Comparing the Pre-2018 and Post-2018 Specific Relief Act — What Changed and Why It Matters

Abstract

The Specific Relief Act, 1963, a seminal legislation governing equitable remedies in India, underwent a paradigm-shifting amendment in 2018. For over five decades, the pre-2018 Act operated under a foundational principle: specific performance of a contract was a discretionary and exceptional remedy, with compensation in monetary damages being the norm. The 2018 Amendment Act fundamentally reversed this presumption, elevating specific performance from an exceptional recourse to an enforceable rule. This article provides a meticulous, detailed comparison of the pre-2018 and post-2018 legal landscapes, analysing the key structural, procedural, and philosophical changes introduced. It delves into the critical amendments, including the new regime for infrastructure projects, the enforceable nature of contracts, substituted performance, the revised scope of injunctions, and the introduction of precise timelines. The analysis extends to the underlying rationale for these changes—addressing judicial delays, boosting investor confidence, strengthening the sanctity of contracts, and catalysing infrastructure development. By examining the practical implications for contract enforcement, commercial litigation, and infrastructure growth, this article argues that the 2018 amendments represent not merely a procedural tweak but a profound jurisprudential shift towards a more contract-centric and performance-oriented legal framework, with significant consequences for India’s economic governance and the very nature of equitable relief.

Introduction

The law of specific relief occupies a unique space in the legal system, bridging the gap between common law remedies of damages and the equitable jurisdiction of courts to enforce performance. In India, this domain was codified in the Specific Relief Act, 1963. For more than half a century, this Act guided courts in determining when a party could be compelled to perform its contractual promises specifically, rather than merely paying monetary compensation for their breach. However, the Act, modelled on nineteenth-century English equity principles, increasingly showed its age in the context of a rapidly globalising Indian economy characterised by complex commercial transactions and massive infrastructure ambitions.

The pre-2018 regime was often criticised for fostering a culture of breach, where a party could calculate that paying damages (with possible litigation delays) was more economical than performing a costly contract. This undermined contractual certainty, a cornerstone of commercial confidence. Judicial discretion was wide, and litigation was notorious for its protracted timelines, especially in suits for specific performance which could languish for decades.

Recognising these systemic impediments to economic growth and ease of doing business, the Central Government, based on the detailed recommendations of the 246th Report of the Law Commission of India (2014), ushered in the Specific Relief (Amendment) Act, 2018. This amendment, which came into force on October 1, 2018, is arguably one of the most significant reforms in Indian commercial law in recent decades. It sought to transform the landscape of contract enforcement by making specific performance a matter of right, curtailing unwarranted judicial discretion, introducing time-bound processes, and creating a special framework for infrastructure projects.

This article embarks on a comprehensive journey to compare the pre-2018 and post-2018 Specific Relief Act regimes. It will dissect the key changes provision by provision, explore the socio-economic and jurisprudential reasons behind them, and critically analyse their practical impact on litigation strategy, contract drafting, and India’s broader economic fabric. The core thesis is that the amendment marks a decisive move from a discretion-centric, damages-preferring model to a right-centric, performance-preferring model, reflecting a modern approach to contracts and economic development.

1. The Foundational Shift: Specific Performance as a Rule, Not Exception (Section 10)

» Pre-2018 Position: Section 10, prior to its substitution, stated that specific performance could be enforced "in the discretion of the court." While it listed categories of contracts where specific performance could be granted (e.g., where monetary damages are not adequate, or where the subject matter is unique), the overarching principle was derived from Sections 20(1) and (2). Section 20(1) declared that jurisdiction to decree specific performance was discretionary, and the court was not bound to grant it merely because it was lawful. Section 20(2) provided a list of circumstances where discretion could be exercised not to grant specific performance (e.g., where compensation would afford adequate relief, where the contract involves continuous duty, or where the contract is inequitable). The burden lay heavily on the plaintiff to justify why damages were inadequate and why the extraordinary remedy of specific performance should be granted.

