Will the following contracts be specifically enforceable: (i) A contract to construct a building; (ii) A contract to execute a mortgage; (iii) A contract to sell property to which seller has no title at time of contract but acquires later?

Each of the three contracts raises a distinct and instructive question of law. They engage different provisions of the Specific Relief Act, 1963 — principally Sections 10, 13, and 14 — and the answers, particularly in respect of the first two, depend critically on whether one applies the law as it stood before or after the Specific Relief (Amendment) Act, 2018.

(i) A Contract to Construct a Building

A contract to construct a building sits at the intersection of two competing legal concerns: the general efficacy of contractual performance and the institutional inability of courts to supervise ongoing construction work. The settled rule, both in English equity and in Indian law, has always been that the court does not ordinarily order specific performance of a building contract. The rationale is straightforward: construction involves a continuous series of technical acts that require constant oversight, and courts are not equipped to stand as superintendents over a building site.

Under the unamended Section 14(1)(b) and (d), such contracts were doubly excluded — first, as contracts running into minute and numerous details dependent on the technical skill of the parties, and second, as contracts requiring the continuous supervision of the court. As observed in Union Construction Co. Pvt. Ltd. v. Chief Engineer of Eastern Command, AIR 1960 All 72, specific performance of a building contract was refused precisely because it is both technically detailed and incapable of court supervision. The Allahabad High Court and the Patna High Court both consistently followed this reasoning.

However, the unamended Section 14(3)(c) carved out an important exception — a decree for specific performance of a building contract could be made if three cumulative conditions were satisfied:The building or work is described with sufficient precision in the contract to enable the court to determine the exact nature of the work to be done.

1. The plaintiff has a substantial interest in performance, of such a nature that money compensation would be an inadequate relief.

2. The defendant has, in pursuance of the contract, obtained possession of the whole or part of the land on which the building is to be constructed.

All three conditions had to be conjunctively satisfied; if even one was absent, the court could not grant the relief. Condition (iii) was particularly important: the defendant must have entered into possession by virtue of the contract itself, not independently as an owner. As the Calcutta High Court explained in Ashok Kumar Jaiswal v. Ashim Kumar Kar, AIR 2014 Cal 92, the words "in pursuance of the contract" signify that possession must have been obtained not as a matter of natural right but solely on the strength of the agreement. Where the building was practically completed by the time of the suit or during the pendency of the appeal, the court took a pragmatic view and did not permit the theoretical difficulty of supervision to defeat an otherwise rightful claim — a position affirmed in KM Jaina Beevi v. MK Govindaswami, AIR 1967 Mad 369.

The 2018 Amendment substantially changes the landscape. Section 14(3)(c) has been deleted. Since the requirement that compensation in money be inadequate has been removed as a general threshold, and since contracts which run into minute details or require court supervision are no longer expressly excluded, the ground for refusing specific performance of a building contract has been considerably narrowed. Post-amendment, under the amended Section 14(b) (which speaks of contracts whose performance involves continuous duty that the court cannot supervise), building contracts may still face difficulty, but the rule is no longer near absolute. The court must now examine whether the particular contract, on its facts, is truly incapable of enforcement due to the court's inability to supervise — rather than presuming unenforceability.

Conclusion on (i): Under the unamended law, a building contract is enforceable only when all three conditions of Section 14(3)(c) are met; otherwise, the plaintiff is relegated to damages. Under the 2018 Amendment, the bar is substantially reduced, and a building contract may be specifically enforced unless it genuinely falls within the residual categories in the amended Section 14.

(ii) A Contract to Execute a Mortgage

A contract to execute a mortgage implicates the general principle that courts do not ordinarily enforce contracts to lend money or to provide security. The reason is rooted in the adequacy of damages: if a borrower refuses to execute a mortgage, the lender can typically be placed in an equivalent financial position through a monetary award.

Under unamended Section 14(1)(a), a contract to lend money or to execute security was not specifically enforceable because compensation in money was considered an adequate remedy. A long line of decisions — including Hitwardhak Cotton Mills Co. Ltd. v. Sorabji Dinshaw Karaka, ILR 33 Bom 426 and Jaydayal v. Ram, ILR 17 Cal 432 (PC) — held that an agreement to lend is incapable of enforcement but may give rise to a claim in damages.

