Specific Performance of a Unique Painting
Under the Indian Contract Act, 1872, damages for breach are intended to put the injured party in the position they would have been in had the contract been performed. Under the Specific Relief Act, 1963 (as amended in 2018), specific performance is a discretionary remedy; it is no longer limited to cases where damages are inadequate, but the court considers whether the contract is capable of being enforced and whether the plaintiff has behaved fairly. A agrees in writing to sell a one-of-a-kind Mughal-era miniature to B for ₹5,00,000. B pays ₹50,000 as advance. The contract says delivery will be on 1 March and includes a clause: 'In case of delay, the seller shall pay ₹10,000 per week as agreed liquidated damages.' On 20 February, A sells the painting to C for ₹7,50,000. C buys in good faith without notice of B's contract. B sues A for specific performance and damages. A argues that the liquidated damages clause is the only remedy.
1. Can B obtain specific performance against A? Can B obtain it against C? Reason from the stated rules.
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Against A, B has a strong claim. The contract is in writing, identifies a one-of-a-kind painting, and fixes price and delivery; B has paid an advance and is not shown to be at fault. Specific performance is discretionary but no longer confined to cases where damages are inadequate, and a unique chattel is a classic case where damages may not substitute for the thing itself. The liquidated-damages clause does not by itself make damages the exclusive remedy; exclusivity would need clear words. Against C, B should fail. C bought in good faith, for value, and without notice of B's contract. Specific performance binds a party to the contract; it is not ordinarily available against a later bona fide purchaser who had no notice. B's remedy for the loss is damages against A.
2. How should the court treat the ₹10,000-per-week clause? Does it bar specific performance?
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The clause should be read as a liquidated-damages provision if ₹10,000 per week was a genuine pre-estimate of delay loss; if it is extravagant and unconscionable, it is a penalty and only reasonable compensation is recoverable under section 74 of the Indian Contract Act. Either way, it is not automatically an exclusive remedy. The contract does not say 'the seller's only liability shall be ₹10,000 per week'. A court may therefore award specific performance and, if B has separately suffered delay loss, damages for that loss, while avoiding double recovery for the same injury. The clause mainly caps or guides delay damages; it does not strip the court of its discretion under the Specific Relief Act.
3. If C had notice of B's contract, how would the answer to the first task change?
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C would no longer be a bona fide purchaser without notice, so the main reason for refusing specific performance against C disappears. B could seek specific performance against C, or ask the court to compel C to join or to surrender the painting, subject to the court's discretion and to any equities. A remains liable for breach, and C may have a claim against A for misrepresentation or breach if A warranted clear title. The priority contest shifts from protecting an innocent third party to preventing A from profiting from a sale that A knew would defeat B's prior contract.