Specific Performance of Contract After the 2018 Amendment: What Changed and What It Means for You
When two parties enter into a contract and one of them refuses to honour it, the law offers two broad categories of remedy. The first is compensation: the defaulting party pays damages to put the aggrieved party in the position they would have been in had the contract been performed. The second is specific performance: the court orders the defaulting party to actually perform the contract, to do what they agreed to do. These two remedies carry different assumptions about what justice requires.
In India, the choice between these two remedies was historically a matter for the court’s discretion. For over a century, the Specific Relief Act, 1963 granted courts the power to refuse specific performance even where a breach was clear, if the court thought that damages were an adequate substitute or that granting specific performance would be inequitable for other reasons. This discretion was exercised frequently and generated a vast body of case law.
The Specific Relief (Amendment) Act, 2018 fundamentally changed this. By substituting the critical Section 10, the legislature converted specific performance from a discretionary remedy into a mandatory one. Courts are now required to grant specific performance of a contract, subject to specified exceptions, rather than having the option to substitute damages for the contractual obligation.
This article explains the pre-amendment position, what the 2018 amendment changed, how the Supreme Court has interpreted and applied the new framework, and the current state of the law on specific performance in India, including the important ongoing question of retrospectivity.
The Pre-Amendment Position: Discretion as the Default
Before the 2018 amendment came into force on 1 October 2018, Section 10 of the Specific Relief Act specified circumstances in which specific performance was enforceable. The opening words of the section read: “except as otherwise provided in this chapter, the specific performance of any contract may, in the discretion of the court, be enforced in the following cases.”
The word “may” was the operative word. Courts had discretion. In exercising it, they weighed several factors: whether damages would be an adequate substitute, whether the contract involved a unique subject matter such as land, whether the plaintiff had performed their part of the contract and was ready and willing to perform the remainder, and whether any equitable considerations militated against enforcement.
The Supreme Court in several pre-amendment decisions laid down five questions that courts had to address when deciding whether to exercise the discretion in favour of specific performance. These included whether the terms of the contract were fair and certain, whether the plaintiff had acted inequitably in procuring the contract, whether the subject matter was such that compensation would not be an adequate remedy, and the overall balance of equities between the parties.
The discretion was wide and often exercised against specific performance in cases where the court thought damages adequate, where the defendant would suffer disproportionate hardship, or where third parties had acquired interests in the property in the meantime.
What the 2018 Amendment Changed
The Specific Relief (Amendment) Act, 2018, made three significant changes to the framework.
Section 10 became mandatory. The amended Section 10 now reads: “the specific performance of a contract shall be enforced by the court.” The word “shall” replaced “may.” The discretion to refuse specific performance has, in principle, been removed. Courts are required to enforce contracts through specific performance unless an exception applies.
Section 14 was rewritten. The pre-amendment Section 14 listed contracts that cannot be specifically enforced, including those for which compensation in money is an adequate remedy. The amended Section 14 retained some of these exceptions but narrowed them. The exception for contracts where monetary compensation is adequate was deleted, removing a key ground on which courts previously refused specific performance.
Section 20 was added. The new Section 20 introduced the concept of substituted performance. Where a contract is broken, the party who is entitled to enforce it may, at their option, get the contract performed by a third party or by their own agency, and recover expenses and other costs actually incurred from the party in breach. This is an alternative to specific performance, allowing the aggrieved party to get the work done and claim reimbursement rather than going through protracted litigation.
The intent of these changes was stated clearly in the Statement of Objects and Reasons to the Amendment Act: to strengthen India’s contractual framework and improve the ease of doing business by giving contracting parties greater certainty that their bargain will be enforced as made, not converted into a damages claim at the court’s discretion.
Specific Performance Is Now the Rule, Not the Exception
The Supreme Court in B. Santoshamma v. D. Sarala, (2020) confirmed for the first time that after the 2018 amendment, the remedy of specific performance is no longer discretionary. The Court noted that the earlier phrase of Section 10 has been replaced and the use of the word “shall” in the current provision gives it a mandatory character. Courts are now supposed to grant the relief of specific performance subject only to the conditions in Sections 11(2), 14, and 16.
This is a significant shift. In the pre-amendment era, a court could look at the entire equitable picture and decline specific performance if it preferred to award damages. Under the amended regime, the question is whether the contract falls within the exceptions listed in Section 14 and whether the plaintiff has satisfied the conditions in Sections 11 and 16. If not, specific performance must be granted.
The Remaining Exceptions: Where Specific Performance Is Still Not Available
The mandatory character of specific performance is not absolute. Section 14 of the amended Act still lists categories of contracts that cannot be specifically enforced. These include contracts where compensation in money is adequate, though this exception was narrowed from the pre-amendment version.
More importantly, a contract cannot be specifically enforced if it is a contract that runs into minute or numerous details, is so dependent on the personal qualifications or volition of the parties, or is otherwise of a nature that the court cannot enforce its material terms. Service contracts, personal employment agreements, and contracts requiring continuous court supervision generally cannot be specifically enforced.
Section 16 of the Act imposes conditions on the plaintiff. Specific performance will not be granted to a person who has not performed or is not willing to perform their part of the contract, or who has failed to tender performance within the time required by the contract if time was of its essence.
The “ready and willing” requirement under Section 16 has always been significant and remains so after the amendment. The plaintiff must prove, continuously throughout the proceedings, that they were ready and willing to perform their obligations. Mere assertion is not enough. The Supreme Court in Katta Sujatha Reddy v. Siddamsetty Infra Projects Pvt. Ltd., the 2022 judgment, confirmed that specific performance cannot be enforced in favour of a party who has not proven that they were always ready and willing to perform their part of the contract.
