Who may enforce Specific Performance of Contract under SRA

Who may and against whom specific performance may be enforced

This article deals with the details of which parties are authorized to enforce specific performance and against whom this remedy can be claimed. It is essential to understand for the enforcing the remedy of specific performance under specific relief act.

Who and against whom specific performance can be enforce:

s. n.	Who may claim specific performance (Section 15)	Against whom specific performance may be claimed (Section 19)
a	Parties to the contract	Parties to the contract
b	Representative in interest or principal Provided personal skills, learning, etc.	any person claiming through him by a title except, the transferee for value
c	Beneficiary under settlement on marriage or compromise of doubtful right	a person claiming through him by a title might be displaced by the defendant.
d	The remainderman, where contract entered by the tenant.	Amalgamated LLP
e	Reversioner in possession.	Amalgamated company
f	a Reversioner in remainderman which he is entitled.	The company, when the promoters of it before incorporation entered into the contract and after incorporation such contract warranted by the terms of incorporation.
fa	Amalgamated Limited Liability Partnership.
g	Amalgamated company.
h	The company, when the promoters of it before incorporation entered into the contract and after incorporation such contract warranted by the terms of incorporation.

Who may obtain specific performance [Section 15]

Privity of contract:  Any party thereto

Privity of contract refers to the legal principle that only parties to a contract have rights and obligations under that contract, and third parties generally cannot enforce or be bound by it.  Section 15(a) and Section 19(a) of specific  relief act refer that the parties to the contract can and against them, the specific performance of a contract can be enforced.

    If there is no contract, then a question of specific performance does not arise. As per section 15(a) contract can be enforced specifically by the plaintiff. If the plaintiff is not party to the contract he is entitled to obtain a decree from the court. S. M. Gopal Chetty v. Raman 1998.

Example: A is the seller and has agreed to transfer ownership of the vintage car to B in exchange for Rs. 1,00, 000. B is the buyer and has agreed to pay Rs. 1,00,000 to A in exchange for ownership of the vintage car. If A fails to transfer ownership of the car to B, B can sue A for the specific performance of a contract. However, if B fails A can enforce a contract specifically or for damages.

Exception to the privity of contract:

The general principal is that under the law of contract  only party to the contract can enforce the contract and stranger cannot do so. However in the following exceptions stranger can also enforce contract. when such stranger is:

1. Representative in interest or principal Provided personal skills, learning, etc.
2. Beneficiary under settlement on marriage or compromise of doubtful right.
3. The remainderman, where contract entered by the tenant.
4. Reversioner in possession.
5. Reversioner in remainderman which he is entitled.
6. Amalgamated Limited Liability Partnership
7. Amalgamated company.
8. The company, when the promoters of it before incorporation entered into the contract and after incorporation such contract warranted by the terms of incorporation.

1. Representative in interest and principal

Under section 15(b) of SRA, 1963, the representative in interest or principal of a party to the contract may obtain specific performance. However, if the contract requires certain personal qualities or prohibits assignment of interest, the representative or principal is not entitled to specific performance unless the party has fulfilled their part of the contract and the performance has been accepted by the other party.

The representative in interest:

"representative in interest" refers to a person who is legally entitled to represent the interests of another individual or entity. 

Illustration : A, the owner of a vintage car, enters into a contract with B, to sell him the vintage car in consideration of  RS. 2,00,000. Unfortunately, A passes away before the sale is finalized. Z, A's daughter and the executor of A's estate, steps in as A's representative in interest. B may enforce the contract of sell against Z.

Assignee is a 'representative in interest':

It is well-settled that the term ‘representative-in-interest’ includes the assignee of a contractual interest. 

In Khardah Company Ltd v. Raymon & Co (India) Private Ltd. 1962 SC Hon'ble Apex Court laid down principal that an assignment of a contract can happen when either by the rights or obligations are transferred, but there is a clear difference between these two types of assignments.

Assignment of obligation : as a rule obligations under a contract cannot be assigned except with the consent of the promisee, and when such consent is given, it is really a novation resulting in substitution of liabilities. 

Assignment of right: the rights under a contract are assignable unless the contract is personal in its nature or the rights are incapable of assignment either under the law or under an agreement between the parties. Where a contract involves mutual rights and obligations an assignee of a right cannot enforce that right without fulfilling the corelative obligations.” 

