The Supreme Court recently in the case of, Smt. Katta Sujatha Reddy v. Siddamsetty Infra Projects Private Limited, [Civil Appeal No. 5822 of 2022], has held that the Specific Relief (Amendment) Act, 2018 (“2018 Amendment”) to the Specific Relief Act, 1963 (“Specific Relief Act”) is prospective and cannot apply to those transactions that took place prior to its coming into force. 

Issue:

By virtue of the 2018 Amendment, whether section 10 of the Specific Relief Act is prospective or retrospective in operation? 

Facts:

1. While considering an appeal against the order passed by the trial court, the Telangana High Court framed issues for adjudication including whether section 10 of the Specific Relief Act substituted by the 2018 Amendment is prospective or retrospective in nature?
2. The Telangana High Court vide judgment dated April 23, 2021 held that, inter-alia, Section 3 of the 2018 Amendment is retrospective in nature. In this regard, the Court observed the following:

• When a provision is replaced by way of substitution, the substituted legislation operates retrospectively and not prospectively;
• Specific relief in essence is a part of the law of procedure, hence it is a retrospective law; and
• An appeal is a continuation of the suit, hence any change in law between passing of the decree and decision of the appeal must be taken into consideration.

Findings/ observations of the Supreme Court:

1. The 2018 Amendment was brought in to increase adherence to the sanctity of contracts. This amendment created new rights and obligations that did not exist prior to the amendment. Section 10 of the unamended Specific Relief Act was subjected to the discretion of courts, but after the 2018 Amendment, this provision was converted to a mandatory provision. The amendment was directed towards growth of commercial law and so that parties comply with contracts and to reduce breaches thereof.
2. After the 2018 Amendment, specific performance is based on satisfaction of the requisite ingredients in the Specific Relief Act. Such remedy is no longer dependent on equitable principles expounded by judges. Further, the adequacy of damages as stipulated in Section 14 (1)(a) in the unamended Specific Relief Act has been removed. 
3. The nature of amendments to a statute determine whether they are procedural or substantive law. For this, reference to the nature of the parent enactment may not be material. If the substituted provisions contain any substantive provisions which create new rights, obligations, or take away any vested rights, then such substitution cannot automatically be assumed to have come into force retrospectively. In such case, the legislature would have to expressly provide whether such substitution is to be construed retrospectively or not.
4. While considering the 2018 Amendment, it incorporates substantive principles, and for this reason, the amendments to the Specific Relief Act would apply prospectively.
5. The Court also relied on Shyam Sunder v. Ram Kumar, [(2001) 8 SCC 24], and observed that when a substantive law is brought about by amendment there is no assumption that it shall take retrospective effect, unless the legislature expressly clarified the same.

Argus View:

This judgment has provided much needed clarity for disputes pertaining to transactions that took place prior to the 2018 Amendment, as such, the amended provisions shall not apply to their disputes.  

Please find attached a copy of the judgment.

This update has been contributed by Ranjit Shetty (Partner) and Yuvraj Choksy (Principal Associate).

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