Law of contracts
Nature and Origin of Specific Relief
The Second Law Commission that sat in London till mid-1856 laid down in its report, the principles on which the foundation of the legal system in India was to be based. But, it could not complete what it had envisaged. In 1861, the Third Law Commission was formed to carry out the directives of the Second Law Commission, signifying that the Government of India agreed with the policies laid down there-in. The Third Law Commission's mandate was to frame a body of substantive law in preparing which, the law of England should be used as the basis but, which once enacted, itself be the law of India on the subject it embraced. The Commission consisting of Lord Romilly (Master of the Rolls), Sir W. Erle (Chief Justice of the Common Pleas), Sir Edward Ryan (Ex- Chief Justice of Calcutta), Lord Sherbrooke, Justice Willes and J.M. Macleod was given the task of considering and reporting on such other matters relating to the reforms of the laws of India, as might be referred to them by the Secretary of State. There were 3 subsequent changes in the constitution of this Commission, caused by 2 retirements and 1 death.
The Secretary of State for India, Sir Charles Wood enjoined the Commission to give the report on one branch of civil law before considering any other branch. This would facilitate measures to be implemented in India for effecting the recommendations of the Commission. The Third Law Commission was significantly the first body to undertake such a task, after the Crown took over subsequent to the War of 1857.
The 7 reports submitted, were sent by the Secretary of State to the Government of India for enactment by the Legislative Council. The 2nd report gave a draft of the Law of Contracts, and the 4th report submitted observations in reply to objections of the Govt. of India against including Sections dealing with the Law of Specific Performance in the draft Law of Contracts contained in the 2nd report. The provisions regarding specific performance became a bone of contention between the Commission and the Secretary of State, on one hand, and the Govt. of India, on the other. This led to the resignation of the Commission in 1870. The controversial clauses were excluded from the Law of Contracts, but ultimately the Law of Specific Relief was separately codified in 1877 with some changes. The relevant act, which is a blend of equity and common law was termed the Specific Relief Act of 1877. Surprisingly, the makers of the law discarded the distinction in English jurisprudence between common law and equity, which aspect is a major point of discussion.
The Specific Relief Act, 1877
Following the discourses mentioned above, the Specific Relief Act of 1877 was drafted by Whitley Stokes and revised by the Law Member, Sir Arthur Hobhouse. It was formulated on the lines of the New York Civil Code, 1862, and help was also taken from English Equity Reports. The Act embodied equitable principles which were developed in England by equity courts and had been already applied by Indian courts as principles of justice and equity. In fact, M.C. Setalvad- comments- "Another instance of an almost bodily transplantation of the doctrines of English equity courts, the Specific Relief Act of 1877 is a blend of common law and equity, as it also makes provision for the writ of mandamus in certain cases. This statute powerfully illustrates how those who were charged with the task of drawing suitable courts for India, discarded the distinction between law and equity in English jurisprudence."┬? Setalvad's comments are significant because he was the Chairman of the 9th Law Commission (1st Law Commission of independent India), which engineered the amendments, resulting in the new Specific Relief Act of 1963.
Specific Relief, as a judicial redress, is classified under Procedural Laws and it would find its place as a distinct division in the Civil Procedure Code, based on the natural affinities of the subject-matter. The position of specific relief in English Procedure has to be studied to understand the features of the Act of 1877. The King's ordinary Civil Courts, in general, had no other instrument of coercion than distraint on property before the enactment of this legislation. Hence, where money compensation was not considered enough, there was no legal way of redressal of a legitimate claim.
After the Restoration , medieval actions relating to repossession of land were rendered defunct. The new procedures relating to recovery of land, the action of ejectment and the action of detinue professed by the form of the judgement to give specific relief, with the value of goods and damages as an alternative etc. were not viable in implementation. Therefore, the Chancellor, Lord Clarendon became empowered to exercise the King's right to compel the defendant to perform what he had undertaken, and not just pay damages. This could be enforced practically by Contempt of Court proceedings to force to bring force to the judgement. But, an obstinate party could prefer to go to jail rather than perform what he had undertaken. However, as pointed by Setalvad, there was a blurring of the distinction between common law and equity in the Specific Relief Act of 1877.
COMMON LAW AND EQUITY
Legal systems that rely on Procedural Law, evolved through centuries of practice and decisions by eminent judges, are considered to be common law. This is based on precedent, as opposed to law based on legislative statutes or executive action. While dealing with a case, if the judge finds close similarities with cases from the past, he can make his decision based on these. If he finds that the case under consideration is totally different from any case in the past, he has to apply his mind and create a precedent. "╦ťThe law embodies the story of a nation's development through many centuries, and it cannot be dealt with as if it contained only the axioms and corollaries of a book of mathematics.'