The rule stated in Section 15(b) is that any interest in a contract can be specifically enforced by the assignee thereof, except where the ‘personal quality’ of the party is a material ingredient in the contract; or where the contract, expressly or by necessary implication, prohibits the beneficiary from transferring their contractual interest to third parties. Kapilaben & Ors. vs. Ashok Kumar Jayantilal Sheth Through POA Gopalbhai Madhusudan Patel & Ors. 2019 SC

In Shyam Singh v. Daryao Singh (dead) by Lrs. and ors. 2003 Delhi High Court observed that the documents do not explicitly prohibit assignment or transfer of right of repurchase, so an implied prohibition cannot be assumed. The legal right of assignment available under Section 15(b) of the Act cannot be denied just because the documents mention 'heirs' but not 'assignees' or 'transferees'.

Illustration : A  owns a piece of property and sells it to B. However, this sale includes a right to repurchase the property at a later date. A assigns this right to repurchase to C. if B makes a breach C may enforce specific performance of the contract.

Principal :-

Under Section 182 of the Indian Contract Act, an agent is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the principal. The relationship between the principal and the agent is governed by the provisions of the Indian Contract Act concerning agency. As per sections 186-187, if the agent enters into a contract with actual, implied, or ostensible authority from the principal, then the principal is considered the actual party to the contract and has the right to demand specific performance. Similarly, if the agent enters into a contract without authority but is later ratified by the principal, then the principal also becomes an actual party to the contract and can demand specific performance.

Example: A an agent of D having authority to do so, agreed to sell a land to B. Here D, the principal of A can file a suit for specific performance of contract.

When representative in interest, assignee or principal of any party cannot claim specific performance of contract.

Proviso to clause (b) of section 15 made it clear that when learning, skill or solvency or any personal quality of such party is material ingredient in the contract. or where the contract provides that his interest shall not be assigned, his representative in interest or principal shall not entitled to specific performance of the contract unless such party has already performed his part of the contract, or the performance thereof by his representative in interest or his principal has been accepted by the other party.

according to proviso representative in interest or principal cannot claim specific performance of contract in following situation:

• when learning, skill or solvency or any personal quality is material ingredient of the contract.
• when his interest not assigned to representative in interest or principal.

in such cases only parties to the contract can claim specific performance of the contract.

2. Beneficiary under settlement on marriage or compromise of doubtful right.

another exception to the general rule is that beneficiary under the settlement on marriage or compromise of doubtful right may claim specific performance of contract. a beneficiary under a settlement on marriage or compromise of a doubtful right refers to a person who receives benefits or entitlements as a result of such settlements.

Beneficiary under settlement on marriage:

A settlement on marriage refers to an agreement or arrangement made in anticipation of a marriage, where property or assets are transferred or settled for the benefit of one or both parties involved. Typically, the spouse and the dependents are the beneficiary under the settlement on marriage.

In K. Gopalasamy Chetty v. Selliamman Koil Co-op Hhousing Site 2002 Madras high court stated that there are two exception to the general rule that only parties can enforce the contract is the beneficiary under trust created by the contract and beneficiary under family arrangement. However beneficiary under marriage settlement can be added into this.

Beneficiary under compromise of doubtful right:

A compromise of a doubtful right refers to an agreement between parties to settle a dispute or uncertainty regarding their legal rights or claims. The beneficiary in this compromise is typically the party or parties who receive benefits as a result of the compromise.

3. Where the contract has been entered into by a tenant for life in due exercise of power, the remainderman

According to clause (d) of section 15 of the SRA, where the contract has been entered into by a tenant for life in due exercise of power, the remainderman can claim specific performance of contract. The term remainderman used in terms of property law, is the person entitled to receive a particular estate on its determination. The remainderman is the individual who possesses a future interest in the property once the life interest comes to an end, and their entitlement to use and possess the property becomes important upon termination of the life estate.

Example: A owns a piece of land and grants a life interest to B, with the remainder to C. B in his lifetime enters into a contract with D. After that C dies, If D fails to comply with the contract C can enforce the contract against D.

In Naunihal Singh and Ors v. Alice Georgina Skinner and Anr. 1925 Allahabad High Court observed that the plaintiff, being remainderman at her father's will, had the right to use Article 140 of the Limitation Act in order to claim that she could sue for the  recovery of property at any time within 12 years.

4. a reversioner in possession, where the agreement is a covenant entered into with his predecessor in title and the reversioner is entitled to the benefit of such covenant.

Another exception to the general rule is section 15(e) of SRA, that reversioner in possession. where a agreement is a covenant entered into with his predecessor in title and the reversioner is entitled to the benefit of such covenant, then reversioner in possession may claim specific performance of contract. Reversion in property law is a future interest that is retained by the grantor after the conveyance of the property of an estate to another person. commonly reversion is created in lease agreement, where grantor creates reversion in possession to another person (LR) in case of death of grantor.

