11. Cases in which specific performance of contracts connected with trusts enforceable.-
- Except as otherwise provided in this Act, specific performance of a contract [shall] be enforced when the act agreed to be done is in the performance wholly or partly of a trust.
- A contract made by a trustee in excess of his powers or in breach of trust cannot be specifically enforced.
It is important to note that trust contracts are entered into between two persons for the benefit of third person. In such contract first person who creates trust is known as creator/settlor of the trust and he imposes duty on other party to contract known as trustee to use property for the benefit of third person who is known as beneficiary. In such contract if breach is made by the creator of the trust then the contract can be specifically enforced either by the trustee or by the beneficiary who may not be existing on the date of formation of contract.
Example 1- A (creator of the trust) entered into contract with B (trustee) to use property for the benefit of C. subsequently, A does not give any property and makes breach of contract. Here either B or C can enforce the contract.
Exception to Section 11(1) : No Specific performance of contracts connected with trusts [Section 11(2)]: Though generally contracts relating to trust are specifically enforceable, however, there is an exception where the contract by the trustee cannot be specifically enforced.
Section 11(2) mentions this exception and it provides that a contract made by a trustee in excess of his powers or in breach of trust cannot be specifically enforced.
Example 1: A is trustee of land with power to lease it for seven years. He enters into a contract with B to grant a lease of the land for seven years, with a covenant to renew the lease at the expiry of the term. This contract cannot be specifically enforced as the trustee has exceeded his power.
Example 2: Two trustees, A and B, empowered to sell trust-property worth Rs. 1 Crore. They entered into contract to sell it to C (A’s relative or friend) for Rs. 30 lakh. The contract is disadvantageous and amounts to breach of trust. C cannot enforce its specific performance.
Limitation period for claiming specific relief–
Limitation period for claiming specific relief under Section 11 is mentioned under Section 11 is mentioned under Article 54 of the Indian Limitation Act 1963 provides a period of limitation of three years (from the date fixed for performance, or, if no such date is fixed, from the date when the plaintiff has notice that performance is refused.
- In K. Usman Koya v. C.S. Shantha, the Kerala High Court held that where in a contract no date for performance of contract is final the limitation period will start from the date on which the plaintiff comes to know that the other party was refusing performance.
