Liquidation of damages not a bar to specific performance20. A contract, otherwise proper to be specifically enforced, may be thus enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default is willing to pay the same.
Illustration
A contracts to grant B an under-lease of property held by A under C, and that he will apply to C for a license necessary to the validity of the under lease, and that, if the license is not procured, A will pay B taka 10,000. A refuses to apply for the license and offers to pay B the taka 10,000. B is nevertheless entitled to have the contract specifically enforced it C consents to give the license.
(b) Contracts which cannot be specifically enforced
Contracts not specifically enforceable21. The following contracts cannot be specifically enforced:–
(a) a contract for the non-performance of which compensation in money is an adequate relief;
(b) a contract which runs into such minute or numerous details, or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the Court cannot enforce specific performance of its material terms;
(c) a contract the terms of which the Court cannot find with reasonable certainty;
(d) a contract which is in its nature revocable;
(e) a contract made by trustees either in excess of their powers or in breach of their trust;
(f) a contract made by or on behalf of a corporation or public company created for special purposes, or by the promoters of such company, which is in excess of its powers;
(g) a contract the performance of which involves the performance of a continuous duty extending over a longer period than three years from its date;
(h) a contract of which a material part of the subject- matter, supposed by both parties to exist, has, before it has been made, ceased to exist.
And, save as provided by the Arbitration Act, 1940, no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract other than an arbitration agreement to which the provisions of the said Act apply and has refused to perform it sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit.
Illustrations
to (a)-
A contracts to sell, and B contracts to buy, a lakh of taka in the four per cent loan of the 6[* * *] Government.
A contracts to sell, and B contracts to buy, 40 chests of indigo at taka 1,000 per chest:
In consideration of certain property having been transferred by A to B, B contracts to open a credit in A’s favour to extent of taka 10,000, and to honour A’s drafts to that amount:
The above contracts cannot be specifically enforced, for in the first and Second both A and B, and in the third A, would be reimbursed by compensation in money.
to (b)-
A contracts to render personal service to B:
A contracts to employ B on personal service:
A, an author, contracts with B, a publisher, to complete a literary work:
B cannot enforce specific performance of these contracts.
A contracts to buy B’s business at the amount of a valuation to be made by two valuers, one to be named by A and the other by B. A and B each name a valuer, but before the valuation is made, A instructs his valuer not to proceed:
By a charter-party entered into in Chittagong between A, the owner of a ship, and B, the charterer, it is agreed that the ship shall proceed to Karachi and there load a cargo of rice, and thence proceed to London, freight to be paid, one-third on arrival at Karachi, and two-thirds on delivery of the cargo in London:
A lets land to B and B contracts to cultivate it in a particular manner for three years next after the date of the lease:
A and B contract that, in consideration of annual advances to be made by A, B will for three years next after date of the contract grow particular crops on the land in his possession and deliver them to A when cut and ready for delivery:
A contracts with B that, in consideration of taka 1,000 to be paid to him by B, he will paint a picture for B:
A contracts with B to execute certain works which the Court cannot superintend:
A contracts to supply B with all the goods of certain class which B may require:
A contracts with B to take from B a lease of a certain house for a specified term, at a specified rent, “if the drawing-room is hand somely decorated”, even if it is held to have so much certainty that compensation can be recovered for its breach:
A contracts to marry B:
The above contracts cannot be specifically enforced.
to (c)-
A, the owner of a refreshment-room, contracts, with B to give him accommodation there for the sale of his goods and to furnish him with the necessary appliances. A refuses to perform his contract. The case is one for compensation and not for specific performance, the amount and nature of the accommodation and appliances being undefined.
to (d)-
A and B contract to become partners in a certain business, the contract not specifying the duration of the proposed partnership. This contract cannot be specifically performed, for, if it were so performed, either A or B might at once dissolve the partnership.
to (e)-
A is a trustee of land with power to lease it for seven years. He enters into a contract with B to grant a lease of the land for seven years, with a covenant to renew the lease at the expiry of the term. This contract cannot be specifically enforced.
The Directors of a company have power to sell the concern with the sanction of a general meeting of the shareholders. They contract to sell it without any such sanction. This contract cannot be specifically enforced.
