Liquidation of Damages not a Bar to Specific Performance – Section 23 Specific Relief Act

Liquidation of Damages not a Bar to Specific Performance – Section 23 Specific Relief Act

Author: Preeti Singh Bhadoria, Lloyd Law College, Greater Noida

Introduction

The institution of justice is being approached by an aggrieved prosecutor to get relief. Within the legally authoritative relationship, where one person detracts from the promise prior made, the other person merits a remedy from the law. This is how the Specific Relief Act tends to achieve. From this codified legislation, a few of the most common remedies that today in a court of law are found to be given in a variety of such cases of breaches. Examples include that of the specific execution of contracts, recovery of possession of the property, etc. This shows how this act covers the remedial perspectives of the law and comes into the picture only when a legal right is violated, thus an office of the procedural law.

A contract, otherwise legitimate to be particularly upheld, maybe so enforced, though an entirety is named in it as the sum to be paid in case of its breach and the party in default is willing to pay the same, in case of the court, having regard to the terms of the contract and other attending circumstances is fulfilled that the sum was named only to secure the performance of the contract and not to give to the party in default an alternative of paying money instead of specific performance.

When enforcing specific execution under this section, the court shall not also proclaim payment of the sum so named in the contract.

Enforcement

The purchaser’s contract to pay off a mortgage debt seems not to be implemented by the mortgagee who was not a party to the contract. It must subsequently be taken as well settled that except in the case of a beneficiary under a belief made by a contractor in the case of a family arrangement, no right may be enforced by an individual who isn’t a party to the contract.

Entitlement

Where the stipulation for harm was made only for the reason of securing the performance of the contract and not for the reason of giving an option to paying money instead of specific execution, the appellant was entitled in law to the enforcement of the agreement.

Grounds of compel

The question always is: What is the contract?

Is it that one particular action shall be done, with a sum attached, whether by the way of penalty or damages, to secure the performance of this very act?

Or, this is one of the two things that shall be done at the election of the party who has performed the contract, namely, and the performance of the act or the payment of the sum of cash?

If the previous, the fact of the penal or other like sum being attached will not prevent the Court’s enforcing performance of the exceptional act and exceptional carrying into execution the intention of the parties, if the latter, the contract is satisfied by the installment of a whole of cash, and there’s no ground for proceeding against the party having the decision to compel the performance of the other alternative.

From what has been said it’ll be gathered that contract of the kind now under discussion is divisible into three classes:

·        Where the entirety specified is strictly a penalty – an entirety named by way of securing the performance of the contract, as the penalty is a bond.

·        Where the entirety named is to be paid as liquidated damages for a fresh of the contract.

·        Where the sum named is an amount the payment of which may be substituted for the performance of the act at the election of the individual by whom the money is to be paid or the act is done.

When the stipulated payment comes under either of the two first-men­tioned heads, the Court will enforce the contract, if in other respects it can and need to be enforced fair the same way as a contract not to do a particular act, with a punishment included securing its performance or an entirety named as liquidated damages, may be particularly enforced using an injunction against breaking it.

On the other hand, where the contract comes under the third head, it is fulfilled by the payment of the money, and there’s no ground for the Court to compel the particular execution of the other alternative of the contract.

Importance

A qualification between liquidated damages and penalty may be imperative in common law but as respects equitable remedy the same does not play any significant part.

Permissibility

In substance statutory arrangements under Sections 23, 13 and 27B lay down that, subject to certain special cases which are not material in this case, a contract in the absence of an opposite intention ex­press or implied will be enforceable by and against the parties and their legal beneficiaries and legal agents including assignees and transferees.

In the present case, there’s nothing within the language of the pre-emption clause or the other clauses of the award to propose that the parties had any con­trary intention.

On the other hand, a reference to the other clauses of the award appears that the parties intended that the commitments and benefits of the contract should go to the assignee or successors-in-interest.

It is obvious that in these clauses the expression “parties” cannot be limited to the original parties to the contract but must include the legal agents and assignees of the original parties.

There’s thus no reason why the same expression ought to be given a restricted meaning in the pre-emption clause which is the subject-matter of translation in the present appeal. The rule against perpetuities isn’t concerned with contracts as such or with contractual rights and commitments as such. Hence a contract to pay money to an individual, his beneficiaries, or legal representatives upon a further contingency, which may happen past the period prescribed would be flawlessly valid.

Assumptions

A reference to Section 22 of the old Act, (the corre­sponding provision is Section 20 of the Act of 1963), would appear that the jurisdiction of the Court to proclaim specific help is discretionary and must be exercised on sound and sensible grounds “guided by legal prin­ciples and able of correction by a Court of the appeal”. This jurisdiction cannot be curtailed or taken away by merely fixing an entirety even as liquidated damages.