Famous works on Common Law include Lord Chief Justice Edward Coke's Institutes and Reports, Commentaries on the Laws of England by Sir William Blackstone, Halsbury's Laws of England, The Common Law by Oliver Wendell Holmes, Jr. and John Chipman Gray's The Nature and Sources of the Law, which is widely read in the USA.
On the other hand, equity in the pure sense means "╦ťright doing' or "╦ťjustice in the ethical sense'. However, it is not possible to claim redress simply on moral grounds and it is necessary to point out some principle in the system of equity before a remedy is granted: just as a particular rule of common law must be cited to support an action at law. As the King's functionary, the judge exercised wide discretion to do justice according to moral law. The Chancery under the Lord Chancellor, primarily dealt with issues of equity. The current idea of equity was shaped by a series of great Lord Chancellors- from Cardinal Wolsey and Sir Thomas More, in the 16th Century through Lord Ellesmere, Sir Francis Bacon, Lord Clarendon, Lord Nottingham, Lord Hardwicke to Lord Eldon in the 19th Century. Eldon's Commission (1825) modified the system and led to the Chancery Reform Act, 1853 which laid down the principles of equity in a systematic way.
The distinction between common law and equity, is therefore, an accident of history. The Common Law courts were restricted in the type of pleas that they would hear. Hence, remedies were obtained by filing petitions before the King who held residual judicial power. The task of resolving this, was entrusted with the Chancellor, leading to the evolution of the Court of Chancery. From the 17th Century onwards, qualified lawyers were invariably appointed as Lord Chancellors.
One area in which this Court assumed a vital role was the enforcement of uses , a role which the rigid framework of common land law could not accommodate. This gave birth to the fundamental distinction between legal and equitable interests.
Reasons For The Repeal
The Report of the 9th Law Commission, dated 19th July, 1958, detailed the reasons for revising the Act of 1877, briefly
(1) Specific Relief, as a form of judicial redress, would find its place as a distinct part of the Civil Procedure Code. There is actually no need for having a separate Special Relief Act, and its contents would be divided between the Civil Procedure Code and the Transfer of Property Act, as would have been done, but for, historical accidents. However, the work involved in such drastic reform would be overwhelming and not worth the pain, but, some revisions were definitely needed. Moreover, Indian lawyers and Courts have become so accustomed to having a separate Act since 1877 that it will be difficult for them to reconcile to any drastic changes.
(2) The Report opined that the newly proposed Act should also deal with compensatory relief. Compensatory relief is inconsistent and often, an alternative for specific relief, and therefore, is best dealt with separately.
(3) The Commission felt that the revised Act should deal only with certain kinds of equitable relief- (a) Recovery of possession of property (b) Specific performance of contracts (c) Rectification of instruments (d) Rescission of contracts (e) Cancellation of instruments (f) Declaratory Reliefs and (g) Injunctions. Other forms of specific relief which were in the Act of 1877(including Transfer of Property Act, Trusts Act, Partnership Act etc.) were considered different in origin and nature, and hence not considered for inclusion in the proposed new Act.
(4) The Report stated that the Commission had made efforts to improve the antiquated language and to bring clarity. But, it was difficult to avoid inherent defects in the codification of equitable principles.
(5) The Report suggested that the language be improved by the inputs given by the official draftsman.
(6) The Report proposed that ALL the illustrations in the Act of 1877 be omitted. Even though Whitley Stokes quoted Macaulay- "illustrations will, greatly facilitate the understanding of the law"┬? , the Commission felt that some of them are not warranted by the terms of the relevant sections and others have tended to stultify the development of equitable jurisdiction.
(7) The Report expressed the need for the Act to be extended to Scheduled Districts, since even the Transfer of Property Act. 1882 has been made applicable there.
(8) The definition of "╦ťtrust' in Section 3 of the Act was found to be unsatisfactory because it refers to "╦ťexpress', "╦ťimplied' and "╦ťconstructive' fiduciary ownership without explaining any of those terms.
(9) Some sections of the original Act were felt to be too elementary to be codified, and was seen to serve no purpose. The Report expressed the need to repeal these sections.
(10) The definition clause of the Specific Relief Act, 1877 was considered to be very vague and important terms, which deserved more attention, were defined casually. This created conflicts with the Indian Contract Act, 1872.
(11) But for a verbal change, no alteration was proposed for Section 10.
(12) The Report suggested that Section 11 was unnecessary and expressed the need to omit it. But, this section confers a right to relief which is not given by any other provision of the Act.
First, specific delivery under Section 11 is to be distinguished from specific performance of a contract inasmuch as the right of recovery in Section 11 is not based on contract, but on the right to possess.