Example: A contract to lease a house property to B for 10 years. further the contract provides that if A dies within 10 years then the house property revert to A's representative. 

        Here B will use house for 10 years and after expiry of such period the property will revert back to A. If A dies in such period the property will revert back to A's representative. If B fails to revert back A's representative may sue B for the reversion of house to him.

in Gopalakrishna (D) By Lrs. vs Narayanagowda (Dead) By Lrs. 2019 this case Hon'ble Apex Court observed that reversioners, entitled to succeed to the estate after the death of a limited heir, for the possession of property, suit must be made within 12 years for immovable property (Article 65 of Indian Limitation Act) and 3 years for movable property (Article 58 of Limitation Act).

5. A reversioner in remainder, where the agreement is such a covenant and the reversioner is entitled to the benefit thereof and will sustain material injury by reason of its breach.

Another exception to the general rule is section 15(f) of SRA, that the reversioner in remainder. Where the agreement is such a covenant and the reversioner is entitled to the benefit thereof and will sustain material injury by reason of its breach, then reversioner in remainder may claim specific performance of contract.

A reversioner in remainder refers to a person who holds a future interest in a property that will come into possession after the expiration of a prior interest or fulfillment of a condition.

Example 1: A owns a piece of land and grants a life estate to B. After B's death, the property will revert to A's son C in remainder.

Example 2: A made contract of lease with B on a condition that B will proper  maintain his property. contract also provides that if B fails to maintain property such contract will come to an end and the property will revert back remainder interest of property to A's daughter D. If B fails to proper maintain property and refuse to revert back property to D. D may claim specific performance of contract.

Tulk v. Moxhay (1848)

Facts: The case involved a property in Leicester Square, London, which was conveyed by the Earl of Leicester to one Elms in 1808. As part of the conveyance, Elms agreed to a restrictive covenant that the property would not be used for any purpose other than private residential purposes. The property changed hands several times over the years, with each subsequent buyer being aware of the restrictive covenant.

Enforcement by Reversioner: The central issue was whether the subsequent purchaser of the property (Moxhay) could be bound by the restrictive covenant entered into by the original purchaser (Elms) for the benefit of the reversioner (Tulk).

Lord Cottenham’s Court held that the restrictive covenant could be enforced by the reversioner (Tulk) against subsequent purchasers, including Moxhay. also the Court observed that the covenant "ran with the land," meaning it was enforceable against subsequent owners who had notice of the covenant and that the covenant was intended to benefit the reversioner (Tulk), who retained a reversionary interest in the property.

6. When a limited liability partnership (LLP) has entered into a contract and subsequently becomes amalgamated with another LLP, the new LLP.

This clause has been inserted by the amendment Act 18 of 2018. According Section 15(fa) When a LLP has entered into a contract and subsequently becomes amalgamated with another LLP then, the new LLP may enforce the contract. However, according to Section 19(ca) any person may claim relief against the new LLP.

Example: LLP-A, had entered into a contract with Z, committing to purchase certain goods on regular intervals. and after that LLP-A amalgamated with LLP-B and form a new LLP, LLP-AB, through a legal process approved by their respective partners. If B fails to provides goods to the LLP then the new LLP-AB may claim relief against B. However if LLP-AB fails to comply the contract B may claim relief against the new LLP.

7. When a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of amalgamation [Section 15(g)]

Another exception to the general rule is that when a company has entered into a contract and subsequently it amalgamated with another company the new company which arises out of such amalgamation may enforce contract. However according to 19(d) such contract may enforce against such new company which arises out of amalgamation. 

Example : Company-A, had entered into a contract with company D, committing to purchase certain goods on regular intervals, and after that company-A amalgamated with company-B and form a new company, Company-AB, through a legal process approved by their respective partners. If company-D fails to provides goods to the Company then the new Company-AB may claim relief against Company-D. However if Company-AB fails to comply the contract Company-D may enforce such contract against the new Company.

8. When the promotors of a company have, before its incorporation entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation, the company.

Another exception to the general rule is section 15(h), when the promotors of the company before incorporation of the company has entered into a contract for the purpose of the company and such contract is warranted by the terms of the incorporation of company, the the new company may enforce the contract which was made before its incorporation. However According to Section 19(e) such contract may enforce against the new company. Provided that the company has accepted the contract and communicated such acceptance to the other party to the contract.

Example: A and B are promoters, who are planning to incorporate a new technology company, Tech AB Ltd. Before incorporating the company, A & B enter into a contract with a software development company, XYZ Tech, to develop a software platform for Tech AB. After that, Company incorporated as Tech AB Ltd. The company Tech AB Ltd. warranted the terms of contract made with the Company XYZ Tech and communicated the acceptance of the contract to the company XYZ Tech.

