SPECIFIC RELIEF ACT, 1963

The Specific Relief Act provides for specific reliefs. Specific relief means relief of a certain
species, ie., an exact or particular, a named, fixed or determined relief. The Act deals with
the following kinds of specific reliefs:

 Recovery of possession of property, immovable and movable

 Specific performance of contracts
 Rectification of contracts
 Rescission of contract
 Cancellation of instruments
 Declaratory decrees
 Injunctions

Originally the Act was passed in the year 1877. Specific relief is equitable relief developed
by courts of equity in England. While granting these remedies the court follows the
following principles of equity :

 He who comes to equity must come with clean hands

 He who wants equity must do equity and
 Delay defeats equity

Section 4 states that specific relief is granted only for enforcing civil rights and not penal
rights. Sec 4 of this act explains that this Act grants special relief for the enforcement of
individual rights and not for imposing penal laws. The enforcement under this Act only bases
itself on the individual civil right and the substantive nature must be established for that fact.
To be understood in a simpler way specific relief is related to providing relief for the
infringed civil rights of the individual. Its main objective is to focus on the rights and if there
is any penal nature of the case, it may have to be established for proving the same.

Recently, Specific Relief Act, 1963 ("the Act") underwent valiant changes in order to cater to
augmented contractual transactions inter-se parties and disputes arising therein. The Act was
enacted to define the law relating to specific performance of contracts and conferred
discretionary powers upon the concerned Courts in India to grant a relief of specific
performance of a contract. As a result of the discretionary powers, the Courts in majority of
cases awarded damages as a general rule and granted specific performance as an exception.
Recently, it was felt that the Act is not in tune with the rapid economic growth and expansion
of infrastructure activities in the country. Consequently, the Specific Relief (Amendment)
Bill, 2017 ("the Amendment") was introduced by the Minister of Law and Justice, on
December 22, 2017. The bill was passed by the Lok Sabha on March 15, 2018 and
subsequently passed by the Rajya Sabha on July 23, 2018.

Recovery of the possession of immovable property : Sec. 5 and 6

Section 5 explains the remedies available to a person when he is dispossesed from his
property. If a person has been removed through the line of possession or wants to recover
what lawfully is his property, then that person can do so through the recovery procedure
provided by the Code of Civil Procedure, 1908 and in which the person will prove that the
title belongs to him.

Section 6 of this Act details that if a person has been dispossessed or divested from the
property against the nature of law, then that person can file a suit for recovery of possession.
This section is not only a mere legal rule but also has a wide practical approach. There are
certain essential requirements for fulfilment of recovery under this section that are as follows:

 The person suing for dispossession must be in possession of that property.

 The person must be dispossessed from the property.
 The dispossession must be without the consent of the person suing.
 Such dispossession was not in due course of law.
 Possession of the plaintiff must be actual and not constructive. It must be judicial
possession not as custodian or as a servant or a tresspasser.
 Tresspasser has no remedy against the true owner under this section. A tenant who
continues in possession of the property after the expiry of the stenancy, cannot be
regarded as tresspasser, his entry was lawful and , therefore, he cnnot be forcibly
evicted. A servant or a manager can be forcibly evicted. He cannot sue his master
under Sec.6.
 Mere interference with the rights of enjoyment of the property is not dispossession.
 Section 6 sub-clause (2) explains that no suit can be bought by a person after the
expiry of 6 months from the date of dispossession.
 Section 6 sub-clause (2) also explains that no suit by a person can be brought against
the government.

If the person has not filed any suit in the prescribed time period (section 6) then the only
relief open to him is that of section 5 i.e to prove his title of the property in a better way.
Section 6 has certain limitations which explains that if any order or decree has been directed
by the court in regards to section 6 then, no appeal or review shall lie against such order or
decree but such order is open to revision.

The object of this section is to discourage people from taking the law into their own hands,
however good their title may be and to provide summary and speedy remedy through the
medium of civil court for the restoration of possession to a party dispossessed of immovable
property.

