Section 12

12. Specific performance of part of contract : 

(1) Except as otherwise hereinafter provided in this Section, the court shall not direct the specific performance of a part of a contract.

(2) Where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed bears only a small proportion to the whole in value and admits of compensation in money, the court may, at the suit of either party, direct the specific performance of so much of the contract as can be performed, and award compensation in money for the deficiency.

(3) Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed forms a considerable part of the whole and- (a) Either admitting of compensation in money; or

(b) Does not admit of compensation in money;

he is not entitled to obtain a decree for specific performance; but the court may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the contract as he can perform, if the other party:

(i) In a case falling under clause (a), pays or has paid the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed and in a case falling under clause (b) pays or has paid the consideration for the whole of the contract without any abatement; and

(ii) In either case, relinquishes all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant.

(4) When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed, the court may direct specific performance of the former part.

Explanation- For the purposes of this section, a party to a contract shall be deemed to be unable to perform the whole of his part of it if a portion of its subject-matter existing at the date of the contract has ceased to exist at the time of its performance.

General Rule regarding specific performance of part of contract under Section 12(1)

Section 12(1) contains the general rule regarding the part performance of the contract. It provides that the court generally does not direct specific performance of a part of the contract except in those cases which are mentioned in Sections 12 (2), (3) and (4). That means the general principle, that specific performance of a part of the contract is not granted by the court, is mentioned in Section 12(1) and exceptions, that specific performance of a part of the contract may be granted by the court, are given in Section 12(2), (3) and (4).

Essentials of part performance under Section 12(2)

(i) A party to contract fails to perform a part of the contract-

First essential of part performance under Section 12(2) is that one of the parties to contract is unable to perform a part of the contract.

(ii) Unperformed part is small as compare to whole contract in value [Explanation to Section 12]-

According to Explanation to Section 12, for the purposes of this section, a party to a contract shall be deemed to be unable to perform the whole of his part of it if a portion of its subject-matter existing at the date of the contract has ceased to exist at the time of its performance.

Example- A contracts to sell a house to B for a lakh of rupees. The day after the contract is made; the small part of the house is destroyed by a cyclone. A is unable to perform his part of promise as a part of the house ceases to exist. Therefore, B cannot compel A to perform his part of the contract as the property ceases to exist.

However, unperformed part must be small as compare to the whole contract in value.

Example: A contacts to sell B a piece of land consisting of 100 bighas. It turns out that 98 bighas of the land belong to A, and the two remaining bighas to a stranger, who refuses to part with them. The two bighas are not necessary for the use or enjoyment of the 98 bighas, nor so important for such use of enjoyment that the loss of them may not be made good in money.

(iii) The promisor has admitted compensation for unperformed part- When the promisor realized that he is unable to perform a part of the contract he agrees compensation for unperformed part.

(iv) The suit for specific performance can be filed by any party- It is important to mention that under Section 12(2) suit may be filed by either the party. That means breach may be made either by the promisor or by the promise. It is breach by the seller, where after he is unable to perform a part of contract due to non existence of the subject matter, refuses to perform a part of the contract which he can perform (refuses to sell a part which exists). It is breach by the buyer, where after seller is unable to perform a part of contract due to non existence of the subject matter, he (buyer) refuses to purchase the remaining property. But in both the situations the court may grant specific performance of a part of the contract.

Example 1- A contracts to sell B a piece of land consisting of 100 bighas. It turns out that 98 bighas of the land belong to A, and the two remaining bighas to a stranger, who refuses to part with them. The two bighas are not necessary for the use or enjoyment of the 98 bighas, nor so important for such use of enjoyment that the loss of them may not be made good in money. If breach is made by A then he may be directed at the suit of B to convey to B the 98 bighas and to make compensation to him for not conveying the two remaining bighas. Similarly, if breach is made by B then at the suit of A the court may direct B to purchase 98 bighas and the court will direct A to give compensation for 2 bighas.

Example 2- In a contract for the sale and purchase of a house and lands for Rs. 2 lac. It is agreed that part of the furniture should be taken at a valuation. The court may direct specific performance of the contract notwithstanding the parties are unable to agree as to the valuation of the furniture, and may either have the furniture valued in the suit or include it in the decree for specific performance, or may confine its decree to the house.

Essentials of part performance under Section 12(3)

(i) A party to contract fails to perform a part of the contract

(ii) Unperformed part forms a considerable part of the whole contract in value

(iii) The promisor may or may not have admitted compensation for unperformed part

(iv) The suit for specific performance can be filed only by the affected party.

(i) A party to contract fails to perform a part of the contract- First essential of part performance under Section 12(3) is that one of the parties to contract is unable to perform a part of the contract.

 (ii) Unperformed part forms a considerable part of the whole contract in value [Explanation to Section 12]-

According to Explanation to Section 12, for the purposes of this Section, a party to a contract shall be deemed to be unable to perform the whole of his part of it if a portion of its subject-matter existing at the date of the contract has ceased to exist at the time of its performance.