» Post-2018 Position: The amendment has fundamentally altered this architecture. The new Section 10 now declares that specific performance "shall" be enforced by the court, subject to the provisions contained in the amended Section 11 (which deals with contracts not specifically enforceable) and Section 14 (which lists the contracts that cannot be specifically enforced). Crucially, the old, broad discretion-underpinning Section 20 has been omitted entirely. The language has shifted from "may" to "shall." The discretion now is not whether to grant specific performance, but rather whether any of the limited exceptions under Sections 11 and 14 apply. The burden has effectively shifted; it is now for the defendant to show why the contract falls within a category where specific performance is barred.

» Why It Matters: This is the heart of the transformation. The law now starts from the presumption that a contract must be performed in specie. It strengthens the sanctity of contract (pacta sunt servanda) as a legal principle. For commercial parties, this provides greater certainty and predictability. A party entering a contract can no longer assume it can easily exit by offering to pay damages. This is expected to reduce strategic breaches and encourage more serious commitment at the contract formation stage.

2. Substituted Performance: A Powerful New Remedy (Section 20)

» Pre-2018 Position: There was no explicit statutory provision for "substituted performance." If a party breached, the aggrieved party's primary statutory remedies were to sue for specific performance (at the court's discretion) or for damages. If they hired a third party to complete the work, they could potentially claim the additional cost as damages, but this required a full-fledged trial to ascertain and award the loss.

» Post-2018 Position: A completely new Section 20 introduces the concept of "substituted performance." An aggrieved party now has the right to get the contract performed by a third party or by its own agency, at the cost of the party in breach. The party must give a 30-day notice to the breaching party before arranging for substituted performance. The costs recovered can include actual costs, expenses, and other losses. Importantly, after opting for substituted performance, the party cannot then claim specific performance of the original contract, though it retains the right to claim further damages.

» Why It Matters: This is a revolutionary, self-help remedy that bypasses immediate court intervention. It provides a swift, practical solution, particularly in commercial and construction contracts where time is of the essence. It empowers the innocent party to mitigate its loss proactively without waiting for a court decree, which could take years. This provision alone has the potential to dramatically alter negotiating dynamics and contract administration practices.

3. Special Framework for Infrastructure Projects (Sections 20A, 20B, 20C)

Pre-2018 Position: Infrastructure projects were treated like any other contract under the old Act. They were vulnerable to injunctions and specific performance suits, which could—and often did—bring massive public-interest projects to a grinding halt for years due to litigation from contractors, landowners, or other stakeholders. The resultant cost overruns and delays were a major drag on national development.

» Post-2018 Position: Recognizing the unique public interest dimension, the amendment introduces a special chapter (Sections 20A, 20B, 20C) for "Contracts relating to Infrastructure Project." Key features include:

» Section 20A: Provides an expansive definition of "infrastructure project," covering transport, energy, water, sanitation, communication, social and commercial infrastructure, etc., as may be notified by the Central Government.

» Section 20B: This is a critical procedural safeguard. It mandates that no injunction shall be granted by a court in a suit involving an infrastructure project where granting an injunction would cause impediment or delay in the progress or completion of the project. The court must record detailed reasons if it believes an injunction is necessary.

» Section 20C: Establishes Special Courts for expedited disposal of suits relating to infrastructure projects. These courts are tasked with deciding the suit within twelve months from the date of service of summons, extendable only for a maximum period of six months for recorded reasons.

» Why It Matters: This is a clear policy-driven intervention to insulate critical public infrastructure from legal entanglements that cause inordinate delays. It balances private rights with overwhelming public interest in timely project completion. The creation of fast-track Special Courts signals the legislature's intent to resolve infrastructure disputes with urgency, a key requirement for attracting investment in this sector.

4. Narrowing the Scope of Contracts Not Specifically Enforceable (Section 14)

» Pre-2018 Position: The old Section 14 listed several contracts that could not be specifically enforced. This included: contracts for non-performance of which compensation is an adequate relief; contracts which run into such minute or numerous details that the court cannot enforce supervision; contracts which are dependent on the personal qualifications or volition of the parties; and contracts to execute a mortgage or settle an account, among others.

» Post-2018 Position: The amended Section 14 significantly prunes this list. The most notable deletions are:

• Removal of the blanket bar on contracts "which run into such minute or numerous details... that the court cannot enforce continuous supervision." This was a major hurdle for enforcing contracts like construction, operation, and maintenance agreements.

