2018 Amendment to SRA not Retrospective

Source: Supreme Court 

Why in News? 

The bench of Justices JB Pardiwala and Manoj Misra clarified in the matter of Annamalai v. Vasanthi and Others (2025) that the 2018 amendment to the Specific Relief Act, 1963, which made the grant of specific performance of contracts a mandatory relief, has no retrospective effect and does not apply to suits or transactions that arose before its enforcement.  

What was the Background of Annamalai v. Vasanthi and Others (2025) Case? 

• An agreement to sell was entered into between the Appellant (buyer) and the defendant (vendor). 
• The defendant attempted to terminate the contract despite having no termination rights, even after accepting an additional amount of consideration from the plaintiff six months after the contract period had lapsed. 
• The trial court dismissed the plaintiff's suit for specific performance, stating that no declaration to invalidate the termination was sought by the plaintiff before filing the suit for specific performance. 
• The First Appellate Court reversed the trial court's decision and decreed the suit for specific performance, holding that there was no requirement to seek a declaration about invalidation of the termination. 
• The First Appellate Court reasoned that upon accepting the additional consideration amount, the vendor had wrongly repudiated the contract by waiving its right to terminate through the conduct of accepting additional consideration. 
• The High Court reversed the First Appellate Court's decision in a second appeal, prompting the plaintiff-buyer to approach the Supreme Court. 
• The impugned judgment by the High Court had been delivered on February 2, 2018, prior to the 2018 amendment.  

What were the Court's Observations? 

• The Supreme Court observed that prior to the 2018 amendment (brought through Act 18 of 2018), the grant of specific performance was a matter of judicial discretion, not a mandatory relief. 
• The bench referred to its earlier decision in Katta Sujatha Reddy v. Siddamsetty Infra Projects (P) Ltd (2022), which held that the 2018 amendment was prospective in nature and could not govern contracts or suits instituted before its commencement. 
• Although the decision in Katta Sujatha Reddy was later reviewed and recalled in Siddamsetty Infra Projects (P) Ltd. v. Katta Sujatha Reddy (2024), the Supreme Court clarified that even in the review judgment, there was no express finding that the amended provisions would apply to suits filed prior. 
• The Court stated: "No doubt, this decision was reviewed and recalled in Siddamsetty Infra Projects (P) Ltd. v. Katta Sujatha Reddy but in the review order/judgment this Court did not specifically hold that the amended provisions would govern suits instituted prior to the 2018 Amendment. The review decision merely proceeded on the assumption that the grant of specific performance continued to be discretionary for suits instituted before the amendment." 
• The Court noted that since the impugned judgment had been delivered on February 2, 2018, prior to the amendment coming into force, it was bound to decide the issue based on the law as it stood at that time. 
• The Court held: "In our view, acceptance of additional money not only signified waiver of the right to forfeit advance money/consideration but also acknowledged subsistence of the agreement." 
• The Court pointed out that the subsequent notice of termination was therefore a wrongful repudiation, not a valid exercise of contractual right. 
• The buyer was thus entitled to sue directly for specific performance without first seeking a declaration. 
• The Supreme Court set aside the High Court's decision and restored the First Appellate Court's decision, allowing the appeal. 

What is the Specific Relief Act, 1963? 

About: 

• The Specific Relief Act, 1963 is a legislation that provides remedies for persons whose civil or contractual rights have been violated. 
• The Act deals with specific performance of contracts, rectification of instruments, rescission of contracts, and cancellation of instruments. 

SRA Amendment Act, 2018: 

Major Amendments:  

Sections 10 & 11 - Core Transformation: 

• Changed specific performance from discretionary ("may") to mandatory ("shall"). 
• Courts must now grant specific performance unless specific exceptions apply (Sections 11(2), 14, and 16). 

Section 6 - Dispossession Suits: 

• Widened scope to include "person through whom" the aggrieved party was in possession. 
• More parties can now file suits for dispossession of immovable property. 

Section 20 - Substituted Performance (New Provision): 

• Aggrieved party can obtain performance from a third party after giving 30 days notice. 
• Can recover costs from the defaulting party. 
• Applies unless contract states otherwise. 

Section 21 - Compensation: 

• Changed "either...or" to "in addition to" - compensation now supplements (not replaces) specific performance. 

Non-Enforceable Contracts (Section 14) 

Specific performance cannot be granted for: 

• Substituted performance contracts. 
• Contracts involving continuous duty. 
• Contracts dependent on personal qualifications. 
• Contracts of determinable nature. 

Special Provisions for Infrastructure Projects 

New Sections 20A, 20B, 20C: 

• 20A: Prohibits injunctions that impede infrastructure project progress. 
• 20B: Designates Special Courts for infrastructure contract disputes. 
• 20C: Mandates disposal within 12 months (extendable by 6 months). 
• Section 41(ha): No injunctions that delay infrastructure projects. 
• Schedule: Lists categories of infrastructure projects covered. 

Other Notable Changes: 

Section 14A - Expert Assistance: 

• Courts can engage experts for opinions on specific issues. 
• Parties can examine experts in open court. 

Sections 15 & 19 - LLP Provisions: 

• Amalgamated LLPs can enforce/be bound by contracts of component LLPs. 

Section 16(c) - Proof Requirements: 

• Party only needs to prove readiness/willingness to perform. 
• No requirement to aver in pleadings. 

Section 25: Updated to reflect Arbitration and Conciliation Act, 1996.