General Clauses Act defines immovable property - shall include land, benefits arising out
of land and things attached to the earth or permanently fastened to anything attached to earth.

Sec: 5 - It deals with a regular suit provided under C.P.C based on title.

Sec: 6 – It deals with summary remedy based on possession.

Sec : 5 – Limitation period for instituting a suit under S. 5 is 12 years from the date of
dispossession.

Sec : 6 – The limitation is 6 months from the date of dispossession.

Sec : 5 - Any person failing in a suit under Sec. 5 will not be allowed to sue under Sec. 6.

Sec : 6 - Any person failing in a suit under Sec. 6 can file a suit under Sec. 5.

The two sections give alternative remedies and they are mutually exclusive. A plaintiff
cannot combine the remedies provided by both the sections in the same suit.

Section 6 of the Act permitted the following persons to file a suit for recovery of possession
of immovable property: (i) a person put out of possession (dispossessed person); and (ii) any
person claiming through such dispossessed person. The Amendment now additionally
permits a person through whom the dispossessed got the possession of the immovable
property, to file a suit for recovery.

Recovery of the possession of movable property : Sec. 7 and 8

Section 7 explains that when a person wants to recover the possession of the movable
property, they can follow the procedure expressed by the Code of Civil Procedure,1908.
section 7 has further two sub-clauses which further details that a trustee may file suit against
the beneficial interest he was entitled to and the other sub-clause explains that the ownership
of the property can also be expressed with the presence of a special right given to the person
suing; which would be enough as an essential to file a suit.

Essentials of section 7 are as follows:

 There must be a presence of movable property which is capable of being delivered or

disposed of.
 The person suing must have the possession of the property in question.
 There may be an existence of a special or temporary right on the property.
 Section 8 of the Specific Relief Act,1963 explains that when a person is in the
possession of the article to which is he is not the owner, shall be compelled to deliver
such article to the person who will have its immediate possession in following cases:
 When the article is held by the defendant as the trustee of a person who has the
immediate possession.
 When compensation in money is not an adequate relief.
 When it is difficult to ascertain actual damage caused to the person.
 When the possession of the article has been wrongfully transferred from the person so
entitled.
Specific Performance of contracts :

Section 10 includes in what condition-specific performance of the contract may be

enforceable, specific performance usually depends upon the discretion of the court but there
are certain conditions for performance which are mentioned as follows:

 When the damages or loss occurred due to the non-performance of the contract cannot
be ascertained.
 When money as compensation is not an adequate relief due to the non-performance of
the contact.

Until the contrary is proved it is presumed by the court that

(i) that the breach of contract of immovable property cannot be adequately fulfilled by money
(ii) the breach of contract of movable property can be relieved except in the cases of a) where
the property is not an ordinary article of commerce, b) where the property is kept by the
defendant as a trustee for the property.

Section 14 mentions certain contracts which cannot be specifically enforced which are as
follows:

 When there is a non-performance for the act, and money is adequate compensation.
 .A contract that is full of many details and its nature is personal to the parties, these
can not be specifically enforced.
 The contract requires continuous work for which the court cannot supervise.
 The contract whose nature is determinable.

Contracts that cannot be specifically enforced :

The Specific Relief (Amendment) Act, 2018 substituted Section 10 of the Act, which now
provides that specific performance of a contract shall be enforced by the court, subject to
Sections 11(2), 14 and 16 of the Act.

Section 14 of the Act deals with contracts which are not specifically enforceable viz.

(i) Where a party has obtained substituted performance of the contract (introduced
vide the amendment in 2018),
(ii) A contract whose performance involves performance of a continuous duty, which
the court cannot supervise,
(iii) A contract, which is so dependent on personal qualifications of the parties that the
court cannot enforce specific performance of its material terms, and
(iv) A contract, which is in its nature determinable. This also has a bearing on
injunctions which may be sought by parties, as Section 41(e) of the Act provides
that an injunction cannot be granted to prevent breach of a contract, the
performance of which would not be specifically enforced.

