When a contract is breached in India, the injured party can claim damages under Section 73 of the Indian Contract Act, 1872, or -- since the Specific Relief (Amendment) Act, 2018 -- seek specific performance of the contract as a matter of right in most cases, a significant shift from the earlier position where specific performance was only a discretionary remedy.
Damages under Sections 73-75
Section 73 of the ICA entitles the injured party to compensation for loss or damage that naturally arose
from the breach, or that both parties knew was likely to result from it -- remote or indirect loss is not
recoverable. Section 74 governs liquidated damages and penalty clauses, capping recovery at the amount named
in the contract (or a reasonable sum) regardless of whether actual loss was proved. Section 75 entitles a
party who rightfully rescinds a contract to compensation for any damage suffered from the non-fulfilment of
the contract.
Specific performance -- now the rule, not the exception
The Specific Relief (Amendment) Act, 2018, in force from 1 October 2018, substantially rewrote the Specific
Relief Act, 1963. Before the amendment, courts had wide discretion to refuse specific performance even where a
valid contract was breached. The amended Act makes specific performance enforceable as of right, subject to
limited exceptions in Sections 11 and 14 (such as contracts requiring personal skill, or where monetary
compensation is adequate). This is a genuinely significant shift from the pre-2018 position that older
commentary may not reflect.
Substituted performance -- a newer alternative
The 2018 amendment also introduced Section 20, allowing an injured party to get the contract performed by
a third party or its own agency, after giving the defaulting party written notice, and then recover the
costs from the defaulting party -- without needing to go to court first for this route. Sections 20A-20C add
special protections against injunctions that would delay specified infrastructure project contracts. For an
NRI party to an Indian contract, these remedies matter practically: pursuing specific performance or
substituted performance from abroad generally requires appointing an India-based advocate and, where personal
appearance is impractical, a Power of Attorney holder to handle procedural steps, so the choice of remedy
should also account for how easily it can be pursued at a distance.
Can I still only claim damages instead of specific performance if I prefer?
Yes -- specific performance being available as of right under the amended Specific Relief Act does not
take away the injured party’s option to instead claim damages under Section 73 of the Indian Contract
Act if that is the remedy they want to pursue.
What changed for specific performance after the 2018 amendment?
Before October 2018, courts had broad discretion to refuse specific performance even if a contract was
validly breached. After the amendment, specific performance is available as of right in most cases, with the
court’s discretion narrowed to the specific exceptions listed in the amended Act.
What is “substituted performance” and when would I use it?
Substituted performance (Section 20, added in 2018) lets you get the contracted work done by someone else
after the other party defaults -- provided you give them written notice first -- and then recover the extra
cost from the defaulting party, without waiting for a court order authorizing it in advance.
