India: Section 14: Contracts Not Specifically Enforceable – Part 3

Last Updated: 13 September 2018
Article by Ashima Obhan and Pooja Katara

Contracts Involving Personal Qualifications

The Specific Relief (Amendment) Act, 2018 ("Amendment Act") has brought about significant amendments to the Specific Relief Act, 1963 ("Act"), the critical one being that specific performance is now (unless a case falls within the exceptions) the norm instead of a discretionary power with Indian Courts. Our present series of articles focus on the four exceptions to the specific performance rule. In Part 1 of the series we discussed substituted performance, in Part 2 we discussed contracts that involve a continuous duty which cannot be supervised by Courts and in Part 3 we discuss the third exception that has been carved out i.e. contracts involving personal qualifications cannot be specifically enforced.

Section 14 (c) : Contracts Involving Personal Qualification Cannot be Specifically Enforced

The following contracts cannot be specifically enforced, namely:

"A contract which is so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms."

Please note that the word "material terms" means the essential purpose of the contract. Purpose can be: teaching, singing, writing a book etc. Contracts involving personal skills/qualifications of a person cannot be specifically enforced vide judicial process, the only choice for the aggrieved party is to settle for and be content with the award of damages.

A provision equivalent to Section 14(c) was also there in the old Act as Section 14(1)(b) and Indian Courts had interpreted what the terms personal qualifications would mean.

The Supreme Court of India in Jitendranath Biswas vs. Empire of India and Ceylone Tea Company (AIR 1990 SC 255) observed that, "An employee of a Private Company whose services are terminated cannot seek the relief of reinstatement and back wages in a Civil Suit as a contract of employment for personal service could not be specifically enforced. At the most he could seek the relief of damages."

As to contract of personal service involving the relationship of master and servant, Halsbury lays down "A judgement for specific performance of a contract for personal work or services is not pronounced, either at the suit of the employer or the employee. The court does not seek to compel persons against their will to maintain continuous personal and confidential relations." The aforesaid para was quoted with approval by the Hon'ble Supreme Court in Nandganj Sihori Sugar vs. Badi Nath Dixit (AIR 1991SC 1525).

The Supreme Court of India in Percept D Mark (India) Pvt. Ltd. vs. Zaheer Khan (AIR 2006 SC 3426)and the Delhi High Court in Infinity Optimal Solutions Pvt Ltd. vs. Vijender Singh (CS(OS) 1807/2009)observed that contracts for personal services are dependent on mutual trust and confidence and specific performance of such contracts were held to be barred under Section 14 (1) of the Specific Relief Act, 1963.

The High Court of Kerala in R. Nitya vs. Dhanlaxmi Bank Limited & Ors. (O.P. (C) No. 355 of 2015(O))held that a contract of personal service cannot be specifically enforced under Section 14 (1) (b) of the Specific Relief Act, 1963. This stand was reiterated by The High Court of Himachal Pradesh in Rohit Kumar vs.Tata Tele Services Limited and Ors. (RSA No. 596/2012)wherein the Courtnoted that where the relationship between the parties as employer and employee is contractual, right to enforce the contract of service depending on personal volition of an employer, is prohibited in terms Section 14 (1) (b) of the Specific Relief Act, 1963. With respect to private contracts of personal service, it is settled law that contracts of personal service are not enforceable as is evident from the perusal of Section 14 (1) (b) of the Specific Relief Act, 1963. The court further held that contracts of personal service were not enforceable as was evident from Section 14 (1) (b) of the Specific Relief Act, 1963.

In light of various judgements and judicial pronouncements it has been observed that a court will not make an order to specifically enforce a contract of personal service. Please note that when rendering of personal service under a contract is dependent upon the volition of the parties or where the acts stipulated required special knowledge, skill, ability, experience or the exercise of judgement, discretion integrity and like personal qualities in short, whenever a performance according to the spirit of the contract rests on the individual will and capacity of the contracting party, a court cannot direct specific performance of those duties for or on behalf of the contracting party.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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