Two trustees, A and B, empowered to sell trust-property worth a lakh of taka contract to sell it to C for taka 30,000. The contract is so disadvantageous as to be a breach of trust. C cannot enforce its specific performance.
The promoters of a company for working mines contract that the company, when formed, shall purchase certain mineral property. They take no proper precautions to ascertain the value of such property- and in fact agree to pay an extravagant price therefore. They also stipulate that the vendors shall give them a bonus out of the purchase-money. This contract cannot be specifically enforced.
to (f)-
A company existing for the sole purpose of making and working a railway contract for the purchase of a piece of land for the purpose of erecting a cotton-mill thereon. This contract cannot be specifically enforced.
to (g)-
A contracts to let for twenty-one years to B the right to use such part of certain railway made by A as was upon B’s land, and that B should have a right of running carriages over the whole line on certain terms, and might require A to supply the necessary engine-power, and that A should during the term keep the whole railway in good repair. Specific performance of this contract must be refuse to B.
to (h)-
A contracts to pay an annuity to B for the lives of C and D. It turns out that, at the date of the contract, C, though supposed by A and B to be alive, was dead. The contract cannot be specifically performed.
(C) Of the discretion of the Court.
Unregistered contract for sale not specifically enforceable7[21A. Notwithstanding anything to the contrary contained in this Act or any other law for the time being in force, no contract for sale of any immovable property can be specifically enforced unless–
(a) the contract is in writing and registered under the Registration Act, 1908, whether or not the transferee has taken possession of the property or any part thereof; and
(b) the balance amount of consideration of the contract is deposited in the court at the time of filing the suit for specific performance of the contract.]
(C) Of the discretion of the Court.
Discretion as to decreeing specific performance22. The jurisdiction to decree specific performance is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a Court of appeal.
The following are cases in which the Court may properly exercise a discretion not to decree specific performance:-
- Where the circumstances under which the contract is made are such as to give the plaintiff an unfair advantage over the defendant, though there may be no fraud or misrepresen-tation on the plaintiff’s part.
Illustrations
(a) A, a tenant for life of certain property, assigns his interest therein to B. C contracts to buy, and B contracts to sell, that interest. Before the contract is completed, A receives a mortal injury from the effects of which he dies the day after the contract is executed. If B and C were equally ignorant or equally aware of the fact, B is entitled to specific performance of the contract. If B knew the fact, and C did not, specific performance of the contract should be refused to B.
(b) A contracts to sell to B the interest of C in certain stock-in-trade. It is stipulated that the sale shall stand good, even though it should turn out that C’s is interest is worth nothing. In fact, the value of C’s interest depends on the result of certain partnership-accounts, on which he is heavily in debt to his partners. This indebted is known to A, but not to B. Specific performance of the contract should be refused to A.
(c) A contracts to sell, and B contracts to buy, certain land. To protect the land from floods, it is necessary for its owner to maintain an expensive embankment. B does not know of this circumstance, and A conceals it from him. Specific performance of the contract should be refused to A.
(d) A’s property is put up to auction. B requests C, A’s attorney, to bid for him. C does this inadvertently and in good faith. The persons present, seeing the vendor’s attorney bidding, think that he is a mere puffer and cease to compete. The lot is knocked down to B at a low price. Specific performance of the contract should be refused to B.
- Where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff.
Illustrations
(e) A is entitled to some land under his father’s will on condition that if he sells it within twenty-five years, half the purchase-money shall go to B. A, forgetting the condition, contracts, before the expiration of the twenty-five years, to sell the land to C. Here the enforcement of the contract would operate so harshly on A, that the Court will not compel its specific performance in favour of C.
(f) A and B, trustees, join their beneficiary, C, in a contract to sell the trust-estate to D, and personally agree to exonerate the estate from heavy encumbrances to which it is subject. The purchase-money is not nearly enough to discharge those encumbrances, though, at the date of the contract, the vendors believed it to be sufficient. Specific performance of the contract should be refused to D.
(g) A, the owner of an estate, contracts to sell it to B, and stipulates that he, A, shall not be obliged to define its boundary. The estate really comprises a valuable property, not known to either to be part of it. Specific performance of the contract should be refused to B unless he waives his claim to the unknown property.