The unamended Section 14(3)(a)(i), however, provided a critical exception. A contract to execute a mortgage could be specifically enforced where:

• A loan has already been advanced, in whole or in part, by the lender on the faith of the contract to execute the mortgage; and

• The borrower refuses to execute the mortgage and is not willing to repay the loan at once.

If the lender had advanced only part of the loan, he was required to show readiness and willingness to advance the remaining part in terms of the contract. The Privy Council confirmed this principle in Jewan Lal v. Nilmani, AIR 1928 PC 80: where a property had been identified, the loan terms had been settled, a draft mortgage had been approved, and the stamp paid — specific performance was decreed. Similarly, in Appu v. NV Sivaramakrishna Ayyar, AIR 1935 Mad 560, where the defendant, pressed to repay or furnish security, had handed over title deeds and written that he would execute a mortgage deed, the Madras High Court decreed specific performance.

Conversely, where the borrower was willing to repay the loan at once, the court would not pass a decree for specific performance since, on repayment, the lender would be entirely reimbursed and the purpose of the mortgage extinguished. As the courts noted, the principle that agreements to lend or mortgage are not specifically enforced rests on the adequacy of the damages remedy; once actual loss can be averted by repayment, there is no basis for equitable intervention.

Post the 2018 Amendment, Section 14(3)(a) has been deleted. The unamended Section 14(1)(a) — which barred enforcement where compensation in money was adequate — has also been removed. There is, therefore, no longer any categorical bar to the specific performance of a contract to execute a mortgage. Subject to Sections 11(2), 14, and 16 of the amended Act, such contracts are now specifically enforceable in principle.

Conclusion on (ii): Under the unamended law, a contract to execute a mortgage is enforceable specifically only if a loan has been advanced and the borrower is unwilling to repay. Under the 2018 Amendment, the categorical bar is lifted, and the contract may be specifically enforced in the ordinary course, subject to the general requirements of the Act.

(iii) A Contract to Sell Property to Which the Seller Has No Title at Time of Contract but Acquires Later

This question is answered directly by Section 13 of the Specific Relief Act, 1963, which deals with the rights of a purchaser against a vendor with no title or imperfect title. The section enacts what is essentially a statutory recognition of a well-established equitable principle: a vendor who contracts to sell property must ensure that he can make good his promise, and a failure of title does not extinguish the purchaser's right to relief.

Under Section 13(1)(a), where a vendor professes to sell property over which he has no title, he must not be understood as warranting an existing title at the moment of contract — but he is bound to convey title when the contract is to be performed. The section, read with the Transfer of Property Act, 1882, Section 55(1), and the Indian Contract Act, 1872, Section 7, recognises that many contracts for sale of future or inchoate property are valid.

The governing principle is that where a seller does not have title to the property at the time of the contract but acquires title subsequently, the purchaser may compel the seller to perform the contract and execute a conveyance. This is a well-settled proposition rooted in the doctrine of feeding the estoppel (Section 43, Transfer of Property Act) — once the vendor acquires title, it feeds back into the contract and the purchaser is entitled to require its conveyance. The Bombay High Court in Mulji Thakarshi v. Kalyan Bechar, AIR 1954 Sau 87 confirmed that a contract for sale where the vendor obtains the necessary sanction or title subsequent to the agreement is valid and specifically enforceable.

It is, however, important to note that the court will not order specific performance of an act which the defendant is not in a position to perform — Lal Chand v. Hari, 43 Cal WN 903. Accordingly, if, by the date of the decree, the seller has still not acquired title, the court cannot decree specific performance; the purchaser's remedy at that stage would be compensation or recession under Section 13(1)(d). The key question is whether title has been acquired at the time when performance falls due and, ultimately, when the court is called upon to make the decree.

It must also be noted that Section 13(1)(c) provides a further protection: where the vendor professes to sell unencumbered property but the property turns out to be mortgaged for a sum not exceeding the purchase money, the purchaser may compel the vendor to procure a conveyance from the mortgagee and then perform the contract, or may himself pay off the encumbrance out of the unpaid purchase money under Section 55(1)(b) of the Transfer of Property Act.

Conclusion on (iii): A contract to sell property to which the seller has no title at the time of contracting but acquires later is specifically enforceable. The defect of title at the date of the contract is not a bar to the grant of the relief, provided the vendor has acquired title by the time the contract falls to be performed, and the decree is to be made. If the vendor has not acquired title even at the time of the decree, the plaintiff is entitled to compensation under Section 13(1)(d) and the refund of any deposit paid.