Example 1- A contracts to sell to B a piece of land consisting of 100 bighas. It turns out that 60 bighas of the land belong to A, and the other 40 bighas to a stranger, who refuses to part with them. A cannot obtain a decree against B for the specific performance of the contract; but if B is willing to pay the price agreed upon, and to take the 60 bighas which belong to A, waiving all right to compensation either for the delivery or for loss sustained by him through A’s neglect or default, B is entitled to a decree directing A to convey those 60 bighas to him on payment of the purchase money.

Example 2- A contracts to sell to B an estate with a house and garden for Rs. 1 crore. The garden is important for the enjoyment of the house. It turns out that A is unable to convey the garden. A cannot obtain a decree against B for the specific performance of the contract, but if B is willing to pay the price agreed upon, and to take the estate and house without the garden, waiving all right to compensation either for the deficiency or for loss sustained by him through A’s neglect or default, B is entitled to a decree directing A to convey the house to him on payment of the purchase money.

(iii) The promisor may or may not have admitted compensation for unperformed part-Section 12(3) talks about a situation where the promisor is unable to perform a part of the contract. Important fact is that unperformed part forms a considerable part of the whole. There are two possibilities:

(i) The promisor admits compensation in money for such unperformed part.- Where after the formation of contract the promisor is unable to perform a part and unperformed part is a considerable and he admits compensation then if suit is filed by the other party then the court may, direct the specific performance of so much of the contract as can be performed provided the other party fulfills following two conditions.

(a) He has paid or ready to pay consideration less compensation in money to the promisor; and

(b) Relinquishes all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant.

(ii) The promisor does not admit compensation in money for such unperformed part.- Where after the formation of contract the promisor is unable to perform a part and unperformed part is a considerable and he does not admit compensation then if suit is filed by the other party then the court may, direct the specific performance of so much of the contract as can be performed provided the other party fulfills following two conditions;-

(a) He has paid or ready to pay full consideration; and

(b) Relinquishes all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant.

(iv) The suit for specific performance can be filed only by the affected party- It is important to mention that under Section 12(3) suit may be filed by only one party i.e. the buyer. That means breach is made by the seller. It is breach by the seller, where after he is unable to perform a part of contract due to non existence of the subject matter, refuses to sell the property. In such situation he cannot go to the court for specific performance if buyer refuses to buy that property because the buyer is permitted by law not to perform his promise in such situation. However, where the seller refuses to sell and buyer goes to the court then the court may grant specific performance of a part of the contract.

Accepting part performance at any stage

Another important question is at what stage of the proceedings part performance can be granted. In case of Surjit Kaur v. Naurata Singh, two important decisions were given by the court. First, that a party can elect to accept part performance of the contract/agreement at any stage of litigation. Merely filing a suit for specific performance of contract and not averring that the party was willing to accept part performance of the contract does not preclude the party seeking performance to accept the performance of the contract in part. However, if a party once categorically elects not to accept part performance, it cannot later resile out or get out of the election made by him.

Second decision was that Compensation for non-performance must be as per agreement. The court stated that where by a term in agreement compensation amount had been fixed, it had to be given effect to and awarding lesser amount than provided in the agreement without assigning any reason was not proper.

Section 12(3) beneficial to buyer

In the case of Surinder Singh v. Kapoor Singh (Dead) through L.R.s and others, the Apex Court of India held that Section 12(3) of the Specific Relief Act, 1963, is a beneficial provision so far as the purchases are concerned. The relinquishment of claim as contemplated under Section 12(3) (ii) of the Act as regard performance of the remaining part of the contract and all rights to compensation need not specifically be pleaded and can be made at any stage. Delay by itself may not stand in the way of the plaintiff from claiming the relief unless the defendant establishes prejudice.

Discretion of the court to grant Partial Specific Performance-

The word “may” under the Section 12(3) of the Specific Relief Act, 1963 shows that the power of the Court to grant partial relief is discretionary. Keeping in view the facts and circumstances of each case and the rights and interests of the parties involved the Court may grant such relief.

Specific performance where the contract consists of Independent parts Section 12(4)-

When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed, the court may direct specific performance of the former part. Section 12(4) talks about a situation where a contract consists of various parts which are independent and separate from each other. However, after entering into contract it is realized by the promisor that only one or more of them can be performed and the promisor is unable to perform remaining parts. If in such situation breach is made by one party is silent about who can claim specific performance, i.e., the party unable to perform remaining parts. If in such situation breach is made by one party the court may grant specific performance of those parts which can be performed.

Significantly, Section 12(4) is silent about who can claim specific performance i.e., the party unable to perform or affected party. But the juristic opinion is that under Section 12(4) suit can be filed by any party.

Example- A agrees to sell four plots, one in Chandigarh, one in Mohali, one in Panchkula and one in Ambala to B. Subsequently, it is realized that the plots at Panchkula and Ambala don’t belong to him but to his brother. If breach is made by A and he refused to sell the plots at Chandigarh and Mohali to B and suit is filed by B the Court may direct A to sell those plots at Chandigarh and Mohali to B.

If breach is made by B and he refuses to buy the plots at Chandigarh and Mohali and suit is filed by A then the court may direct B to purchase plots at Chandigarh and Mohali from A.

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