11/17/2018 Amendment to the Specific Relief Act in 2018: whether retrospective?

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Amendment to the Specific Relief Act in

2018: whether retrospective?
Introduction

The Specific Relief Act, 1963 (the Principal

Act) was enacted to define and amend law
relating to certain kinds of specific reliefs. It
contained provisions concerning inter-alia
specific performance of contracts; contracts not specifically enforceable; the Parties who could
obtain; and against whom specific performance could be obtained etc. Under the Principle Act,
specific performance could not be claimed where damages could afford adequate remedy. The
Principle Act also conferred discretion to the courts to decree specific performance. On a
construction of the provisions of the Principal Act and by exercising the discretion vested, the
courts in a large number of cases have awarded damages as a general rule, while specific
performance is granted as an exception.

The rationale behind Amendment

Taking note of large scale economic development since the enactment of the Principal Act which
brought in enormous commercial activities including Foreign Direct Investment, Public Private
Partnerships etc., the Centre proposed amendment to the Principal Act, to facilitate enforcement
of contracts in a speedy manner by doing away with wider discretion of courts to grant specific
performance and to make specific performance as the rule than an exception[1]. Accordingly,
the Specific Relief (Amendment) Bill, 2017 was introduced in Parliament which after passage
received the assent of the President and is published in official gazette on 1/8/2018.

The amendment

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11/17/2018 Amendment to the Specific Relief Act in 2018: whether retrospective?

With effect from 1/8/2018 the Specific Relief (Amendment) Act, 2018 (Amendment Act) has
come into force to amend Principal Act.

Sections 3, 4, 5, 7 and 10 of the Amendment Act substitute Sections 10, 11, 14, 16 and 20 of the
Principal Act to facilitate enforcement of a contract by specific performance as a rule rather than
an exception and do away with the discretion vested in courts to grant specific performance.

Absence of express provision to make amendment retrospective

There is no express provision in the Amendment Act stating if the Amended Act will apply
retrospectively or will have only prospective application. Further, in the event of retrospective
application, whether the Amendment Act will apply to all existing contracts or only to the contracts
in relation to which legal proceedings for enforcement thereof are already pending, is not clear.

Argument in favour of retrospective application

The position that legislature can enact laws retrospectively is well settled. However, the legislative
power to amend an enacted law with retrospective effect is subject to several judicially recognized
limitations like (i) the words used must expressly provide or necessarily imply, retrospective
operation; (ii) retrospectivity must be reasonable and not excessive or harsh otherwise it runs the
risk of being struck down as unconstitutional. There is no fixed formula for expression of
legislative intent to give retrospectivity to an enactment. Substitution of an existing provision by a
new provision can be construed as if substituted expressions were included from the date of
introduction of the original law[2].

It is noticed that the Amendment Act while amending the provisions of Principal Act uses the
expression “substituted”. The word “substitute” ordinarily would mean “to put one in place of
another”; or “to replace”.

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11/17/2018 Amendment to the Specific Relief Act in 2018: whether retrospective?

In a recent decision[3] the Supreme Court held that ordinarily wherever the word “substitute” is
used by legislature, it has the effect of deleting the old provision and make new provision
operative. The process of substitution consists of two stages: in one, the old rule is made to
cease to exist and in next, the new rule is brought into existence in its place. Consequently, when
a subsequent law amends an earlier one in such a way as to incorporate itself or a part of itself
into the earlier, then the earlier law must thereafter be read and construed as if the altered words
had been written into the earlier law with pen and ink and the old was scored out so that there is
no need to refer to the amending law at all. The court further observed that in certain
circumstances however having regard to the purport and object sought to be achieved by
legislature, the court may construe the word “substitution” as an amendment having prospective
effect. In said case the court considered whether substitution of Section-6 of Recovery of Debts
due to Banks and Financial Institutions Act, 1993, by Act No.44 of 2016 with effect from 1/9/2016
to provide that the Presiding Officer shall hold office for five years from the date he enters office
provided he shall not continue beyond the age of 65 years, applied prospectively i.e., with effect
from 1/9/2016. Having regard to objective behind the amendment of said law viz. to reduce the
burden of pendency by enhancing the age of Presiding Officers concerned as reflected from the
report of Lok Sabha Joint Committee and the statement of objects and reasons to the said
Amendment, the court held that the amendment applied to serving Presiding Officers on the day
when the amendment became enforceable.

Conclusion

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11/17/2018 Amendment to the Specific Relief Act in 2018: whether retrospective?

Having regard to the purport and object sought to be achieved by the legislature as per the
statement of objects and reasons for the amendment viz. and to make grant of specific
performance the rule than an exception, the word “substituted” is likely to be construed to imply
retrospective application of the Amendment Act.

[1] Sse statement of objects and reasons to Specific Relief (Amendment) Act, 2018

[2] National Agricultural Co-operative Marketing Federation of India Ltd., & Ors. v. Union of India
& Ors. MANU/SC/1221/2003

[3] Gottumukkala Venkata Krishnamraju v. Union of India & Ors. MANU/SC/0950/2018

Smita Singh
on 27 September 2018

Published in Civil Law Other Articles by - Smita Singh

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