• Removal of the bar on contracts "the performance of which involves the performance of a continuous duty which the court cannot supervise." The amendment implicitly recognises that modern commercial contracts often involve continuous duties and that courts can enforce them through appropriate mechanisms.

• The revised list retains bars on contracts dependent on personal skill/volition, those which are in their nature determinable, and contracts whose terms are uncertain.

» Why It Matters: By removing the "difficulty of supervision" and "continuous duty" objections, the law has opened the door for specific performance of a vast array of modern commercial contracts—construction agreements, operation & maintenance contracts, franchise agreements, supply agreements, etc. This aligns the law with commercial reality, where non-monetary performance is often the core of the bargain and damages are a poor substitute.

5. Time-bound Disposal and Streamlined Procedures (Section 21, etc.)

» Pre-2018 Position: There was no time limit prescribed for the disposal of a suit for specific performance. These suits were notorious for taking 15-20 years or more to conclude, which itself acted as a deterrent to seeking the remedy and an incentive for breaching parties to prolong litigation.

» Post-2018 Position: The amended Act introduces a sense of urgency. While not as rigid as the infrastructure court timeline, the new Section 21 mandates that, as far as possible, the court should endeavour to dispose of any suit for specific performance within twelve months. This is directory but reflects a strong legislative intent. Furthermore, procedures have been streamlined—the requirement for framing issues is made more flexible, and the court is empowered to engage experts to assist it in complex cases.

» Why It Matters: The value of a remedy is severely diminished if it is not timely. A decree for specific performance after two decades may be useless (the property may have vanished, the business opportunity lost). By mandating time-bound disposal, the amendment seeks to make the remedy of specific performance meaningful, effective, and a credible threat against potential breaches.

6. Other Significant Amendments

» Liquidation Damages / Penalty (Section 15): A new explanation clarifies that a contract specifying a sum to be paid in case of its breach (liquidated damages or penalty) does not, by itself, preclude the right to seek specific performance. This resolves an old debate and clarifies that the two remedies can coexist.

» Power to Require Documents from Government (Section 23): The court is now empowered to require any government or authority to produce any document in its possession relevant to the suit, and to afford all assistance in the inquiry. This aids in transparency and fact-finding in cases involving state contracts.

» Recovery of Possession (Section 5 & 6): The amendment clarifies that the plaintiff in a suit for specific performance (e.g., of a sale agreement) can also seek a decree for possession, and need not file a separate suit. This prevents multiplicity of proceedings.

» The Rationale: Why These Changes Were Necessary

The 2018 amendments were not born in a legal vacuum. They were a targeted response to several interconnected problems:

» Sanctity of Contracts: The old regime was seen as undermining the fundamental principle that contracts must be honoured. By making damages the primary remedy, it created a moral hazard where a party with deeper pockets could deliberately breach.

» Ease of Doing Business: India's ranking in the World Bank's "Enforcing Contracts" indicator was persistently poor. The lengthy and uncertain process of contract enforcement was a major red flag for foreign and domestic investors. The amendments directly address this by making enforcement faster and more certain.

» Infrastructure Development: The National Infrastructure Pipeline (NIP) and other ambitious projects required a legal environment that minimised litigation risks and delays. The special provisions for infrastructure projects are a direct legislative shield to protect public investment.

» Judicial Efficiency and Delay: By introducing timelines, encouraging substituted performance (which reduces court dockets), and streamlining procedures, the amendments aim to reduce the burden on the overstretched judiciary and make justice more efficacious.

» Modernisation of Law: The 1963 Act was based on archaic English equity principles unsuited for 21st-century commercial complexities. The amendments modernise the law to reflect contemporary business practices, where non-monetary performance is commonplace.

Conclusion: Assessing the Impact and Future Trajectory

The Specific Relief (Amendment) Act, 2018, is a landmark piece of legislation that has fundamentally recalibrated the equilibrium between contractual liberty and enforceability in India. The shift from discretion to entitlement in specific performance, the creation of the powerful tool of substituted performance, and the protective carapace built around infrastructure projects collectively represent a new jurisprudential philosophy—one that prioritises the actual performance of contracts as an engine for economic growth and trust.

