Court’s power to award damages in certain cases :

Under Section 21 of the Specific Relief Act, the Court is empowered to award compensation in certain cases. Sub-section (1) states that in a suit for specific performance of a contract, the plaintiff may also claim compensation for its breach, either in addition to, or in substitution of such performance, Sub-section (2) states that if, in any suit the Court decides that specific performance ought not to be granted but that there is a contract between the parties which has been broken by the defendant and that the plaintiff is entitled to compensation for that breach, it shall award him such compensation accordingly. Sub-section 3 lays down that if, in any such suit the Court decides that specific performance ought to be granted, but that it is not sufficient to satisfy the justice of the case, and that some compensation for breach of the contract should also be made to the plaintiff, it shall award him such compensation accordingly. Sub-section (4) states that in determining the amount of any compensation awarded under this section, the Court shall be guided by the principles specified in Section 73 of the Indian Contract Act, 1872. Sub-section 5 lays down that no compensation shall be awarded under this Section unless the plaintiff has claimed such compensation in his plaint provided that where the plaintiff has not claimed any such compensation in the plaint, the Court shall at any stage at the proceeding, allow him to amend the plaint on such terms as may be just for including a claim for such compensation. Even if the contract has become incapable of specific performance that does not preclude the Court from exercising the jurisdiction conferred by this section.

The conditions according to which damages may be awarded by the Court in addition to specific performance are:

(i) the Court decides that specific performance ought to be granted but,

(ii) the justice of the case requires that not only specific performance but also some compensation for the breach of the contract should also be given to the plaintiff.

In a suit for specific performance, the plaintiff may ask for damages in the alternative or in addition to specific performance of the contract. The Court’s power to award damages in a suit for specific performance is laid down in Section 21.

The circumstances in which a court would award damages in lieu of specific performance:

(a) Specific performance could have been granted but in the circumstances of the case the Court in its discretion considers that it would be better to award damages instead of specific performance.

(b) Though specific performance is refused, plaintiff is entitled to compensation for breach of the contract.

(c) If the circumstances are such that specific performance would not be granted; for example, where the plaintiff has disentitled himself to the specific performance, damages cannot be awarded under Section 21 in lieu of specific performance.

Section 22 gives power to the Court to grant relief for possession, partitions, refund of earnest money. Under Section 22 any person, suing for the specific performance of a contract for the transfer of immovable property may, in an appropriate case ask for (a) possession or partition and separate possession, of the property in addition to any such performance; or (b) any other relief to which he may be entitled in case his claim for specific performance is refused.

The power of the Court to grant relief under clause (b) shall be without prejudice to its power to award compensation under Section 21.

Illustrations

(a) A conveys land to B, who bequeaths it to C and dies. Thereupon D gets possession of the land and produces a forged instrument stating that the conveyance was made to B in trust for him. C may obtain the cancellation of the forged instrument.

(b) A, representing that the tenants on his land were all at will, sells it to B, and conveys it to him by an instrument dated the 1st January 1877. Soon after that day, A fraudulently grants to C a lease of part of the land, and procures the lease dated the 1st October, 1876 to be registered under the Indian Registration Act. B may obtain the cancellation of this lease.

On such cancellation, the Court may require the party to whom such relief is granted to restore as far as may be any benefit which he may have received from the other party and to make any compensation to him which justice may require.

In a case defendant and plaintiff were real brothers residing jointly in a house. The defendant executed agreement to sell the property of his share in favour of plaintiff. Subsequently he sold the same property to another purchaser. The subsequent purchaser had no knowledge about the earlier agreement. It was held that he is the bona-fide purchaser of the property. The plaintiff can recover back earnest money paid by him to defendant (Jagtar Singh v. Gurmit Singh, AIR 2006 P&H 62).

Section 23 lays down that even if the parties have agreed for liquidated damages, in the contract itself, specific performance of that contract may be decreed by the Court in proper cases but in that case the payment of the sum named in the contract will not be decreed.

Section 24 imposes a bar on suit for compensation for breach of a contract after dismissal of the suit for specific performance.