However, where a contract comprises an affirmative agreement to perform a certain act,

coupled with a negative agreement (express or implied) not to perform a certain act, the
 circumstance that the court is unable to compel specific performance of the affirmative
agreement will not preclude it from granting an injunction to perform the negative
agreement, provided that the plaintiff has not failed to perform the contract so far as it is
binding on him.

Section 10 now reduced the discretionary jurisdiction of courts in granting the order of
specific performance of contracts.

Persons against whom the contracts can be specifically enforced

Section 15 deals with the person against whom the contracts can be specifically enforced:

 Any party to contract or any party to suit.

 Representative in interest or principal, which holds certain important ingredients-
 Any special skill, or any qualification.
 The principal in interest shall be not be entitled to specific performance.
 Where the contract is for settling a marriage or to compromise the situation between
the family members.
 When a contract has been entered into by a tenant over a property for life.

Enforcement of awards

Section 21 deals with the power to award compensation; in various cases, compensation can
be done through the court to the aggrieved person. There are certain cases which are as
follows:

When there is a suit filed for specific performance of the contract due to its breach the
aggrieved person may also demand compensation in addition. When according to the court
the specific performance may not be granted but there has been a breach of contract, the court
accordingly will order for compensation to be given to the aggrieved party. When the court
thinks that in this case specific performance of the court shall be granted but it will not be an
adequate relief so, compensation in money can be ordered. No compensation shall be
awarded when the relief for money is not itself mentioned in the plaint.

As per the previous scheme of the Act, to obtain a decree of specific performance, a party
filing a suit had to appeal to the discretionary powers of the Court. The Amendment modifies
Section 10 by substituting the words, "the specific performance of any contract may, in the
discretion of the court, be enforced" with "specific performance of a contract shall be
enforced by the court".

The effect of the amendment is that the party filing a suit for specific performance of contract
will be entitled for the relief of specific performance. Similar discretionary powers of the
Court in granting specific performance have been substituted with the word 'shall' in relation
to trusts (under Section 11).

POWER OF COURTS TO ENGAGE EXPERTS (SECTION 14A)

The Amendment introduces a new provision i.e. Section 14A which will empower and enable
the Court to engage one or more technical experts to assist on any specific issue involved in
any suit. The expert may also be called upon for providing evidence, including production of
relevant documents related to the issue.

AMALGAMATION OF LLPS, ONE OF WHICH IS PARTY TO THE CONTRACT

ENTITLED TO SEEK SPECIFIC PERFORMANCE (SECTION 15)

Sub-clause (g) of Section 15 of the Act provided that when a company had entered into a
contract and it subsequently amalgamated with another company, the new company which
arose out of the said amalgamation was entitled to seek specific performance of the contract.
The Amendment extends similar rights to a limited liability partnership by inserting Clause
(fa) which states that when a limited liability partnership has entered into a contract and
subsequently amalgamated with another limited liability partnership, the new limited liability
partnership which arises out of the said amalgamation is entitled to seek specific performance
of the contract.

SUBSTITUTED PERFORMANCE: NEW RELIEF ADDED (SECTION 20)

The Amendment introduces the concept of 'substituted performance' under Section 20. As per
the concept, a party who is affected by the breach of contract can choose to get the contract
performed by a third party, or by its own agency, at the cost of the contracting party at
default. The affected party has to give prior notice of thirty days to the other party expressing
his intention to seek substituted performance. It is also clarified that the party enforcing
substituted performance forfeits its right to get specific performance of the contract enforced
through Court. Consequently, Section 14 of the Act which enlists contracts which cannot be
specifically enforced has also been amended by substituting Clause (a) which earlier read "a
contract for the non-performance of which compensation in money is an adequate relief" with
"(a) where a party to the contract has obtained substituted performance of contract in
accordance with the provisions of section 20".