The practical implications are profound. Contract drafters must now be more meticulous, as the exit option via breach is legally riskier. Litigation strategy has changed; defendants can no longer rely on broad discretionary grounds to resist specific performance. The focus in suits may shift more to the conduct of parties, the existence of valid exceptions under Sections 11 and 14, and issues of readiness and willingness. For the economy, the amendments promise a more stable and predictable contract enforcement regime, which is a essential ingredient for long-term investment.

However, the success of this transformative law will ultimately depend on its implementation by the judiciary. How will courts interpret the new "shall" in Section 10? Will they find new avenues for discretion? How effectively will the Special Courts for infrastructure be constituted and function? The early judicial trends have been largely supportive, with courts acknowledging the change in legislative intent.

In essence, the 2018 amendments have moved Indian contract law closer to the civil law tradition and modern international commercial practice, where specific performance is more readily available. By doing so, they have not just amended an Act; they have sought to reshape a commercial culture, sending a clear message that in the new India, a promise is not just a basis for a claim in damages, but an obligation that the state will help enforce in kind. The journey from a remedial, discretion-based model to a rights-based, performance-oriented one is now codified. Its full resonance will unfold in the courtrooms and boardrooms of the coming decades.

Here are some questions and answers on the topic:

1. What was the fundamental philosophical shift in the approach to contractual remedies brought about by the Specific Relief (Amendment) Act, 2018?

Answer: The fundamental philosophical shift was the reversal of the default remedy for breach of contract from monetary damages to specific performance. Prior to the 2018 amendment, the Specific Relief Act of 1963 was rooted in a discretionary, equity-based model where specific performance was considered an exceptional remedy granted only when damages were deemed inadequate or when the subject matter of the contract was unique. The legal presumption favoured compensation, and the burden was on the plaintiff to convince the court why the extraordinary remedy of specific performance should be awarded. The 2018 amendment overturned this centuries-old principle derived from English common law. It transformed specific performance from a discretionary, exceptional relief into a statutory right that "shall" be enforced by the court. The amendment omitted the broad discretionary clauses, thereby establishing a performance-centric rule. The new legal presumption is that a contract must be performed in specie, and the burden now shifts to the defendant to prove that the contract falls within the narrowly defined exceptions where specific performance is not permissible. This shift represents a profound move from a damages-preferring philosophy, which tolerated breach for a price, to a performance-preferring philosophy, which emphasizes the sanctity of the contractual promise itself, thereby strengthening the principle of pacta sunt servanda (agreements must be kept) in Indian commercial law.

2. How does the newly introduced concept of "substituted performance" alter the practical options available to an aggrieved party in a contract?

Answer: The concept of "substituted performance," introduced as a new Section 20, radically alters the practical options by providing a powerful, self-help, and extra-judicial remedy to the aggrieved party. Before the amendment, if a party breached a contract, the innocent party's statutory options were essentially limited to either filing a suit for specific performance—a lengthy and uncertain litigation process—or suing for damages after the breach. If they proactively engaged a third party to complete the work, they had to undergo a full trial to recover those costs as damages, with no guarantee of full or timely recovery. The new provision for substituted performance changes this dynamic entirely. It statutorily empowers the innocent party to directly arrange for the performance of the contract by a third party or by its own agency, after serving a 30-day notice to the party in breach. The costs incurred, including actual expenses and other incidental losses, can then be recovered from the breaching party. This mechanism allows the aggrieved party to mitigate its loss immediately without waiting for a court decree, ensuring business continuity, especially in time-sensitive commercial and construction contracts. Crucially, by opting for this remedy, the party forecloses the option to later seek specific performance of the original contract but retains the right to claim any further damages. This provision not only provides a swift and practical recourse but also alters the negotiation power balance, as the threat of swift substituted performance at the defaulter's cost acts as a significant deterrent against strategic breaches.

