What is the Specific Relief Act and why does the govt want to change it?2 min read . Updated: 23 Jun 2016, 04:50 PM IST
The recommendations for change may reduce uncertainty in infrastructure projects and the ones involving huge public investments
New Delhi: A Central government-appointed expert committee on Monday submitted its report recommending changes to a 1963 law called the Specific Relief Act.
Here’s what the law is about and what could change, if the government accepts the recommendations.
What does the Specific Relief Act do?
Specific Relief is legalese for performing a contract when monetary compensation for failing to complete contractual obligations is not enough. The law prescribes that in an event where the actual damage for not performing the contract cannot be measured or monetary compensation is not adequate, one party can ask the court to direct the other party to fulfil the requirements of the contract. This is called specific performance of a contract.
This extends to infrastructure contracts, like construction of housing societies or sale and purchase of land.
Why does the government want to change this law?
Specific performance of contracts under the 1963 law is an alternative—only when monetary compensation is not sufficient can the court ask for it. There is a provision which says that there will be no specific performance of those contracts where monetary compensation is sufficient, or the contract involves performance of a continuous duty which the court cannot supervise.
It is also a discretionary relief, that is, it is left to the court to decide whether specific performance should be given to a party asking for it.
This gives rise to uncertainty in contracts.
The government wants to ensure that there is ease of doing business, and the specific relief law is a hindrance. Uncertainty in contracts often means investors become vary of getting entangled in legal trouble.
What are the recommendations made by the committee?
The committee has asked for specific performance to be made the rule and not an exception. This would mean that even if contractual obligations cannot be met, the court could ask the parties to fulfil terms of the contract. Monetary compensation will be an alternative when contracts cannot be fulfilled.
It has also suggested guidelines to the courts for exercising discretion in these matters, in order to streamline how courts interpret the provisions.
The committee said that there was need to see whether intervention of courts in public works should be minimal.
How will it help?
The committee expects this to reduce uncertainty in projects for infrastructure or those involving huge public investments. The recommendations are aimed at ensuring that public works contracts happen without unnecessary delays.
Can these recommendations be stopped by a court?
At the recommendation stage, generally, courts will not interfere. If the recommendations are accepted by the government and an amendment is brought by way of law, high courts and the Supreme Court can review it to see if it is constitutional. No legislation can take away the power of the higher judiciary to review legislations under the court’s writ jurisdiction.