(h) A contracts with B to sell him certain land, and to make a road to it from a certain railway-station. It is found afterwards that A cannot make the road without exposing himself to litigation. Specific performance of the part of the contract relating to the road should be refused to B, even though it may be held that he is entitled to specific performance of the rest with compensation for loss of the road.
(i) A, a lessee of mines, contracts with B, his lessor, that at any time during the continuance of the lease B may give notice of his desire to take the machinery and plant used in and about the mines, and that he shall have the articles specified in his notice delivered to him at a valuation on the expiry of the lease. Such a contract might be most injurious to the leasee’s business, and specific performance of it should be refused to B.
(j) A contracts to buy certain land from B. The contract is silent as to access to the land. No right of way to it can be shown to exist. Specific performance of the contract should be refused to B.
(k) A contracts with B to buy from B’s manufactory and not elsewhere all the goods of a certain class used by A in his trade. The Court cannot compel B to supply the goods, but if he does not supply them, A may be ruined, unless he is allowed to buy them elsewhere. Specific performance of the contract should be refused to B.
The following is a case in which the Court may properly exercise a discretion to decree specific performance: –
III. Where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
Illustration
A sells land to a railway-company, who contract to execute certain works for his convenience. The company takes the land and used it for their railway. Specific performance of the contract to execute the works should be decreed in favour of A.
(d) For whom Contracts may be specifically enforced
Who may obtain specific performance23. Except as otherwise provided by this Chapter, the specific performance of a contract may be obtained by-
(a) any party thereto;
(b) the representative in interest, or the principal, of any party thereto: provided that, where the learning, skill, solvency or any personal quality of such party is a material ingredient in the contract, or where the contract provides that his interest shall not be assigned, his representative in interest or his principal shall not be entitled to specific performance of the contract, unless where his part thereof has already been performed;
(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 thereunder;
(d) where the contract has been entered into by a tenant for life in due exercise of a power, the remainderman;
(e) a reversioner in possession, where the agreement is a covenant entered into with his predecessor in title and the reversioner is entitled to the benefit of such covenant;
(f) a reversioner in remainder, where the agreement is such a covenant, and the reversioner is entitled to the benefit thereof and will sustain material injury by reason of its breach;
(g) when a public company has entered into a contract and subsequently becomes amalgamated with another public company, the new company which arises out of the amalgamation;
(h) when the promoters of a public company have, before its incorporation, entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation, the company.
(e) For whom Contracts cannot be specifically enforced
Personal bars to the relief24. Specific performance of a contract cannot be enforced in favour of a person-
(a) who could not recover compensation for its breach;
(b) who has become incapable of performing, or violates, any essential term of the contract that on his part remains to be performed;
(c) who has already chosen his remedy and obtained satisfaction for the alleged breach of contract; or
(d) who, previously to the contract, had notice that a settlement of the subject-matter thereof (though not founded on any valuable consideration) had been made and was then in force.
Illustrations
to clause (a)-
A, in the character of agent for B, enters into an agreement with C to buy C’s house. A is in reality acting, not as agent for B, but on his own account. A cannot enforce specific performance of this contract.
to clause (b)-
A contracts to sell B a house and to become tenant thereof for a term of fourteen years from the date of the sale at a specified yearly rent. A becomes insolvent. Neither he nor his assignee can enforce specific performance of the contract.
A contracts to sell B a house and garden in which there are ornamental trees, a material element in the value of the property as a residence. A, without B’s consent fells the trees. A cannot enforce specific performance of the contract.
A, holding land under a contract with B for a lease, commits waste, or treats the land in an unhusbandlike manner. A cannot enforce specific performance of the contract.
A contracts to let, and B contracts to take, an unfinished house, B contracting to finish the house and the lease to contain covenants on the part of A to keep the house in repair. B finishes the house in a very defective manner: he cannot enforce the contract specifically, though A and B may sue each other for compensation for breach of it.
to clause (c)-
A contracts to let, and B contracts to take, a house for specified term at a specified rent. B refuses to perform the contract. A thereupon sues for, and obtains, compensation for the breach. A cannot obtain specific performance of the contact.