Rectification of instruments :

An instrument may be rectified when through fraud or a mutual mistake of the parties to a
contract or other instument in writing is present and thereby it does not express their real
intention. Instrument includes every document by which any right or liability is created,
transferred, limited, extended, extinguished or recorded. Eg: will, deed, decree, award etc.

Section 26 deals with the ways in which instrument can be rectified:

 When through fraud or mutual mistake the parties do not show their real intention
then:
  Either party or representative in interest may file a suit for rectification of the
instrument,
 The plaintiff in his plaint may plead for rectification of instrument,
 The defendant in his defence may claim for rectification of instrument.
 The court can direct rectification of instruments in cases where the party through
fraud does not show their real intention to prevent violation of rights to the third party.

If the court finds that the instrument does not express the real intention of the parties, it
may,in its discretion direct rectification of the instrument so as to express the real intention,
as far as possible, without prejudicie to rights acquired by third persons in good faith and for
value. But it is possible without effecting the rights acquired by third persons in good daith
and for value. It shall be granted only if it has been specifically claimed by a party.
Requirement for rectification

The party who wants to rectify the instrument firstly must give them in writing and then
mention them in their pleading. No relief shall be granted when the rectification is not
specifically mentioned. The burden of proof of fraud or mutual mistake lies on the party who
seeks rectification.

Rescission of Contracts

Sections 27 – 30 deals with the recession of the contract.

Rescission means avoidance of a contract. Rescission can be claimed only if the contract is
voidable. The object of rescission is to annul or putting an end to the contrat and restore the
parties to the original position in which they stood at the time of the contract. It is not
applicable to void contracts. In law, recession means withdrawing of the contract or in
simpler terms: cancellation of the contract. It brings the party in a situation as if the contract
did not happen i.e status quo ante meaning in its original state.

Rescission may be granted in the following cases:

a) where the contract has been terminated or “has been deemed” voidable by the plaintiff,

b) when the contract is unlawful.

c) Where the court has passed a decree for specific performance of a contract for the sale or
lease of immovable property and the purchaser or lessee makes default in payment, the seller
or lessor may apply for te rescission of the codntract (Sec. 28).

d) In a suit for specific performance of a contract, the plaintif may ask for the alternative
prayer or rescission of contract, if the contract cannot be specifically enfornced and if the
court refuses to enforce the contract specificlly, may direct it to be rescinded. (Sec. 29)
Restoration of benefits (Sec. 30)

Rescission may be refused in the following cases:

a) Where the plaintiff has expressly or impliedly ratified the contract

b) Where third parties have acquired rights in good faith for value without any notice of
the defect.
c) Where due to the change of circumstances which has taken place after the making of
the contract and before rescession the parties cannot be substantially restored to the
postion in which they stood when the contract was made.

Cancellation of instruments:

Cancellation is one of the remedies which is available to parties against injuries in a contract;
section 31 to 33 deals with cancellation of instruments through the court.

Section 31 explains that when an instrument is void or voidable against a person then he can
get that instrument if it may cause damage to it.

Section 32 deals when a contract can be partially cancelled; for example in cases where there
are certain rights and obligations connected with some parties through that contract, then the
court accordingly may cancel the faulty portion and let the other in motion.

Section 33 has two heads in it i.e powers to aggrieved party after cancellation and orders to
the defendant after cancellation.

Cancellation of instrument may be claimed even by persons who are not parties to a
document.

Power of aggrieved party

When the contract has been successfully cancelled, the aggrieved party may receive all the
restoration of benefit and compensation to ensure justice.

Orders to the defendant after cancellation

When the suit has been proven voidable against the defendant, he is required to restore every
benefit to the plaintiff which the defendant may have received during the contract.

Declaratory decrees

Section 34 and 35 deal with declaratory decrees which are declared through the courts to the
parties to suit or contract.

