Who can claim specific performance and when can specific performance be refused?

Who Can Claim Specific Performance: Section 15

The General Rule — Party to the Contract

The starting point is simple: primarily, the parties to the contract are the proper persons to sue. Section 15(a) of the Specific Relief Act, 1963 declares that specific performance may be obtained by any party thereto. This seems straightforward, but in practice it encompasses a seller, a purchaser, a lessor, and a lessee with equal force. As the Supreme Court confirmed in Bharat Karsondas Thakkar v. Kiran Construction Co., (2008) 13 SCC 658, a third party — not being a party to the contract — falls outside the purview of Section 15(a) and cannot sue. The scope of a specific performance suit cannot be enlarged to bring in strangers; doing so would convert a contractual action into a title dispute, which is impermissible.

Where the contract is made in favour of more than one person, all co-contractors must generally be before the court. The settled position, confirmed in G. Jayashree v. Bhagwandas S. Patel, AIR 2009 SC 1749, is that those who refuse to join as plaintiffs must be impleaded as defendants, and once all parties are before the court, the court may grant appropriate relief.

Representative in Interest or Principal: Section 15(b)

The Act extends the right of suit beyond the original contracting party to the representative in interest or the principal. A representative in interest carries the contractual interest, not just a property right, into his suit. This means that the legal heirs of a deceased contracting party may pursue the contract, as may an assignee, provided the right has been validly transferred.

The proviso to Section 15(b), however, insists on an important qualification: where the learning, skill, solvency or personal quality of the original party was a material ingredient of the contract, or where the contract expressly prohibited assignment, the representative in interest or principal cannot seek specific performance unless the original contracting party had already performed his part, or the other party has accepted performance by the representative. The reason is straightforward: no contracting party should be compelled to accept performance from a stranger when he contracted on the faith of specific personal qualities. As the Supreme Court put it in Kapilaben v. Ashok Kumar Jayantilal Sheth (2019), an assignee cannot enforce the contract if the promisee's consent to performance by a third party has not been obtained and the contract was of a personal nature.

An assignee of the contractual right may also sue under Section 15(b). The ordinary presumption is that contracts are assignable, and the assignee steps into the shoes of the assignor — unless the contract expressly or by necessary implication prohibits assignment. In Shyam Singh v. Daryao Singh, AIR 2004 SC 348, the Supreme Court held that an implied prohibition against assignment of a right to purchase cannot be inferred unless words in the document clearly indicate such prohibition.

Persons Beneficially Entitled Under Family Settlements: Section 15(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 under such settlement or compromise may sue for specific performance, even if he was not a party to the original agreement. This clause constitutes a recognised exception to the doctrine of privity, and is justified by the fact that family arrangements are often made for the benefit of persons not directly party to them — such as children under a marriage settlement, or junior members of a family affected by an elder's compromise.

Remainderman, Reversioner, Amalgamated Companies and Pre-Incorporation Contracts: Sections 15(d) to 15(h)

The Act further extends the circle of persons who may sue, all for recognisable reasons of equity and commercial necessity:

Under Section 15(d), a remainderman may enforce a contract made by a tenant for life in due exercise of a power, because the remaining interest is ultimately his.

• Under Sections 15(e) and (f), a reversioner — in possession or remainder — may enforce a covenant entered into with his predecessor in title, where the reversioner is entitled to the benefit of the covenant.

• Under Section 15(g), where a company merges with another, the new company may enforce contracts of the transferor company. By the 2018 Amendment, Section 15(fa) extends the same right to an amalgamated Limited Liability Partnership.

• Under Section 15(h), a company may enforce pre-incorporation contracts made by its promoters for its purposes, provided the company has accepted the contract and communicated such acceptance to the other party.
  

When Can Specific Performance Be Refused

The Unamended Position: Judicial Discretion under Section 20

Under the law as it stood before the Specific Relief (Amendment) Act, 2018, the grant of specific performance was discretionary — governed not arbitrarily, but by settled principles. The Supreme Court, drawing from the famous pronouncement in Rookes' Case (1598) 77 ER 209, held in K. Prakash v. B.R. Sampath Kumar, (2015) 1 SCC 597 that judicial discretion must follow the law implicitly and must be guided by rules of law and equity. The unamended Section 20 enumerated specific circumstances in which the court may properly refuse the relief.

