What’s specific performance?
If an agreement to sell has not culminated in a sale deed, courts can order the defaulters to fulfil their obligations
Properties are sold through transactions of agreement to sell (ATS) followed by a sale deed. In an ATS, the parties set out terms such as advance sale price and total sale price, manner and timelines of payment, time period within which the sale deed is to be executed, conditions to be fulfilled by the seller, if any, before the sale can take place, etc. However, there are numerous cases where an ATS has not culminated into signing of a sale deed because of the buyer or seller defaulting. One such instance in a seller’s case is where he refuses or delays the execution of the sale deed in favour of the buyer. What an aggrieved buyer can do is take recourse to specific performance under Specific Relief Act, 1963.
When a court orders ‘specific performance’, it essentially mandates that the defaulting fulfil its obligations and take on the which otherwise requires compulsory registration renders it inadmissible as evidence in courts. If the ATS is inadmissible as evidence, the court may refuse to grant specific performance on its basis.
In Uttar Pradesh, an ATS with possession as well as ATS without possession require compulsory registration. However, in Delhi, an ATS without possession does not require compulsory registration. In the event of the seller breaching a term of an ATS which does not require compulsory registration, the buyer can get his rights under ATS specifically enforced, irrespective of whether ATS has been registered or not. If the seller breaches term of an ATS which requires compulsory registration but has not been duly registered, the court may not order specific performance in favour of the buyer.
One must also bear in mind that specific performance of a contract is not an absolute right under the act. The court's power to decree specific performance of a contract is discretionary and not mandatory. After taking into consideration the unique facts of each particular case, the court may either grant specific performance of the contract, or grant compensation in lieu of specific performance, or grant compensation in addition to specific performance. Nevertheless, specific performance is a valuable legal remedy in contracts relating to immovable property, where often monetary compensation alone may not provide adequate relief to the aggrieved party.