Section 34 deals with that when any person has a certain right or obligation over the property
and he has been denied that right by any party, then the aggrieved party may file a suit for the
enforcement of the right over the property which has been denied to him. The Court will give
a declaration after looking over the case that the aggrieved party has a right over the title of
such property and so a declaratory decree will be passed. Such declaratory decree will not be
passed by the court when the plaintiff demands something more than the title over that
property.

Section 35 deals with the effect of the declaration which explains that this decree will be
binding to only to those which are the parties to suit, the decree will be binding to only the
parties to suit and the trustees at the time of suit if any. It is a judgement in personam.

.Preventive relief : Preventive relief is considered to be any relief which abstains a party
from doing any act; a relief from the court which details that the party should not perform
certain acts for which the relief shall be prescribed. Such reliefs can be imposed in the form
of injunctions.

Injunctions : Sec. 36 to 44 of Specific Relief Act deal with injunctions. Injunction is a

preventive relief granted at the discretion of the court. According to Lord Halsbury it is a
judicial process whereby a party is ordered to restrain from doing or to do a prticular act or
thing. Injunctions are a specific order under which a party must abstain from performing any
act. Injunctions under the Specific Relief Act,1963 may be divided into three different types
namely temporary, perpetual and mandatory.

Temporary injunction: It will continue only for a specified period or until further order of
the court. It may be granted at any stage of a suit. It is also called as interlocutory injunction.
The granting of injunction is regulated by C.P.C . Sec. 37(1).

Perpetual injunctions : Perpetual injunctions are known as permanent injunctions. It is

granted by the decree made after the final hearing on merits. By this injunction the defendant
is permanently restrained from the assertion of a right, or from the commission of an act,
which is contrary to the rights of the plaintiff. Sec. 37(2).

They can only be imposed after hearing the parties on the merits of the case in which the
defendant has enjoyed an assertion of the right and by affecting the plaintiff on the contrary.
The perpetual injunction may be granted to the plaintiff to prevent the breach of an obligation
and imposing rights in his favour. Clause 3 of Sec. 38 gives certain specific instances in
which perpetual injunction can be granted. When the defendants invade the plaintiff’s right
to enjoyment, a perpetual injunction may be applied in certain cases where:

 The defendant is the trustee of the property.

 Actual damage cannot be ascertained.
 Money as compensation would not be adequate relief.
 Injunctions are necessary to prevent multiplicity of judgments.

Landmark Judgments

Geeta Rani Paul v. Dibyendu Kundu

It was held by the Hon’ble Supreme Court that when the plaintiff files suit regarding the
dispossession, it is enough if he proves that he is entitled over the title of that property. Once
the title is proved other details like being divested from the property or other things are not
required to be proved.

N.P. Thirugnanam [Link]. R.J. Mohan Rao

It is held by the Court that when in a case it is observed that the plaintiff itself did not
perform his portion in the contract or neither does he want to perform, so the decision
regarding specific performance act will be issued under this favour.

Prem Singh vs. Birbal

The Court, in this case, held that when a contract is valid no doubt of it being cancelled arises
and when it is void ab initio (meaning no existence in the law from the starting ) then no also
no option of cancelling it arises as it is not present in the eyes of law. When a contract has no
existence no action is enforced on it.

Mandatory Injunction: It is an order of a court requiring the defendant to do some positive

act for the purpose of putting an end to a wrongful state of things created by him. It is
therefore, both prohibitory and restitutory (Sec. 39).

It will be claimed to restrain the breach of any obligation whether arising out of a contract or
tort. It will be granted to compel the defendant to restore the things to their former condition.
Court refuses to grant mandatory injunction in the following cases:

 Where the injury can be fairly compensated by damages

 Where there is undue delay in filing the petition
 Where the alleged obstruction is of temporary character
 Where the balance of convenience is in favour of the defendant.

