Supreme Court clarifies 2018 amendment to Specific Relief Act isn’t retrospective, reaffirming judicial discretion for pre-2018 cases.
Supreme Court Reaffirms Judicial Discretion In Pre-Amendment Cases
In a significant ruling with implications for contract enforcement across India, the Supreme Court has held that the 2018 amendment to the Specific Relief Act, 1963, which made specific performance of contracts a mandatory remedy, does not apply retrospectively. The Court clarified that the amendment will govern only those suits and contractual transactions that arose on or after its enforcement date — October 1, 2018.
The Bench comprising Justice J.B. Pardiwala and Justice Manoj Misra underscored that, before the amendment introduced by Act 18 of 2018, the grant of specific performance was a matter of judicial discretion, rather than an absolute right available to the aggrieved party.
“The amendment cannot be applied to causes of action that accrued prior to its coming into force. To hold otherwise would disturb vested rights and alter the legal landscape retrospectively,” the Bench observed.
Background: From Discretionary to Mandatory Relief
The Specific Relief Act, 1963 originally treated the grant of specific performance — compelling a party to perform a contractual obligation — as discretionary. Courts could deny such relief if damages were deemed adequate compensation.
However, the 2018 amendment, which came into effect on October 1, 2018, marked a paradigm shift in Indian contract law. It replaced judicial discretion with a rule of mandatory enforcement of contracts, significantly reducing the circumstances where courts could refuse specific performance.
Legal experts have described the amendment as an effort to enhance the sanctity of contracts and align Indian commercial law with global standards — particularly beneficial to infrastructure and real estate projects.
In the present case, however, the Supreme Court made it clear that this legislative shift cannot operate retrospectively, especially where the cause of action or the suit was filed before the amendment’s enforcement.
Court’s Reasoning: No Express Legislative Intent for Retrospectivity
The judgment turned on the principle that statutes altering substantive rights are presumed to be prospective unless the legislature expressly states otherwise.
The Bench noted that Section 10 of the Specific Relief Act, as amended, fundamentally changes the nature of the right — from discretionary to mandatory. Therefore, applying it retrospectively would affect vested rights of defendants and alter judicial expectations under the pre-amendment regime.
“An amendment that substitutes discretion with compulsion cannot be applied to pending cases unless expressly provided,” the judgment emphasized, reaffirming the cardinal rule of statutory interpretation.
This clarification aligns with earlier jurisprudence, including Shyam Sunder v. Ram Kumar (2001) and K.S. Paripoornan v. State of Kerala (1994), which held that substantive changes in law are presumed to be prospective.
Implications for Pending Suits and Contractual Disputes
The ruling is expected to have a direct impact on numerous pending suits for specific performance that originated before October 2018.
Advocate Ritika Menon, speaking to The Legal Observer, noted:
“This judgment restores predictability to pre-2018 disputes. It ensures that neither litigants nor courts are forced to apply post-amendment standards retroactively.”
She added that while the 2018 amendment aimed to strengthen contractual enforcement, judicial discretion remains integral to equitable justice in older cases where circumstances may differ substantially.
Balancing Legislative Intent and Judicial Prudence
By reaffirming that the amendment is not retrospective, the Supreme Court has balanced the legislative intent of stricter contract enforcement with the principles of fairness and predictability.
Legal commentators believe the decision underscores a broader judicial philosophy — that statutory amendments should not unsettle existing legal rights unless Parliament clearly indicates that intent.
In a related insight shared on The Legal Observer YouTube Channel, legal scholar Dr. Meera Deshmukh commented:
“This ruling demonstrates the Court’s sensitivity to both commercial certainty and legal continuity. It reflects judicial restraint and respect for legislative demarcations.”
Broader Legal Context
The decision adds to a growing body of Supreme Court rulings clarifying temporal application of amendments in key commercial statutes — including the Arbitration and Conciliation Act and the Insolvency and Bankruptcy Code.
It reinforces that fair notice and non-retrospectivity are cornerstones of legal reform, especially in fields like contract law where predictability influences business confidence.
For readers following developments in commercial jurisprudence, more coverage is available under The Legal Observer – National News and analytical commentary in The Legal Observer – Views: Insight.
