Limitation for Specific Performance of Contract under the Limitation Act

Specific performance is a crucial remedy in contract law, ensuring that parties fulfil their obligations as agreed rather than just compensating the aggrieved party with damages. In India, the enforcement of specific performance is governed by the Specific Relief Act, 1963 (SRA) and subject to the limitation period provided under the Limitation Act, 1963.

The Limitation Act sets a time frame within which legal actions must be initiated. For specific performance of a contract, Article 54 of the Limitation Act, 1963, prescribes a limitation period of three years. This article examines the limitation period for filing a suit for specific performance, the starting point for calculation, judicial interpretations, and exceptions where applicable.

Understanding Specific Performance Under the Specific Relief Act, 1963

What is Specific Performance? 

Specific performance is a legal remedy compelling a party to perform its contractual obligations. Unlike monetary compensation, which provides an alternative to performance, specific performance seeks to enforce the contract as originally agreed.

When is Specific Performance Enforceable? 

Under Section 10 of the Specific Relief Act, 1963, specific performance of a contract shall be enforced subject to conditions laid down in Sections 11(2), 14, and 16 of the Act.

• Section 11(2): Contracts entered into by a trustee are not enforceable if they exceed the trustee’s authority or breach the trust.
• Section 14: Certain contracts are not enforceable, including those that require constant supervision or depend on personal qualifications.
• Section 16: Lists personal bars to relief, such as the plaintiff’s incapacity to perform or violation of contract terms.

The 2018 Amendment to the Specific Relief Act transformed specific performance from a discretionary remedy into a general rule, making it easier to enforce contracts in India.

Limitation Period for Specific Performance under Article 54 of the Limitation Act, 1963

What is the Limitation Period? 

Article 54 of the schedule of the Limitation Act, 1963, provides that a suit for specific performance must be filed within three years.

When Does the Limitation Period Begin? 

The limitation period starts from:

• The date fixed for performance, or
• If no such date is fixed, the date when the plaintiff has notice that the performance is refused.

This means that if a contract stipulates a specific date for fulfilment, the countdown starts from that day. However, if no such date is provided, the limitation period begins once the plaintiff is made aware that the defendant is unwilling to perform the contract.

Judicial Interpretations of Limitation in Specific Performance Cases

Several court judgements have clarified the application of Article 54:

Rajesh Kumar v. Anand Kumar & Ors. (2024)

The Supreme Court ruled that the mere filing of a suit within three years does not guarantee relief. The court emphasised that if a plaintiff delays unreasonably before filing, despite knowing about the breach, it may affect their claim.

Sabbir (Dead) Through LRs v. Anjuman (2023)

The Court reaffirmed that the three-year limitation applies from the date fixed for performance or when refusal is communicated. The plaintiff cannot claim specific performance indefinitely.

A. Valliammai v. K.P. Murali (2023)

The Supreme Court clarified that if no date is set for performance, then limitation begins only when the plaintiff is made aware of the refusal to perform. This interpretation protects parties from indefinite claims but ensures fairness where contract terms are unclear.

Readiness and Willingness: A Key Factor in Specific Performance

Section 16(c) of the Specific Relief Act, 1963, states that a party seeking specific performance must demonstrate “readiness and willingness” to perform the contract.

Key aspects of readiness and willingness:

• Readiness refers to the financial and physical capability of the plaintiff to perform the contract.
• Willingness refers to the conduct of the plaintiff in fulfilling their obligations.

Case Law: UN Krishnamurthy v. AM Krishnamurthy (2022)

• Readiness means the ability to perform.
• Willingness is determined by the plaintiff’s actions and intent.
• The Court held that both factors must be proved to grant specific performance.

Impact of the 2018 Amendment to the Specific Relief Act

The 2018 Amendment brought significant changes to the enforcement of specific performance:

1. Made specific performance a statutory right, rather than a discretionary remedy.
2. Removed certain discretionary powers of the court to refuse specific performance.
3. Improved contract enforcement, aiding India’s Ease of Doing Business ranking.

Global Music Junction Pvt. Ltd v. Shatrughan Kumar (2023)

• The Delhi High Court ruled that post-2018, specific performance is now the norm rather than an exception.

Is the 2018 Amendment Retrospective or Prospective?

A key question in contract law is whether the 2018 Amendment applies to contracts entered before its enforcement on 1st October 2018.

Katta Sujatha Reddy v. Siddamsetty Infra Projects (2022)

• A three-judge bench of the Supreme Court held that the 2018 amendment is prospective.
• It does not apply to contracts signed before 1st October 2018.

Practical Implications of Limitation on Specific Performance

1. Timely Action is Essential
   • Plaintiffs must file within three years to avoid dismissal.
   • Delaying until the last moment can weaken the case, as courts expect reasonable promptness.
2. Contracts Without Fixed Performance Dates
   • Plaintiffs must be vigilant in identifying refusal by the defendant.
   • The limitation period does not restart upon repeated refusals.
3. Readiness and Willingness Must be Proved
   • Plaintiffs must demonstrate financial ability and proactive conduct in honoring the contract.
4. Contracts Entered Before 2018
   • Such contracts will be governed by pre-amendment laws, making specific performance more discretionary.

Conclusion

The three-year limitation period under Article 54 of the Limitation Act, 1963, is a crucial safeguard against indefinite claims for specific performance. The courts have consistently held that mere adherence to the limitation period is not enough; plaintiffs must also show timely action, readiness, and willingness.

The 2018 Amendment to the Specific Relief Act has strengthened the enforceability of contracts, making specific performance a general rule rather than an exception. However, it applies prospectively, ensuring fair treatment for contracts executed before its enforcement.

Thus, while the limitation period ensures timely enforcement, judicial discretion, readiness, and willingness remain critical factors in securing specific performance of a contract. Plaintiffs must be proactive, well-prepared, and demonstrate sincere intent to perform the contract to successfully obtain relief under the law.