In a suit for perpetual injunction, or mandatory injunction the plaintiff may claim damages
either in addition to, or in substitution of injunction. The court may award damages if it
thinks fit. Sec. 40.

Where a contract comprises of an affirmative agreement to do certain act, coupled with a

negative agreement not to do a certain act if the circumstances are that the court is unable to
compel specific performance of the affirmative agreement, then the court can divide the
agreement and grant an injunction to perform the negative agreement (Sec. 42). Lumley v.
Wagner (1852). Held, court refused to order for specific performance of her positive
agreement to sing at the plaintiff’s theatre but granted an injunction restraining not to sing
any where (negative agreement).
Injunction will be refused in the following cases:

a) to stay a judicial proceeding pending at the institution of the suit in which the injunction is
sought, unless such restraint is necessary to prevent a multiplicity of proceedings;

(b) to stay proceedings in a Court not subordinate to that from which the injunction is sought;

(c) to restraint persons from applying to any legislative body;

(d) to interfere with the public duties of any department of the Government, or with the
sovereign acts of Foreign Government;

(e) to stay proceedings in any criminal matter;

(f) to prevent the breach of a contract the performance of which would not be specifically
enforced;

(g) to prevent, on the ground of nuisance, an act of which it is not reasonably clear that it will
be a nuisance;

(h) to prevent a continuing breach in which the applicant has acquiesced;

(i) when equally efficacious relief can certainly be obtained by any other usual mode of
proceeding except in case of breach of trust; - alternative remedy.

(j) when the conduct of the applicant on his agents has been such as to disentitle him to the
assistance of the Court;

(k) where the plaintiff has no personal interest in the matter

Injunctions : The Act provides powers to Court to grant preventive relief (injunctions) to
parties. The Act provides circumstances in which injunctions cannot be given, for example, to
stop a party from filing a complaint in a criminal matter. The Bill additionally seeks to
prevent courts from granting injunctions in contracts related to infrastructure projects, if such
an injunction would hinder or delay the completion of the project. The aforementioned
projects can be categorized under the following infrastructure sectors and their sub-sectors –

• Transport

• Energy

• Water and Sanitation

• Communication (such as telecommunication) and

• Social and commercial infrastructure (such as affordable housing).

• The central government may amend the list through notification.

Identification of Special Courts to speed up Infrastructure project disputes : In order

to give a boost to Infrastructure projects, especially to remove uncertainty in dispute
resolution timelines, provision have been made to designate certain civil courts as Special
Courts by the State Government, in consultation with the Chief Justice of a High Court.
These Special Courts will deal with cases related to infrastructure projects and are expected
to dispose of such cases within 12-months from the date of receipt of summons by the
defendant, with an additional 6-month extension as required.

E Contracts:

Definition: E-contract is a contract modeled, specified, executed and deployed by a software

system. E-contracts are conceptually very similar to traditional (paper based) commercial
contracts. Vendors present their products, prices and terms to prospective buyers. Buyers
consider their options, negotiate prices and terms (where possible), place orders and make
payments. Then, the vendors deliver the purchased products. Nevertheless, because of the
ways in which it differs from traditional commerce, electronic commerce raises some new
and interesting technical and legal challenges.

Recognition of E-contracts

Offer: The law already recognizes contracts formed using facsimile, telex and other similar
technology. An agreement between parties is legally valid if it satisfies the requirements of
the law regarding its formation, i.e. that the parties intended to create a contract primarily.
This intention is evidenced by their compliance with 3 classical cornerstones i.e. offer,
acceptance and consideration.

One of the early steps in the formation of a contract lies in arriving at an agreement between
the contracting parties by means of an offer and acceptance. Advertisement on website may
or may not constitute an offer as offer and invitation to treat are two distinct concepts. Being
an offer to unspecified person, it is probably an invitation to treat, unless a contrary intention
is clearly expressed.