3. Why were special provisions carved out for infrastructure projects, and what are their key features?

Answer: Special provisions were carved out for infrastructure projects in response to a critical national need: to prevent inordinate delays and cost overruns in public interest projects caused by injunctions and protracted litigation. Prior to the amendment, infrastructure projects were vulnerable to being stalled for years due to interim injunctions granted in suits filed by contractors, suppliers, or land owners. This judicial delay had become a major impediment to national development and economic growth. The 2018 amendment addresses this by creating a special, protective framework through Sections 20A, 20B, and 20C. The key features of this framework are threefold. First, it provides a broad, inclusive definition of "infrastructure project" covering sectors like transport, energy, water, sanitation, communication, and social and commercial infrastructure, which can be further notified by the government. Second, and most significantly, it imposes a stringent statutory restriction on the grant of injunctions. Section 20B mandates that no court shall grant an injunction in a suit involving an infrastructure project if doing so would cause an impediment or delay in the progress or completion of that project. If a court believes an injunction is absolutely necessary, it must record detailed, compelling reasons for its decision. Third, to ensure expedited resolution of any disputes that do arise, the amendment provides for the establishment of Special Courts dedicated to infrastructure project suits. These courts are legally obligated to endeavour to dispose of the suit within twelve months from the date of service of summons, with a maximum extension of only six months. These provisions collectively aim to insulate vital public infrastructure from legal entanglements, balancing private contractual rights against the overwhelming public interest in timely project completion.

4. In what way did the amendment alter the landscape for enforcing complex commercial contracts like construction or operation agreements?

Answer: The amendment dramatically altered the landscape for enforcing complex commercial contracts by dismantling the major legal hurdle that previously made them virtually unenforceable through specific performance: the "difficulty of supervision" doctrine. Under the pre-2018 Section 14 of the Act, a contract could not be specifically enforced if it was "a contract which, by its nature, is determinable" or, critically, "a contract the performance of which involves the performance of a continuous duty which the court cannot supervise." This clause was routinely invoked to deny specific performance for a wide range of modern commercial agreements, including construction contracts, operation and maintenance agreements, franchise deals, and supply contracts. Courts were reluctant to grant specific performance for such agreements, arguing that enforcing them would require ongoing judicial supervision, which was impractical. The 2018 amendment strategically deleted this very clause from the list of contracts not specifically enforceable. This deletion is a game-changer. It signifies the legislature's recognition that complex, continuous duties are the hallmark of contemporary commerce and that courts can, and should, enforce them using appropriate mechanisms such as appointing commissioners, receivers, or experts to oversee implementation. Consequently, parties to a construction agreement, for instance, can now legitimately seek a court decree compelling the defaulting contractor to complete the building, rather than being confined to a claim for damages. This change aligns the law with commercial reality, where the actual performance of non-monetary obligations is often the core value of the bargain, and monetary compensation is a poor and inadequate substitute.

5. What are the broader implications of the 2018 amendments for India's economic governance and the culture of contract enforcement?

Answer: The broader implications of the 2018 amendments extend far beyond procedural legal changes, directly impacting India's economic governance and seeking to transform the deep-seated culture of contract enforcement. Firstly, from an economic governance perspective, the amendments are a direct legislative intervention aimed at improving India's ranking in global indices like the World Bank's "Ease of Doing Business," particularly the "Enforcing Contracts" parameter. By making contract enforcement faster, more certain, and performance-oriented, the law seeks to signal to both domestic and foreign investors that India provides a stable and predictable legal environment where contractual rights are seriously protected. This is crucial for attracting long-term investment, especially in capital-intensive sectors like infrastructure. Secondly, the amendments aim to catalyze a cultural shift from a "culture of breach" to a "culture of performance." The old regime, where breach coupled with damages was often the more calculative and economically rational choice, encouraged contractual indiscipline. The new regime, with its right to specific performance, threat of substituted performance, and tight timelines for infrastructure disputes, raises the stakes for non-performance. It encourages parties to be more diligent during contract formation, more committed during execution, and more serious about dispute resolution. Ultimately, the amendments envision a commercial ecosystem where the sanctity of contracts is paramount, judicial resources are used more efficiently for complex disputes rather than routine breaches, and public infrastructure projects are delivered in a timely manner for the nation's socio-economic development. The success of this vision hinges on consistent and robust judicial interpretation, but the legislative foundation for a more contract-compliant economy has been decisively laid.

Disclaimer: The content shared in this blog is intended solely for general informational and educational purposes. It provides only a basic understanding of the subject and should not be considered as professional legal advice. For specific guidance or in-depth legal assistance, readers are strongly advised to consult a qualified legal professional.