Secondly, Section 11 was required to be distinguished from Section 10. Both Section 10 and Section 11 relate to what is called an action of detinue in England, but, while Section 10 represents the common law rule, Section 11 represents the equitable gloss upon it. Pollock and Mulla put it as such
"In England a person entitled to the immediate possession of a specific chattel was in principle entitled to recover it by an action of detinue. The writ in that action demanded specific delivery. But owing to the defective procedure for the execution of common-law judgments, this could not in practice be enforced. Then a court of equity, when applied to for relief, had to be satisfied that the remedy in damages to the value of the goods, which alone was available for the plaintiff at common law, would not be adequate, or that some specially equitable right of the plaintiff under trust, for example, was involved."┬?
Under these circumstances, the Commission felt that Section 11 should not be omitted.
Similarly, the Commission highlighted the numerous other flaws in the Specific Relief Act of 1877, and thus, succeeded it with the Specific Relief Act of 1963.
Specific Relief Act, 1963
The law relating to equity, in India today, is contained in the Specific Relief Act, 1963(Act 47 of 1963). The law of specific relief is classified under the law of procedure. It is called "╦ťspecific' because under this procedure, the plaintiff gets his relief in specific, that is, the very thing which the other party was bound to perform or forbear from performing. Specific relief finds its roots in equitable principles. The mission of the Act is to provide a remedy for every wrong done. The important equitable maxims applied in the Act are
(1) The jurisdiction is discretionary (s.20)
(2) He who seeks equity must do equity (s.33)
(3) Equity acts in personam, that is, only a person who is a party to the contract can claim specific performance; so also can be called to specific performance.
(4) He who comes to equity must come with clean hands.
(5) Delay defeats equity.
As discussed before, the various kinds of specific relief dealt by the Act are
(1) Recovery of possession of property
(2) Specific performance of contracts
(3) Rectification of instruments
(4) Rescission of contracts
(5) Cancellation of instruments
(6) Declaratory decrees
(7) Preventive Relief
General Principles governing Specific Performance:
1. Mutuality: The Court will not enforce the obligation of one party if it cannot the obligation of another.
2. Contracts for personal service are not specifically enforceable, but some relief can be given by way of injunction.
3. Contracts requiring constant supervision by the Court will not be specifically enforced.
Recovery of Possession of Property (Ss. 5 to 7):
Section 5 of the Specific Relief Act states that a person who has a right to the possession of any specific immovable property may recover the same by instituting a suit in the manner provided by the Civil Procedure Code. Under Section 6, if any person is dispossessed, without his consent, immovable property otherwise than in due course of law, he may recover possession from the defendant without reference to any question of title. The object is to prevent persons taking law into their own hands, however good their title might be. The Government stands exception to this section though. To enjoy relief under Section 6, the plaintiff has to prove the following:
(1) That he was in possession
(2) That he had been dispossessed
(3) That the dispossession took place without his consent
(4) That it was done otherwise than in due course of law
(5) That the dispossession took place within six months before institution of the suit.
Section 7 provides for the recovery of movable property, that is, a person entitled to the possession of specific movable property may recover it in the manner provided by the Civil Procedure Code.
Specific Performance of Contracts
Specific Performance of Contracts:
Specific Performance can be obtained by
(1) A party to the contract
(2) The representative in interest of any party to the contract
(3) In marriage and family settlements, any person benefitting by such settlement.
(4) The principal, if the party to the contract was an agent.
(5) A remainder-man where one of the parties is a tenant for life
(6) A reversioner in possession as against his predecessor in title who has transferred certain benefits to him.
(7) A reversioner in remainder likely to sustain material injury by breach of covenant entered into with his predecessor in title
(8) A new company formed by the amalgamation of two companies may specifically enforce the contracts entered into by the original companies, and
(9) A company can enforce contracts duly entered into by the promoters prior to its incorporation.
Persons who can be held to specific performance
(1) A party to the contract
(2) A person claiming under a party to the contract but not transferee for value in good faith and without notice.
(3) A new company formed by the amalgamation of two or more companies
(4) A company whose promoters had entered into a contract duly authorised prior to its incorporation.
(5) A person claiming under title which might have been displaced by the defendant, though this happened prior to the contract sought to be specifically enforced and the plaintiff had known about this title.
In Lumley v. Wogner, even though the court refused to order specific performance of a positive agreement to sing at the plaintiff's theatre, the court granted an injunction to prevent the breach of a negative promise that during a certain period the defendant should not sing elsewhere, where she refused to perform her contract to the plaintiff and attempted to sing in another theatre in pursuance of a contract with another person after she had made the contract with the plaintiff. The ruling in the case has been confirmed in the case of Warner Bros v. Nelson. But, in the absence of clear and express negative terms the above rule will not apply.
"Specific performance is an equitable relief, given by the court in case of breach of contract, in the form of judgment that the defendant does actually perform the contract according to its terms and stipulations."┬? Specific performance will not be granted where damages are an adequate remedy and the jurisdiction to grant specific performance is discretionary.
(a) Contracts which can be specifically enforced:
The jurisdiction to grant specific performance is discretionary, and section 10 embodies the principle on which specific performance should be granted. The specific performance of any contract may be enforced.