This is one of the few areas of Indian civil law where the ground genuinely moved, and advice written before October 2018 now understates your position badly.
Compare that with what it replaced. The old Section 10 said specific performance may, in the discretion of the court, be enforced, and the old Section 20 was headed Discretion as to decreeing specific performance and set out when the court would decline it. The 2018 amendment substituted Section 10, and replaced Section 20 entirely with a provision about substituted performance. The discretion went with it. A court that finds the contract proved and the statutory bars absent is now obliged to decree performance rather than to weigh whether damages would do instead.
What can still stop you
Section 14, as amended, lists the contracts that cannot be specifically enforced. Where a party has obtained substituted performance under Section 20. A contract whose performance involves a continuous duty the court cannot supervise. A contract so dependent on the personal qualifications of the parties that the court cannot enforce its material terms. And a contract which is in its nature determinable. An ordinary agreement to sell a site or a flat is none of these.
Section 16 is where these suits are actually lost. Specific performance cannot be enforced in favour of a person who has obtained substituted performance under Section 20, or who has become incapable of performing or violates any essential term or acts in fraud of the contract, or who fails to prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms whose performance has been prevented or waived by the defendant. The Explanation to clause (c) says that where a contract involves the payment of money it is not essential for the plaintiff to actually tender the money or deposit it in court except when the court directs, but that the plaintiff must prove performance of, or readiness and willingness to perform, the contract according to its true construction.
The 2018 amendment tightened the language from aver and prove to prove. A pleading that recites the formula and stops is not enough. What proves it is a bank balance or a sanction letter contemporaneous with the date fixed for performance, a legal notice calling on the seller to complete, and correspondence that is continuous rather than a single letter written the week before the suit.
The trap in the new Section 20
Section 20 now provides for substituted performance. Where a contract is broken, the party who suffers may, after giving written notice of not less than thirty days calling on the party in breach to perform, get the contract performed through a third party or by his own agency and recover the expenses and costs actually incurred from the party in breach. Sub-section (3) is the sting. Where the party suffering the breach has got the contract performed through a third party or his own agency after giving that notice, he shall not be entitled to claim the relief of specific performance against the party in breach. And Section 14(a) and Section 16(a) both bar specific performance to a party who has obtained substituted performance. For a buyer of a specific piece of land, substituted performance is almost never what you want, and invoking it can cost you the property.
Limitation, and why it is the real risk
Article 54 of the Schedule to the Limitation Act, 1963 gives three years for a suit for specific performance of a contract, running from the date fixed for the performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused. Two consequences follow. Where the agreement fixes a completion date, the clock starts there whether or not anyone said anything. Where it does not, the clock starts on refusal, which is why a written refusal from the seller, or your notice recording it, is a document worth having and worth dating.
Protecting the property while the suit runs
- A legal notice recording the agreement, your readiness, and calling on the seller to execute by a fixed date
- A suit for specific performance, with the alternative relief of refund of the advance specifically claimed, since the Specific Relief Act requires alternative relief to be pleaded
- An application for a temporary injunction restraining alienation, so the property is not sold on while you litigate
- A caveat, so an order is not passed behind your back in a proceeding you do not know about
- Every payment traced through the bank, because cash advances are the first thing a defaulting seller denies
- The agreement itself, and note that even an unregistered document may be received as evidence of a contract in a suit for specific performance under the proviso to Section 49 of the Registration Act, 1908
Section 19(b) of the Specific Relief Act protects you against a person claiming under the seller by a title arising after your contract, except a transferee for value who paid in good faith and without notice of it. Notice is the operative word, and it is why the injunction and the caveat matter more than they look. The difference between the two instruments in play is set out in the sale agreement and sale deed answer and in our guide to sale agreement against sale deed. How an injunction is obtained is in our note on temporary injunctions under Order 39.