Personal Bars: Section 16

The most important categorical ground for refusing specific performance is the set of personal bars in Section 16. These disentitle a plaintiff on account of his own conduct, irrespective of the nature of the contract. Under the amended Act, Section 16 provides that specific performance cannot be enforced in favour of:

(a) A person who has obtained substituted performance of the contract under Section 20 (post-2018 amendment). Once a party has had the contract performed by a third party at the promisor's expense, he has elected his remedy and cannot simultaneously seek specific performance of the very same contract.

• (b) A person who has become incapable of performing, or who violates an essential term of the contract that remains to be performed on his part, or who acts in fraud of the contract, or who wilfully acts at variance with or in subversion of the relation intended to be established by the contract. The acts of contravention must be gross and wilful to attract this bar; minor breaches of good faith, where the defendant had a remedy in hand, may not disqualify the plaintiff.

• (c) A person who fails to prove that he has performed or has always been ready and willing to perform the essential terms of the contract on his part. This is the most frequently invoked bar and has been discussed earlier — it is an absolute statutory bar and neither the court nor the defendant can waive it.
  

Unfair Advantage over the Defendant: Unamended Section 20(2)(a)

The court under the unamended Section 20 could properly refuse specific performance where the terms of the contract, or the conduct of the parties at the time of contracting, or surrounding circumstances, gave the plaintiff an unfair advantage over the defendant — even if the contract was not voidable. The Explanation to this clause cautions that mere inadequacy of consideration or the mere fact that the contract is onerous to the defendant or improvident in its nature shall not by itself constitute an unfair advantage. An agreement which inflicts more injury upon the defendant than it confers a benefit on the plaintiff will not be enforced — the court will not become an instrument of oppression. It must be clear from the circumstances that the plaintiff used some unconscionable advantage, some superior knowledge, or some inequality in bargaining to extract the contract from the defendant.

Hardship on the Defendant: Unamended Section 20(2)(b)

Another ground for refusal was where performance of the contract would involve some hardship on the defendant which he did not foresee at the time of contracting, whereas its non-performance would involve no such hardship on the plaintiff. The word hardship here means something more than inconvenience — it connotes a burden that a court of equity would find it unconscionable to enforce. Explanation 2 to Section 20 clarified that the question of hardship must be determined with reference to the circumstances existing at the time of the contract, not subsequent circumstances — except where the hardship resulted from the plaintiff's own subsequent act. A sharp rise in the price of land, occurring after the contract was made, does not by itself constitute unforeseeable hardship; courts have been reluctant to allow the defendant to benefit from his own delay or speculation by pleading the rise in prices as hardship — T.V. Krishnamurthy v. Veeranna, AIR 2009 SC 1749.

Other Inequitable Circumstances: Unamended Section 20(2)(c)

The court could also refuse the relief where, though the contract was not voidable in law, it was inequitable to enforce specific performance on account of the circumstances under which the defendant entered into it. This residual ground covers cases of surprise, imposition or undue influence falling short of legal fraud — situations where, although the contract cannot be set aside, the court's conscience would be troubled by actively enforcing it. The conduct of the plaintiff throughout the transaction and up to the hearing is relevant to this inquiry.

The Post-2018 Position

The 2018 Amendment has done away entirely with the court's discretion under Section 20. Specific performance is now a rule, not an exception, and if the requirements of Sections 11(2), 14, and 16 are satisfied, the court is bound to decree it. The grounds of unfair advantage, hardship, and general inequity — which were part of unamended Section 20 — no longer operate as a direct bar to specific performance in suits filed after the amendment came into force on 1 October 2018. However, the personal bars of Section 16 remain fully operative, and the categories in Section 14 continue to define the outer boundary of the specifically enforceable. For suits filed before the 2018 Amendment, the law applicable is that which was in force at the time of filing, and the unamended provisions continue to govern — a position affirmed by the Supreme Court in Sughar Singh v. Hari Singh, (2021) SCC OnLine SC 975.