The Retrospectivity Controversy: A Complex Position
The most litigated question arising from the 2018 amendment has been whether the new mandatory regime applies only to contracts entered into on or after 1 October 2018 (prospective application), or also to contracts entered into before that date where suits are still pending (retrospective application).
The Supreme Court addressed this in Katta Sujatha Reddy v. Siddamsetty Infra Projects Pvt. Ltd., (2022). The three-judge bench, then comprising the former Chief Justice NV Ramana and Justices Krishna Murari and Hima Kohli, held that the 2018 amendment was substantive in nature and not merely procedural. Creating a mandatory right where none existed previously is a substantive change. Substantive amendments ordinarily apply prospectively. The Court therefore held that the 2018 amendment applies only to transactions entered into on or after 1 October 2018 and does not affect pending suits or contracts predating that date.
The matter did not rest there. The Siddamsetty decision was subsequently reviewed. The review judgment of November 2024, delivered by a bench of the then Chief Justice DY Chandrachud with Justices Pardiwala and Kohli, recalled the 2022 judgment on factual grounds, holding that the original bench had committed a grave error in its analysis of whether discretion should have been exercised in favour of the parties on the specific facts of that case. The Court exercised its discretion in review to order specific performance.
However, the review judgment was careful not to hold that the 2018 amendment applies retroactively to suits filed before 1 October 2018. The review proceeded on the assumption that even under the pre-amendment discretionary regime, specific performance should have been granted on those facts. The 2025 Supreme Court decision in Annamalai v. Vasanthi has confirmed this: the 2018 amendment has no retrospective effect and does not apply to suits or transactions that arose before 1 October 2018. Pre-amendment suits continue to be governed by the old Section 10, with its discretionary regime.
The practical position as it stands is therefore clear. For contracts entered into from 1 October 2018 onwards, specific performance is mandatory subject to the exceptions in Sections 14 and 16. For suits based on contracts predating 1 October 2018, the old discretionary regime applies, and courts must exercise their discretion in accordance with the principles laid down before the amendment.
The “Time Is of the Essence” Question
One of the most practically important questions in specific performance suits is whether time was of the essence of the contract. If it was, failure by either party to perform within the stipulated time may excuse the other party from performing, and a plaintiff who failed to tender performance on time may lose the right to specific performance.
The Supreme Court in Chand Rani v. Kamal Rani, (1993) 1 SCC 519, established the foundational principle that time is not inherently the essence of contracts for the sale of immovable property in India, unlike contracts for the sale of movable goods. Whether time is of the essence depends on the specific language of the contract and the surrounding circumstances.
The 2022 judgment in Katta Sujatha Reddy confirmed this principle. The Court observed that the mere inclusion of a date by which the transaction was to be completed does not make time of the essence unless the contract specifically says so or the surrounding circumstances clearly imply it. A purchaser who fails to tender the balance consideration by the date in the agreement is not automatically barred from seeking specific performance if time was not of the essence.
Substituted Performance: A New Practical Option
The addition of Section 20 in the amended Act introduced substituted performance as an alternative to going to court for specific performance. Where a contract is breached, the aggrieved party can now arrange for the contract to be performed by a third party or their own agency, and then sue the defaulting party for the reasonable costs incurred.
This option has significant practical value for commercial contracts where time is critical. Rather than waiting years for a specific performance decree and then executing it, the aggrieved party can simply get the work done, document the costs carefully, and pursue a straightforward claim for reimbursement. This is particularly useful in infrastructure, construction, and services contracts where performance of the specific obligation was possible and available from other sources.
However, the substituted performance option is available at the election of the aggrieved party. They cannot first purport to accept substituted performance and then simultaneously claim specific performance in court. The two remedies are alternatives.
Practical Implications for Litigants and Contracting Parties
For parties entering contracts on or after 1 October 2018, the key takeaway is that the other party can now more readily obtain a specific performance decree if they breach. Contracts should be drafted with this in mind. Where one side wants the ability to exit by paying damages, this should be explicitly addressed in the contract, as the default position now strongly favours specific performance.
For plaintiffs in pending specific performance suits based on pre-2018 contracts, the old law applies. Courts will exercise their discretion. The plaintiff must demonstrate readiness and willingness, the absence of any equitable bar, and the inadequacy of damages as a remedy.
For defendants in specific performance suits filed after 1 October 2018, the main lines of defence are the exceptions in Section 14, the conditions in Section 16 (particularly the plaintiff’s readiness and willingness), and where time was of the essence and the plaintiff failed to comply.
Conclusion
The Specific Relief (Amendment) Act, 2018 represents one of the most significant shifts in Indian contract law in decades. By making specific performance mandatory, the legislature sent a clear message: contracts are meant to be performed, not converted into damages claims at the defaulting party’s option. This aligns India’s approach more closely with civil law jurisdictions and reflects the modern understanding that contractual obligations carry intrinsic value that damages cannot always replace.
The Supreme Court has broadly upheld the mandatory character of the amended Section 10, while also confirming that the pre-amendment discretionary regime continues to apply to suits based on contracts predating 1 October 2018. The ready and willing requirement, the exceptions under Sections 14 and 16, and the time-is-of-the-essence doctrine remain important filters that defendants can invoke.
For contracting parties, practitioners, and litigants, the 2018 amendment requires a fresh reading of the specific relief landscape. The options available, the defences available, and the remedies available have all shifted. Navigating this landscape with an understanding of both the new mandatory regime and the pre-amendment discretionary principles — depending on the date of the relevant contract — is now an essential part of civil litigation practice in India.
