OPINION

Keeping contracts alive

The Specific Relief (Amendment) Bill of 2017 is meant to ensure performance of a contract, be it building a road or a bridge. The Bill intends to wean the courts away from the usual practice of closing a case after a grant of monetary damages to the injured party to the contract. Instead, it pushes courts to direct parties to complete the promised project.

The Bill is an improvement on the Specific Relief Act of 1963 under which payment of damages was the rule and specific performance of contracts an “exception”.

The government said the time is ripe for amending the 1963 law as “the tremendous economic development since the enactment of the Act [has] brought in enormous commercial activities in India including foreign direct investments, public private partnerships, public utilities infrastructure developments, etc., which have prompted extensive reforms in the related laws to facilitate enforcement of contracts, settlement of disputes in speedy manner.”

The statement of objects and reasons in the new Bill says that the 1963 Act is not in tune with the rapid economic growth of the country. So, the 2017 Bill does away “with the wider discretion of courts to grant specific performance and to make specific performance of contract a general rule than exception subject to certain limited grounds.”

Further, it proposes for the substituted performance of contracts. That is, when a contract is broken, the party who suffers would be entitled to get the contract performed by a third party or by his own agency to recover expenses and costs, including compensation from the party who failed to perform his part of the contract. This would be an alternative remedy at the option of the party who suffers the broken contract. The Bill also proposes to enable courts to engage experts on specific issues and to secure their attendance.

A new Section 20A is proposed for infrastructure project contracts. This provides that the court “shall not grant injunction in any suit, where it appears to it that granting injunction would cause hindrance or delay in the continuance or completion of the infrastructure project”.

The Department of Economic Affairs is the nodal agency for specifying various categories of projects and infrastructure sub-sectors, which is provided as Schedule to the Bill. The Department may amend the Schedule relating to any such category or sub-sectors.

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