This is made clear by the provisions of Section 20 of the old Act (compared to Section 23 of the Act of 1963) so that the Court has to decide, on the facts and circumstances of each case before it, whether the particular performance of a contract to convey a property ought to be allowed.

The fact that the parties themselves have provided an entirety to be paid by the party breaking the contract does not, by itself, remove the solid presumption contemplated that says “unless and until the contrary is proved”. The sufficiency or lacking any evidence to expel such a presumption is a matter of evidence.

The fact that the parties them­selves specified a sum of money to be paid in the occasion of its breach is, no doubt, a piece of evidence to be considered in deciding whether the presumption has been repulsed But, it is nothing more than a piece of evidence. It is not conclusive or decisive.

The second assumption underlying the contentions on the sake of the defendants-appellants is that, once the presumption, contained in explana­tion to Section 12 of the old Act, is removed, the bar contained in Section 21 of the old Act, against the particular authorization of a contract for which compensation in money is a satisfactory relief, automatically operates, over­looks that the condition for the inconvenience of the bar is real proof that compensation in money is satisfactory on the facts and circumstances of a specific case before the Court.

The impact of the presumption is that the party coming to Court for the particular execution of a contract for the deal of immovable property need not prove anything until the other side has re­moved the presumption. After evidence is led to removing the presumption, the plaintiff may still be in a position to demonstrate, by other evidence in the case, that the installment of money does not compensate him adequately.

In the case of N. L. Devender Singh & Ors vs Syed Khaja, both sides have led the way. There’s no proof that on the extent of the loss of the prospective gains to the plaintiff-respondent, who carries on a Bakery trade, from the deprivation of a site so valuable as one before the Secunderabad Junction Railway Station.

There’s no standard for Judging the loss from such a deprivation either to the plaintiff-respondent or to the partners of the Alpha Hotel who are the real corpora-ting parties.

No attempt was even made to gauge the value of prospects of such a site to businessmen in the position of plaintiff-respondent and those defendants-appellants who are partners of the Alpha Hotel. The property has got no such value for the primary respondent, who is a businessman completely occupied with several businesses in Delhi where he had dwelling for 19 years. He may not conveniently see after the property situated in Sikandrabad.

The defendants-appellants had badly failed to prove their cases. The attempt to prove either extortion or misrepresentation or “an unfair advan­tage” over the primary defendant, to bring his case within Section 22 (1) of the old Act, was unsuccessful. The Courts commented adversely on incorrect assertions made by the primary defendant who could not show anything beyond the penalty or damages clause in the contract for sale dated 9.10.1962. It is strange that the first defendant, whereas willing to pay Rs. 20,000/- as damages to the plaintiff but the respondent will only get Rs. 10,000/ – more in price over Rs. 60,000/- if his contract of a deal to the partners of the Alpha Hotel was to stand.

It is hence clear that the first defendant must have a few hidden motives in being prepared to suffer the apparent loss of Rs. 10.000/- even on the off chance that his sale of 16.10.1962 for Rs. 70,000/ – to the partners of the Alpha Motel may be maintained. The plaintiff himself had stated that financial consideration doesn’t decide his stand. It isn’t possible to accept this profession of unconcern for financial gain on the part of a clever businessman like the first defendant.

It is more likely that there is an undisclosed understanding between him and the partners of Alpha Motel who are also co-appellants with him before the Court.

The result is that the presumption contained within the explanation to Sec­tion 12 of the old Act was not refuted here.

In such cases, equity helps genuine plaintiffs against defendants who break seriously given undertak­ings. The High Court had rightly declared the suit for specific performance of the contract.

Scope and Applicability

Section 23 of the Act of 1963 contains a comprehensive explanation of the standards on which, ever before the Act of 1963, the presence of a term in a contract indicating a sum of money to be paid for a breach of the contract has to be understood. Where payment is an alternative to carrying out the other terms of the contract, it would avoid, by the terms of the contract itself, specific execution of the contract to communicate property.

Transfer of Possession

In the case, M. Shankaran vs M. Krishnan on 13 December 2018, there was a transfer by the lessee with reservation to take back ownership on the transferee’s failure to discharge the lessees, holding towards the lessor within the stipulated time. The lessor accepted part payment from the transferee without recognizing him as a debtor.

The adjustment was not paid either by the transferee or the lessee. It was held that the lessee was entitled to induce back possession from the transferee.

Conclusion

Though the act isn’t thorough, the remedies it covers are important and have far-reaching consequences. The courts’ jurisdiction is being encouraged in imparting their virtue of justice conveyance more efficiently so that the prosecutor can not only that Justice is done rather Justice is seen to be done.

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