Contracts to sell property by one who has no title, or who is a voluntary settler25. A contracts for the sale or letting of property, whether moveable or immoveable, cannot be specifically enforced in favour of a vendor or lessor-
(a) who, knowing himself not to have any title to the property, has contracted to sell or let the same;
(b) who, though he entered into the contract believing that he had a good title to the property, cannot, at the time fixed by the parties or by the Court for the completion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt;
(c) who, previous to entering into the contract, has made a settlement (though not founded on any valuable consideration) of the subject-matter of the contract.
Illustrations
(a) A, without C’s authority, contracts to sell to B an estate which A knows to belong to C. A cannot enforce specific performance of this contract, even though C is willing to confirm it.
(b) A bequeaths his land to trustees, declaring that they may sell it with the consent in writing of B. B gives a general prospective assent in writing to any sale which the trustees may make. The trustees then enter into a contract with C to sell him the land. C refuses to carry out the contract. The trustees cannot specifically enforce this contract, as, in the absence of B’s consent to the particular sale to C, the title which they can give C is, as the law stands not free from reasonable doubt.
(c) A, being in possession of certain land, contracts to sell it to Z. On inquiry it turns out that A claims the land as heir of B, who left the country several years before, and is generally believed to be dead, but of whose death there is no sufficient proof. A cannot compel Z specifically to perform the contract.
(d) A, out of natural love and affection, makes a settlement of certain property on his brothers and their issue, and afterwards enters into a contract to sell property to a stranger. A cannot enforce specific performance of this contract so as to override the settlement, and thus prejudice the interest of the persons claiming under it.
(f) For whom Contracts can not be specifically enforced, except with a Variation.
Non-enforcement except with variation26. Where a plaintiff seeks specific performance of a contract in writing, to which the defendant sets up a variation, the plaintiff cannot obtain the performance sought, except with the variation so set up, in the following cases (namely):-
(a) where by fraud or mistake of fact the contract of which performance is sought is in terms different from that which the defendant supposed it to be when he entered into it;
(b) where by fraud, mistake of fact, or surprise the defendant entered into the contract under a reasonable misapprehension as to its effect as between himself and the plaintiff;
(c) where the defendant, knowing the terms of the contract and understanding its effect, has entered into it relying upon some misrepresentation by the plaintiff, or upon some stipulation on the plaintiff’s part, which adds to the contract, but which he refuses to fulfil;
(d) where the object of the parties was to produce a certain legal result, which the contract as framed is not calculated to produce;
(e) where the parties have, subsequently to the execution of the contract, contracted to vary it.
Illustrations
(a) A, B and C sign a writing by which they purport to contract each to enter into a bond to D for taka 1,000. In a suit by D, to make A, B and C separately liable each to the extent of taka 1,000, they prove that the word “each” was inserted by mistake; that the intention was that should give a joint bound for taka 1,000. D can obtain the performance sought only with the variation thus set up.
(b) A sues B to compel specific performance of a contract in writing to buy a dwelling-house. B proves that he assumed that the contract included and adjoining yard, and the contract was so framed as to leave it doubtful whether the yard was so included or not. The Court will refuse to enforce the contract, except with the variation set up by B.
(c) A contracts in writing to let to B a wharf, together with a strip of A’s land delineated in a map. Before signing the contract, B proposed orally that he should be at liberty to substitute for the strip mentioned in the contract another strip of A’s land of the same dimensions, and to this A expressly assented. B then signed the written contract. A cannot obtain specific performance of the written contract, except with the variation set up by B.
(d) A and B enter into negotiations for the purpose of securing land for B for his life, with remainder to his issue. They execute a contract, the terms of which are found to confer an absolute ownership on B. The contract so framed cannot be specifically enforced.
(e) A contracts in writing to let a house to B, for a certain term, at the rent of taka 100 per month, putting it first into tenantable repair. The house turns out to be not worth repairing, so, with B’s consent, A pulls it down and erects a new house in its place: B contracting orally to pay rent at taka 120 per mensem. B then sues to enforce specific performance of the contract in writing. He cannot enforce it except with the variations made by the subsequent oral contract.