The test is of intention whether by supplying the information, the person intends to be legally
bound or not. When consumers respond through an e-mail or by filling in an online form,
built into the web page, they make an Offer. The seller can accept this offer either by express
confirmation or by conduct.

Acceptance:

Unequivocal unconditional communication of acceptance is required to be made in terms of

the offer, to create a valid e-contract. The critical issue is when acceptance takes effect, to
determine where and when the contract comes into existence.

The general receipt rule is that acceptance is effective when received. For contracting no
conclusive rule is settled. The applicable rule of communication depends upon reasonable
certainty of the message being received. When parties connect directly, without a server, they
will be aware of failure or partial receipt of a message. Such party realizing the fault must
request re-transmission, as acceptance is only effective when received.

When there is a common server, the actual point of receipt of the acceptance is crucial in
deciding the jurisdiction in which the e-contract is concluded. If the server is trusted, the
postal rule may apply, if however, the server is not trusted or there is uncertainty concerning
the e-mail’s route, it is best not to apply the postal rule. When arrival at the server is
presumed insufficient, the ‘receipt at the mail box’ rule is preferred.

Consideration and Performance:

Contracts result only when one promise is made in exchange for something in return. This
something in return is called ‘consideration’. The present rules of consideration apply to e-
contracts. There is concern among consumers regarding Transitional Security over the
Internet. The e-directive on Distance Selling tries to generate confidence by minimizing
abuse by purchasers and suppliers. It specifies---

A list of key points, must be supplied to the consumer in ‘a clear and comprehensible manne

Validity of E-Contracts: With the e-commerce boom and the growing trend of commercial
transactions being concluded by way of internet, execution of contracts by electronic means
has become quite prevalent.

Like an ordinary paper contract, an electronic contract (or e-contract) is also primarily
governed by the codified provisions of Indian Contract Act, 1872 ("ICA"), as applicable to
contracts in general. Therefore, an electronic contract also cannot be validly executed unless
it satisfies all the essentials of a valid contract, such as (a) "Offer" and "Acceptance"; (b)
Lawful consideration; (c) Lawful object; (d) Free consent; (e) Parties to be competent to
contract; (f) Intention of parties to create legal relationship; (g) Certainty and possibility of
performance; (h) Not be expressly declared to be void; and (j) Compliance with formalities
under different laws governing the agreement.

All other statutes applicable to an electronic contract are to be read in conjunction, and
not in substitution, with the ICA. Therefore, in this context, if an electronic contract has
been formed over a series of electronic communications where the essential elements of the
contract (such as offer, acceptance, consideration etc.) are captured separately, then proper
maintenance of all such electronic records and emails becomes essential to prove the record
of the contractual arrangement between the parties.

Electronic contracts/records have also found statutory recognition under the Information
Technology Act, 2000 ("IT Act"). Amongst other things it specifically states that a contract
shall not be deemed unenforceable, solely on the ground that electronic form/means were
used for communication of proposals, acceptance of proposals, revocation of proposals or
acceptances, as the case may. The IT Act also recognizes "digital signatures" or "electronic
signatures" and validation of the authentication of electronic records by using such
digital/electronic signatures. The contents of electronic records can also be proved in
evidence by the parties in accordance with the provisions of the Indian Evidence Act, 1872.

Conclusion of contracts through electronic means, such as through e-mail

communications (or execution of electronic contracts) have also been recognized by Indian
courts from time to time. For instance, in the case of Trimex International FZE Limited,
Dubai vs. Vendata Aluminum Ltd., the Hon'ble Supreme Court of India held that the contract
between the parties was unconditionally accepted through e-mails and was a valid contract
which satisfied the requirements of the ICA.

Jurisdiction of Courts under E-Contracts: Given the nature of e-contracts, one

question which often comes to force is – which court would have territorial jurisdiction to try
disputes arising out of such e-contracts? The Code of Civil Procedure, 1908 ("CPC")
prescribes the manner of determining the jurisdiction of civil courts in India, based on two
fundamental principles:

(i) the place of residence of the defendant; and

(ii) the place where the cause of action arises.