        In this case if company XYZ Tech fails to perform the contract, the company Tech AB may enforce the contract against Tech XYZ. However if company Tech AB fails to performs the contract then company Tech XYZ may enforce the contract against company Tech AB.

In Radhakrishna Ananta Prabhu & ors v. Siri Construction and ors 1991 Bombay High Court held that pre-incorporation contracts whether entered into on behalf of a proposed company or society)  are binding on the individual and are enforceable by or against them and on incorporation the contract becomes enforceable by or against the company or the society, depending upon the terms of incorporation and adoption of contract by the company and the provision of section 15(h) and 19(e) of specific relief act would apply.

Against whom specific performance of contract may be enforced [Section 19]

Relief against parties and persons claiming under them by subsequent title (Section 19)

Section 19 deals with the persons against whom the specific performance of contract may be enforced. specific performance may be enforced against the following persons:

1. Parties to the contract
2. Any person claiming through him by title, except transferee for value
3. Any person claiming under a title, which he might have been displaced by defendant.
4. New LLP arising out of amalgamation.
5. New Company arising out of amalgamation
6. The company, before its incorporation promotors of company made contract and after incorporation the contract has warranted by the company.

Any other person claiming under him by a title arising subsequently to the contract, except transferee for value who has paid money in good faith and without notice of the original contract.

Section 19(b) of SRA provides that specific performance of contract may be enforced against any transferee claiming under the vendor by a title arising subsequently to the contract. However the transferee for value, who has paid his money in good faith and without notice of the original contract is excluded from the purview of this clause.

To fall within the purview of excluded class the transferee must show that

• He has purchased the property for value (which is subject matter of the suit of specific performance of contract).
• He has paid money to the vendor in good faith.
• He has no notice of the earlier contract (which is sought to be enforced against him). such notice may be actual, constructive or implied, Ram Niwas (dead) Through LRS. v. Smt. Bano & ors. 2000 Supreme Court.

In Sujata Sanzgiry vs. Ankush R. Naik and ors 2005 Hon'ble Bombay High Court observed that the term transferee in section 19b cannot be given broader meaning than it intends, i.e. a person to whom the coveyance of property has been made. A person who has not been granted a conveyance or document of title in their favor would not be considered a 'transferee' within the meaning of Clause (b) of Section 19. 

        An agreement for sale by itself does not create any right or title. Section 19 deals with the cases where specific performance of the contract may be enforced against the parties. However, the specific performance of the contract can be enforced against either party to the contract or any other person claiming under them or a person claiming title arising subsequent to the original contact. The exception to this general rule is that later legal title shall prevail over an earlier equitable title in the case of a bonafide purchaser with value without notice of earlier contract. The expression 'title' used in Clause (b) is referable to the complete legal title. An agreement for sale subsequent to the original contract shall be out of purview of the expression 'title' in Section 19(b).

Any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant. 

According to section 19(c) of the Specific Relief Act the suit for specific performance of contract may be brought against any person which claimed under a title, which he might been displaced by the defendant.

In Mokarulu Pitchayya v. Beggavarapu Venkatakrishnayya and ors 1943 Hon'ble Madras High Court Observed that an agreement though executed by one alone, it is obviously binding on both the parties. Under Section 27, Clause (c) of the Specific Relief Act, 1877 [now section 19(c) of SRA 1963] specific performance may be declared not merely against a party to the contract but also against a person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant. 

In this case the father of the defendant 1 to 3 had created a title in the name of the fourth defendant.  The title was known to Pattabhiramayya before the contract, but it might have been taken away by Pattabhiramayya's son or defendants 1 to 3. Pattabhiramayya has option to filed a suit for a declaration that the title always vested in him and that the fourth defendant had no title at any time. Really it is a case of the fourth defendant being merely an alias for Pattabhiramayya or for defendants I to 3. The apparent title of the fourth defendant might have been displaced by defendants 1 to 3 or their father. Therefore, this is a case directly covered by Section 27(c). Specific performance can be decreed against not merely defendants I to 3 but also the fourth defendant.

Conclusion:

In conclusion, privity of contract generally limits the enforcement of contractual rights and obligations to the parties involved. However, the Specific Relief Act provides several exceptions where specific performance can be enforced by or against individuals or entities not directly party to the contract. These exceptions include representatives in interest, beneficiaries under certain settlements, reversioners in property agreements, and entities arising from amalgamations or pre-incorporation contracts of companies. Each exception is governed by specific provisions under the Specific Relief Act. Thus, while privity of contract remains a fundamental principle, its exceptions accommodate broader applicability of contract rights when necessary.

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