(g) Against whom contracts may be specifically enforced
Relief against parties and persons claiming under them by subsequent title27. Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against-
(a) either party thereto;
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract;
(c) any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant;
(d) when a public company has entered into a contract and subsequently becomes amalgamated with another public company, the new company which arises out of the amalgamation;
(e) when the promoters of a public company have, before its incorporation, entered into a contract, the company: provided that the company has ratified and adopted the contract and the contract is warranted by the terms of the incorporation.
Illustrations
to clause (b)-
A contracts to convey certain land to B by a particular day. A dies intestate before that day without having conveyed the land. B may compel A’s heir or other representative in interest to perform the contract specifically.
A contracts to sell certain land to B for taka 5,000. A afterwards conveys the land for taka 6,000 to C, who has notice of the original contract. B may enforce specific performance of the contract as against C.
A contracts to sell land to B for taka 5000. B takes possession of the land. Afterwards A sells it to C for taka 6,000. C makes no inquiry of B relating to his interest in the land. B’s possession is sufficient to affect C with notice of his interest, and he may enforce specific performance of the contract against C.
A contracts, in consideration of taka 1,000 to bequeath certain of his lands to B. Immediately after the contract A dies intestate, and C takes out administration to his estate. B may enforce specific performance of the contract against C.
A contracts to sell certain land to B. Before the completion of the contract, A becomes a lunatic and C is appointed his committee. B may specifically enforce the contract against C.
to clause (c)-
A, the tenant for life of an estate, with remainder to B, in due exercise of a power conferred by the settlement under which he is tenant for life, contracts to sell the estate to C, who has notice of the settlement. Before the sale is completed, A dies. C may enforce specific performance of the contract against B.
A and B are joint tenants of land, his undivided moiety of which either may alien in his life time, but which, subject to that right, devolves on the survivor. A contracts to sell his moiety to C and dies. C may enforce specific performance of the contract against B.
Specific performance in case of part performance of contract to lease27A. Subject to the provisions of this Chapter, where a contract to lease immoveable property is made in writing signed by the parties thereto or on their behalf, either party may, notwithstanding that the contract, though required to be registered, has not been registered, sue the other for specific performance of the contract if,-
(a) where specific performance is claimed by the lessor, he has delivered possession of the property to the lessee in part performance of the contract; and
(b) where specific performance is claimed by the lessee, he has, in part performance of the contract, taken possession of the property, or, being already in possession, continues in possession in part performance of the contract, and has done some act in furtherance of the contract:
Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.
This section applies to contracts to lease executed after the first day of April, 1930.
(h) Against whom Contracts cannot be specifically enforced
What parties cannot be compelled to perform28. Specific performance of a contract cannot be enforced against a party thereto in any of the following cases:-
(a) if the consideration to be received by him is so grossly inadequate, with reference to the state of things existing at the date of the contract, as to be either by itself or coupled with other circumstances evidence of fraud or of undue advantage taken by the plaintiff;
(b) if his assent was obtained by the misrepresentation (whether wilful or innocent), concealment, circumvention or unfair practices, of any party to whom performance would become due under the contract, or by a promise of such party which has not been substantially fulfilled;
(c) if his assent was given under the influence of mistake of fact, misapprehension or surprise: Provided that, when the contract provides for compensation in case of mistake, compensation may be made for a mistake within the scope of such provision, and the contract may be specifically enforced in other respects if proper to be so enforced.
Illustrations
to clause (c)-
A, one of two executors, in the erroneous belief that he had the authority of his co-executor, enters into an agreement for the sale to B of his testator’s property. B cannot insist on the sale being completed.
A directs an auctioneer to sell certain land. A afterwards revokes the auctioneer’s authority as to 20 bighas of this land, but the auctioneer inadvertently sells the whole to B, who has not notice of the revocation. B cannot enforce specific performance of the agreement.
(i) The effect of dismissing a Suit for Specific Performance
Bar of suit for breach after dismissal29. The dismissal of a suit for specific performance of a contract or part thereof shall bar the plaintiff’s right to sue for compensation for the breach of such contract or part, as the case may be.
(j) Awards and Directions to execute Settlements
Application of preceding sections to awards and testamentary directions to execute settlements30. The provisions of this Chapter as to contracts shall, mutatis mutandis, apply to awards and to directions in a will or codicil to execute a particular settlement.