Subject to the above, while the parties remain free to determine the choice of courts to
adjudicate their disputes, they can choose only such court(s) which is/are not barred from
exercising jurisdiction, i.e. parties cannot confer jurisdiction upon a court which does not
have jurisdiction to entertain their case. Ordinarily, contracts contain a specific provision
with respect to the place of execution thereof, and the courts of such a place would have
territorial jurisdiction to entertain and try the disputes arising under such contracts if in
accordance with the CPC as aforesaid.

However, since e-contracts are not physically signed/executed and are concluded in a
virtual space, simply imposing the traditional principles of jurisdiction, applicable to physical
contracts, to such transactions can prove to be challenging.

The jurisdictional issues of e-contracts have, however, been addressed to an extent

under the IT Act. Section 13 of the IT Act governs the provisions relating to time and place
of dispatch and receipt of an electronic record, and addresses the issue of deemed jurisdiction
in electronic contracts, as under:

(1) The despatch of an electronic record occurs when it enters a computer resource outside
the control of the originator. The time of receipt of an electronic record shall be determined
as follows, namely:

(a) if the addressee has designated a computer resource for the purpose of receiving
electronic records,

(i) receipt occurs at the time when the electronic record enters the designated
computer resource; or
(ii) if the electronic record is sent to a computer resource of the addressee that is not the
designated computer resource, receipt occurs at the time when the electronic record is
retrieved by the addressee;

(b) if the addressee has not designated a computer resource along with specified timings, if
any, receipt occurs when the electronic record enters the computer resource of the addressee.

(3) An electronic record is deemed to be dispatched at the place where the originator has his
place of business, and is deemed to be received at the place where the addressee has his place
of business.

(4) The provisions of subsection (2) shall apply notwithstanding that the place where the
computer resource is located may be different from the place where the electronic record is
deemed to have been received under subsection (3).

(5) For the purposes of this section:

(a) if the originator or the addressee has more than one place of business, the principal
place of business, shall be the place of business;

(b) if the originator or the addressee does not have a place of business, his usual place of
residence shall be deemed to be the place of business;

(c) "usual place of residence", in relation to a body corporate, means the place where it is
registered."

To further illustrate application of the aforesaid principles, we may refer to the case of
PR Transport Agency vs. Union of India, wherein the Allahabad High Court had to decide
the question of jurisdiction where the respondent had sent the letter of acceptance by an e-
mail to the petitioner's e-mail address. Subsequently, the respondent sent another e-mail
cancelling the e-auction in favour of the petitioner "due to some technical and unavoidable
reasons". When the petitioner challenged this communication in the Allahabad High Court,
the respondent raised an objection as to the "territorial jurisdiction" of the Court on the
ground that no part of the cause of action had arisen within Uttar Pradesh (UP), and therefore,
the Allahabad High Court (UP) had no jurisdiction to try the dispute. In the case, the principal
place of business of the petitioner was in district Chandauli (UP), and the other place where
the petitioner carried on business was Varansi, which is also in the State of UP. The Court,
therefore, on the basis of section 13(3) of the IT Act, held that the acceptance of the tender by
e-mail would be deemed to have been received by the petitioner at Varanasi/Chandauli,
which are the only two places where the petitioner has his places of business. As both these
places fell within the territorial jurisdiction of the Allahabad High Court, the Court assumed
jurisdiction to try the dispute.

The place of contract in an e-contract for the purposes of determining jurisdiction (i.e., the
place where the cause of action arose) would be deemed to be where the originator has his
place of business and where the addressee has his place of business. However, since Section
13 of the IT Act is subject to the mutual agreement of the contracting parties with respect to
the agreed place of contract, it is recommended that all parties in their electronic contracts
provide for a specific clause on jurisdiction.