Specific Relief Act 2018: From Compensation-Default to Performance-Default
The Specific Relief (Amendment) Act, 2018 inverted the default position of Indian contract law. Where the original Section 10 conferred discretion on the court to grant specific performance only in defined cases, the amended Section 10 makes specific performance the rule. The shift has practical consequences for every commercial contract drafted in India today.
The pre-2018 framework
The original Specific Relief Act, 1963 was structured around a discretionary exception. Section 10 conferred power on the court to enforce specific performance "in the discretion of the court" in three cases: where compensation in money would not afford adequate relief; where there existed no standard for ascertaining the actual damage caused by non-performance; or where the Act would not be likely to be of any value if compensation were given. Section 14 enumerated contracts which "cannot be specifically enforced" — including contracts dependent on personal qualifications, contracts of a continuous nature, and contracts the performance of which involved minute details.
The position that emerged was that compensation was the default remedy; specific performance was the exception, granted in the court's discretion when compensation would not suffice.
The 2018 amendment
The Specific Relief (Amendment) Act, 2018 — based on the recommendations of an Expert Committee — inverted this architecture. The amended Section 10 now reads, in substance, that specific performance "shall" be enforced by the court, subject to the limitations under Sections 11(2) and 14. The court's discretion to refuse specific performance has been substantially curtailed.
The amended Section 14 now lists contracts which "cannot be specifically enforced" — but the list is narrower, focused on cases where compensation is in fact adequate, where personal qualifications make enforcement impracticable, where the contract is determinable in nature, and where the contract involves the performance of a continuous duty which the court cannot supervise.
The amendment also introduces Section 14A, which permits the court to engage technical experts where the suit involves issues requiring specialised knowledge.
Substituted performance
The most consequential introduction is Section 20A, which enables a special procedure for "infrastructure project contracts". Where the contract relates to an infrastructure project listed in the Schedule (highways, ports, airports, railways, transmission, hydropower, irrigation), the court will not grant injunction in suits to delay or impede the progress of the project. The provision is structured to preserve project-execution timelines against opportunistic injunctive relief.
Section 20 introduces "substituted performance" — a remedy by which a party in default may have the contract performed by a third party at the cost of the defaulting party, after due notice. The substituted-performance route is an alternative to specific performance and damages, not a substitute for them.
The drafting consequences
For commercial contracts drafted after 2018, the amendment changes the working assumptions in several respects.
First, liquidated-damages clauses lose their finality. Under the pre-2018 framework, a properly drafted LD clause was the de-facto cap on the non-breaching party's recovery — the court would award damages and decline specific performance. Under the post-2018 framework, the LD clause does not preclude specific performance; the non-breaching party may elect either remedy.
Second, continuous-supply and long-term contracts are squarely enforceable. The pre-2018 Section 14 list included continuous-performance contracts as non-enforceable; the post-2018 list is narrower. Long-term supply agreements, off-take agreements, and franchise agreements — previously thought to fall outside specific performance — are now within the working scope of Section 10.
Third, infrastructure contracts are protected against injunctive obstruction. Section 20A's no-injunction principle applies to listed infrastructure projects and changes the strategic calculus for both project authorities and contractors. A contractor cannot, in suits to delay project progress, secure injunctive relief; the project continues, with damages or substituted performance available as remedies.
The 2018 amendment did not abolish the discretion of the court. It reset the default — and the default is performance, not compensation.
The judicial response
The Supreme Court and the High Courts have applied the amended framework with measured rigour. The amended provisions have been held to be substantive in nature and prospective in application — they apply to contracts entered into on or after 1 October 2018, when the amendment came into force. For contracts entered into before that date, the pre-2018 framework continues to apply, even where the breach occurs after 1 October 2018.
The "readiness and willingness" requirement under Section 16(c) — that the plaintiff aver and prove readiness and willingness to perform — has been retained, with the amended Section 16(c) Explanation clarifying that the plaintiff need not actually tender money or perform if such performance is impossible by reason of the defendant's default.
Working observations
Three observations from current practice. First: every commercial contract drafted after 1 October 2018 must be reviewed for its specific-performance exposure. Clauses that read tolerably under the pre-2018 framework — broad termination rights, vague performance standards, asymmetric remedies — read very differently when specific performance is the default remedy.
Second: the litigation strategy in suits relating to contracts post-1 October 2018 must be calibrated to the amended Section 10. The plaintiff seeking specific performance no longer needs to demonstrate that compensation is inadequate; the burden has shifted to the defendant to bring the case within the narrower Section 14 exceptions.
Third: the substituted-performance route under Section 20 requires careful contract-drafting on notice and procedure. Where the contract is silent, the statutory framework applies — but a properly drafted contract can stipulate the conditions under which substituted performance may be invoked, and the manner of computing the cost recoverable from the defaulting party.