The Specific Relief Act: Mitigating the uncertainty in contract execution

The Cabinet on Friday approved amendments to the Specific Relief Act, 1963, in a bid to ease enforcement of contracts. The govt is likely to introduce the new Bill in the winter session of Parliament

Why was there a need to amend the Act?

World Bank’s Ease of Doing Business global report places India at the 164th position on the enforcing contracts indicator. The time taken to enforce a contract in India is close to four years (1,445 days), according to the World Bank report.

The Act, which has not been amended in the past 54 years, deals with discretionary relief given to a party on breach of a contract. This usually involves contract-based infrastructure and public-private partnership development projects. The amendments are directed to curb uncertainty in contracts that arise out of inability to ascertain monetary damages in case of a breach of contract. The amendment Bill is still not in public domain. The government appointed an expert committee last year to suggest modifications in the Act.

What were the recommendations of the expert committee?

An expert group, led by Anand Desai, submitted its recommendations to the law & justice ministry in June last year. The key highlights of the committee’s recommendations were:

• Make specific performance the rule and damages the alternate remedy
 

• Provide guidelines for reducing the discretion granted to courts and tribunals while granting performance and injunctive reliefs
 

• Introduce provisions for rights of third-parties
 

• Any public work must progress without interruption

How will the amendments improve ease of doing business?

Uncertainty in contract execution plays on the mind of investors, especially those involved in capital-intensive, long-duration projects, says Ramesh Vaidyanathan, managing partner, Advaya Legal. “The amendments will boost investor confidence,” he says. Experts point out that any ease in enforcement of contract brings down overall cost of doing business in India. 

However, these amendments have to be followed up with setting up of more commercial courts in the country, along with intensive training for judges on matters related to commercial contracts, say legal experts. 

How many of these bills will see the light of the day?

Some key economic Bills listed for introduction, consideration and passage in the winter session of Parliament (Dec 15, 2017 – Jan 5, 2018)
 

The Goods and Services Tax (Compensation to states) Amendment Bill, 2017 

• Amends the schedule to the Goods and Services Tax (Compensation to States) Act, 2017, to increase the cap on cess rates on motor vehicles 
 

The Insolvency and Bankruptcy Code (Amendment) Bill, 2017 

• Prohibits certain persons from submitting a resolution plan

• These include promoters of defaulting companies undergoing resolution 

The Banning of Unregulated Deposit Schemes and Protection of Interest of Depositors Interest Bill, 2017 

• Provides for a central law to deal with unauthorised deposit taking schemes 

The Negotiable Instruments (Amendment) Bill, 2017 

• Addresses issues related to delay in resolution of cheque bounce cases 

The Specific Relief (Amendment) Bill, 2017 

• Simplifies the procedure for ease of doing business 

The Consumer Protection Bill, 2017

• Provides for better protection of consumers

The Prevention of Corruption (Amendment) Bill, 2013

• Makes giving a bribe an offence and modifies the definition of taking a bribe

The Whistle Blowers Protection (Amendment) Bill, 2015

• Specifies grounds under which disclosures related to corruption may not be made

Source: PRS Legislative Research