Substituted Performance Of Contract (Sec 20 – Sec 20C)

SUBSTITUTED PERFORMANCE

Section 20 of the Specific Relief Act, 1963(as it stood before amendment) provided that the court has the discretion to grant specific performance of contract and it is not bound to grant such relief solely because it is lawful to do so. However, Specific Relief Amendment Act, 2018 has substituted section 20 with new provision and introduced the concept of “Substituted performance”. Substituted performance of contracts means , where 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 and to recover expenses and costs, including compensation from the party who failed to perform his part of contract. This would be an alternative remedy at the option of the party who suffers the broken contract.

Sub-section (2) of Section 20 puts a mandate upon the opposite party to serve a notice of not less than 30 days to the party in breach. It is also provided that the party who suffered such breach would be entitled to receive such expenses and costs only if the contract has been performed through a third party or by its own agency.

Sub-section(3) of Section 20 does equity with the opposite party and provides that once substituted performance has been opted, the party suffering breach would not be entitled to claim relief of specific performance against the party in breach. The provision akin to section 20(3) is provided under section 41 of the Indian Contract Act,1882 where a promisee accepts performance of the promise from a third person, he is barred from enforcing the same from promisor.

Further, it is provided that the provision of section 20 does not prevent the party who has suffered breach of contract from claiming compensation from the party in breach.By providing the remedy of ‘substituted performance’, the Amendment Act seeks to restore a innocent party to the position in which it would have if the contract had not been breached.

INFRASTRUCTURE PROJECT SECTION

SECTION 20A. Special provisions for contract relating to infrastructure project.— (1) No injunction shall be granted by a Court in a suit under this Act involving a contract relating to an infrastructure project specified in the Schedule, where granting injunction would cause impediment or delay in the progress or completion of such infrastructure project.

Explanation.—For the purposes of this section, section 20B and clause (ha) of section 41, the expression “infrastructure project” means the category of projects and infrastructure Sub-Sectors specified in the Schedule.

 (2) The Central Government may, depending upon the requirement for development of infrastructure projects, and if it considers necessary or expedient to do so, by notification in the Official Gazette, amend the Schedule relating to any Category of projects or Infrastructure Sub-Sectors.

(3) Every notification issued under this Act by the Central Government shall be laid, as soon as may be after it is issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the notification or both Houses agree that the notification should not be made, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that notification.

A new section 20A has been inserted which 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 Act.

HARI RAM NAGAR & OTHER VS. DDA & OTHERS, 2019, DHC The Court held that the counsel for the plaintiff, in an attempt to take away the suit from the category of infrastructure suit, has contended that the acquisition and the use of land is not for the hospital but for a road. However, the said submission was made without realizing that even then the suit would fall in the category of infrastructure suits.

It was also held that Section 20A has to be given purposive interpretation, though Section 20A makes provision for a suit “…involving a contact…” but does not requires the relationship between the plaintiff and defendant to be contractual. The words “involving a contract relating to an infrastructure project” are of wide magnitude and would also cover a suit under the Specific Relief Act to stall an infrastructure project, but by a plaintiff who has no contractual relationship with the defendants. Such stalling of an infrastructure project would also involve a contract. Any stalling of an infrastructure project at the behest of anyone would certainly affect the contract under which the said infrastructure project is being executed.

SECTION 20B. Special Courts.—The State Government, in consultation with the Chief Justice of the High Court, shall designate, by notification published in the Official Gazette, one or more Civil Courts as Special Courts, within the local limits of the area to exercise jurisdiction and to try a suit under this Act in respect of contracts relating to infrastructure projects.

SECTION 20C. Expeditious disposal of suits.—Notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908), a suit filed under the provisions of this Act shall be disposed of by the court within a period of twelve months from the date of service of summons to the defendant.

Provides for expeditious disposal of suits filed under the provisions of the Act to be disposed of within 12 months from the date of service of summons to the defendant, which may be extended for a further period not exceeding six months in aggregate.

SPECIAL COURTS:  Section 20B and Section 20C have been inserted by the Amendment Act of 2018. It provides for the Special Courts to deal with cases related to infrastructure projects and to dispose of such suits within a period of twelve months from the date of service of summons to the defendant. Said period can be extended for another six months by the Court.

By Anushka Sharma

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close