The Supreme Court has held that the 2018 amendment to the Specific Relief Act, 1963, which made the remedy of specific performance of contracts a mandatory relief rather than a discretionary one, does not apply retrospectively. The Court clarified that the amended provisions are applicable only to suits or transactions that arose after the amendment came into effect on October 1, 2018.
A Division Bench comprising Justice J.B. Pardiwala and Justice Manoj Misra, in a recent judgment, emphasized that prior to the 2018 amendment (introduced through Act 18 of 2018), granting specific performance was a matter left to the judicial discretion of the courts and not an obligatory relief.
Referring to its earlier decision in Katta Sujatha Reddy v. Siddamsetty Infra Projects (P) Ltd. (2022), the Bench reiterated that the amendment was prospective in nature and could not govern contracts or suits filed before its commencement. Although this decision was later reviewed and recalled in Siddamsetty Infra Projects (P) Ltd. v. Katta Sujatha Reddy (2024), the Court clarified that even the review judgment did not explicitly hold that the amended provisions would apply to pre-October 2018 suits.
The Bench observed:
“Though the earlier decision was reviewed and recalled in Siddamsetty Infra Projects (P) Ltd. v. Katta Sujatha Reddy, the review judgment did not categorically hold that the amended provisions would govern suits instituted prior to the 2018 Amendment. It merely proceeded on the assumption that specific performance continued to be a discretionary relief for suits filed before the amendment.”
The Court further noted that since the judgment under challenge in the present case had been delivered on February 2, 2018, before the amendment came into force, it must be decided in accordance with the pre-amendment legal position.
Case Background
In the present matter, an agreement to sell was executed between the Appellant (buyer) and the Respondent (vendor). The vendor, despite lacking any contractual right to terminate, sought to cancel the agreement after accepting an additional payment from the buyer—made six months after the expiry of the contract period.
The buyer filed a suit for specific performance, which the Trial Court dismissed, holding that the plaintiff had not first sought a declaration that the termination was invalid. However, the First Appellate Court reversed this decision, holding that no such declaration was necessary since the vendor had waived their right to terminate by accepting the additional amount and thereby affirming the subsistence of the contract.
The High Court, in a second appeal, overturned the First Appellate Court’s ruling, prompting the buyer to approach the Supreme Court.
Allowing the appeal, the Supreme Court set aside the High Court’s judgment and restored the First Appellate Court’s decree for specific performance. Justice Manoj Misra, writing the judgment, held that the vendor’s acceptance of further consideration after the contract period had expired amounted to waiver of the right to terminate and signified the continuing validity of the agreement.
The Court remarked:
“The acceptance of additional payment not only indicated waiver of the right to forfeit advance money or consideration but also affirmed that the agreement remained in force. The subsequent notice of termination was thus a wrongful repudiation and not a legitimate exercise of contractual rights.”
Consequently, the Court concluded that the buyer was entitled to directly seek specific performance without first filing for a declaratory relief.
Outcome: The appeal was allowed, and the First Appellate Court’s decree in favor of the buyer was reinstated.
Case Title:
Annamalai v. Vasanthi & Others
