New bill may limit court’s power to stay infra projects
NEW DELHI: The government on Friday tabled a bill in the Lok Sabha that seeks to limit a court’s power to grant an injunction that can delay infrastructure projects.
Suits pertaining to infrastructure-related contracts must be settled by the court within one year, it says. The Specific Relief (amendment) Bill, 2017, is aimed at updating the half-a-centuryold law that deals with specific fulfillment of contracts to further enhance India’s score under the “enforcement of contracts” head in the World Bank’s ease of doing business rankings, according to a top law ministry official.
“A new section 20A is proposed for infrastructure project contracts which provides that the court shall not grant injunction in any suit, where it appears to it that granting injunction would cause hindrance or delay in the continuance or completion of the infrastructure project,” the bill says. Legal experts that HT spoke with appeared divided over whether the proposed amendment curtails the court’s power.
“The clause is merely directory,” a Delhi-based expert said. A jurist based in Hyderabad said he was “apprehensive about the constitutionality of the provision”. Neither wanted to be named. The amended law also talks of designating special courts to try suits for contracts related to infrastructure projects and to dispose them of within 12 months from the summons date.
The proposed law also grants a party to a contract the rights to seek damages from the other side in case of a breach and “substituted performance”. The amendments propose that if one of the parties in agreement breaks the contract, the affected party will have the freedom to get the contract executed by a third party and also recover the costs.
The bill proposes “to make specific performance of a contract a general rule than exception subject to certain limited grounds”.
Last week, the Union Cabinet approved amendments to the Specific Relief Act, 1963, and the bill was introduced in the lower House. “The tremendous economic development since the enactment of the (1963) Act have brought in enormous commercial activities in India including foreign direct investments, public-private partnerships, public utility infrastructure development etc which have promoted extensive reforms,” the bill states, adding that the existing law is not in tune with the needs of economic development.