Sections 21, 22, 23, 24 and 25 of the Specific Relief Act, 1963

Section 21. Compensation for breach of contract

Section 21 empowers the court, in a suit for specific performance, to award compensation for breach of contract in addition to specific performance, or instead of it when specific performance is refused but a breach and entitlement to compensation are established.

Under sub-section (2), if the court concludes that specific performance should not be granted but the defendant breached an enforceable contract, compensation must be awarded when justified. Under sub-section (3), compensation may accompany specific performance if performance alone does not satisfy the justice of the case. Sub-section (4) adopts the principles of Section 73 of the Indian Contract Act, 1872, concerning compensation for loss or damage caused by breach.

Under sub-section (5), the plaintiff must specifically claim compensation in the plaint. Where omitted, the court shall permit amendment at any stage on just terms. The Explanation clarifies that the contract becoming incapable of specific performance does not remove the court's power to award compensation.

Section 22. Possession, partition and refund of earnest money

Section 22 concerns suits for specific performance of contracts to transfer immovable property. In an appropriate case, the plaintiff may also claim possession, partition and separate possession, or other relief including refund of earnest money or a deposit if specific performance is refused. This provision operates notwithstanding contrary provisions of the Code of Civil Procedure, 1908.

Sub-section (2) requires the additional relief to be specifically pleaded, but permits amendment of the plaint at any stage on just terms. Sub-section (3) preserves the court's separate power to award compensation under Section 21. A prayer for specific performance alone should therefore not be assumed to include all consequential relief automatically.

Section 23. Liquidated damages do not necessarily bar performance

Section 23 provides that a clause specifying a sum payable upon breach does not, by itself, prevent specific performance. The court examines the contract and surrounding circumstances to decide whether the sum was intended merely to secure performance, rather than to give the defaulting party a genuine choice to pay money instead of performing.

If specific performance is ordered under this section, sub-section (2) prohibits also decreeing the stipulated sum. Whether a contract is otherwise specifically enforceable remains subject to the other provisions of the Act.

Section 24. Effect of dismissal on a later compensation suit

Under Section 24, dismissal of a suit for specific performance of a contract, or part of a contract, bars the plaintiff from bringing a subsequent suit for compensation for breach of that contract or part. It does not bar a suit for another relief to which the plaintiff may be entitled by reason of the breach.

This makes the pleading of alternative or additional compensation under Section 21 important in the original specific-performance proceedings, subject to the applicable procedural and substantive law.

Section 25. Awards and testamentary directions to settle property

Section 25 extends the provisions of this Chapter relating to contracts to certain awards to which the Arbitration and Conciliation Act, 1996 does not apply, and to directions in a will or codicil to execute a particular settlement.

A codicil is a testamentary instrument that modifies or adds to a will. The section addresses enforcement of the specified award or testamentary direction through the Chapter's applicable principles.

Practical points when drafting a plaint

A plaintiff should consider pleading compensation expressly under Section 21 and, for a contract transferring immovable property, possession, partition or refund as appropriate under Section 22. Both sections provide for amendment where relief was not originally claimed. The facts establishing breach, the contractual terms and the basis for the amount sought should be pleaded and proved.

Section 23 requires attention to the purpose of any stipulated damages amount; Section 24 makes the outcome of the specific-performance suit important for a later compensation claim. The enforceability of the contract and available remedies depend on the Act and the particular facts.

Official legislation and related provisions

Consult the India Code official legislation portal for the Specific Relief Act, 1963 and its amendments, the Legislative Department, the Indian Contract Act, 1872, and the Arbitration and Conciliation Act, 1996. The applicable version and judicial interpretation should be checked for the relevant transaction and date.