by itself amount to an election to refuse part performance. The refusal must be categorical and unambiguous. Absent such a categorical refusal, the plaintiff retains the right to subsequently elect to accept partial performance.

At What Stage May the Relinquishment Be Made?

This is the most practically important question for litigants, and the law has developed a notably liberal answer. A three-judge bench of the Supreme Court in Surinder Singh v. Kapoor Singh (2005) 5 SCC 142 settled the position once and for all: section 12(3) lays down no limitation on the stage at which an application for relinquishment can be made. Such an application can be filed at any stage of the proceedings, including before the Supreme Court itself.

The court in that case approved the earlier decision in Kalyanpur Lime Works Ltd. v. State of Bihar (AIR 1954 SC 165), where a relinquishment was made across the bar during arguments before the Supreme Court and was accepted. The court further held that even a statement across the bar, without any formal written application or amendment of the plaint, is sufficient to constitute a valid relinquishment for the purposes of this section.

The following propositions now stand established:

• The relinquishment need not be pleaded in the original plaint.

• It can be made at the stage of trial, in the first appellate court, before the High Court in second appeal, or even before the Supreme Court.

• The plaint can be amended at the appellate stage to include the necessary averment, and courts should ordinarily allow such an amendment.

• Delay alone will not disentitle the plaintiff from making this election, unless the defendant can establish that the delay has caused him actual prejudice.

• However, where a party has already categorically refused part performance, no subsequent reversal of that election will be entertained.

The Supreme Court further observed in Surinder Singh that an application for amendment which, read as a whole, discloses an intention to relinquish the unperformable part and pay the proportionate consideration, will be treated as sufficient, even if it does not contain the exact statutory language of section 12(3). By necessary implication, if the prayer is restructured to seek enforcement only of the performable part, the relinquishment of both performance and compensation for the remainder is implicit.

The Vital Change Brought by the Act of 1963

One change introduced by the present Act deserves special mention, because much confusion has arisen from courts overlooking it. Under section 15 of the old Act of 1877, the plaintiff seeking part performance under sub-section (3) had to pay the entire consideration — even in cases where the unperformed part was capable of monetary assessment. The Law Commission in its 9th Report found this inequitable, and the present Act introduced the provision for proportionate abatement under section 12(3)(a): where the unperformed part admits of money compensation, the plaintiff need only pay the consideration reduced proportionately for the part that cannot be performed.

The Supreme Court in Hanumappa Channappa Hullur v. Shivamaruthappa Parappa Kalli (2015) 9 Scale 328 and in PC Varghese v. Devaki Amma Balambika Devi (2005) 8 SCC 486 explicitly noted this "vital departure" from the old law. In cases under sub-section (3)(b) — where the unperformed part does not admit of money compensation — the whole consideration without abatement remains payable, since apportionment is not mathematically possible.

Reading the section as a whole, the law of part performance is calibrated around a principle of equity: a party who is unable to perform what it promised should not be entirely absolved, but equally, the innocent party who did not get what was bargained for should not be compelled to receive a fundamentally different thing. The structure of section 12 — distinguishing between small and considerable deficiencies, between divisible and indivisible contracts, and between the party at fault and the party who is not — is the legislature's attempt to strike that balance with precision.