Newsletter | September 2018
Infra News
 

NHAI invites bids for second tranche of highway projects under TOT
Enthused by over-subscription of the maiden bundle of 9 highway projects under toll-operate-transfer (TOT), NHAI has invited bids for second tranche of highway projects comprising eight stretches... More

India offers ₹ 1trillion of oil and gas resources in DSF-II round
India put up for bidding 25 discovered oil and gas fields, holding resources of an estimated ₹1 trillion, as it looked to expedite production from areas lying idle for years... More

Union Cabinet approves extension of Concessional Financing Scheme (CFS) for infrastructure projects abroad
The Union Cabinet, chaired by Prime Minister Narendra Modi approved the first extension of Concessional Financing Scheme (CFS) to support Indian Entities bidding for strategically important infrastructure projects abroad for five years till 2023... More

UAE commits $75 billion towards infrastructure development in India: Commerce Ministry
With increasing economic ties with India, the UAE has committed USD 75 billion towards infrastructure development in the country, the commerce ministry... More

Solar-powered Cochin Airport gets UN’s highest environmental accolade
The Cochin International Airport in Kerala, the first fully solar-powered airport in the world, has been chosen for the prestigious Champion of Earth Prize – 2018 instituted by the United Nations (UN)... More

Bharatmala project: 17 road-cum-airstrips being developed across India
As many as 17 facilities that can be used as roads as well as airstrips are being developed in the country... More

Government looks to sell viable infrastructure projects
The government is looking to sell successfully running public sector infrastructure projects such as power and steel plants to private companies in a bid to boost green-field investment and create fresh capacity.... More

Coastal highway projects worth Rs 7,500 crore to commence in Odisha after state govt nod
The Centre plans to execute two coastal highway projects in Odisha at an estimated cost of Rs 7,500 crore post the state government's nod... More

1,800 projects to solve traffic problems on highways.
The government is undertaking over 1,800 road projects across the country with a total length of over 60,000 km in order to resolve the problem of traffic jams on national highways... More

GAIL Planning to Set-up Battery Charging Stations for Electric Vehicles in India
GAIL India, the country's largest gas transportation and marketing company, plans to set up battery charging stations for electric vehicles as well as build solar plants as it looks to be "future ready" for emerging businesses, a senior company official said... More

Mumbai-Pune expressway concession agreement inked at Rs 90 billion
The Maharashtra State Road Development Corporation (MSRDC) has signed a concession agreement for Mumbai-Pune Expressway at Rs 90 billion, almost 10 times of the Rs 9.18 billion worth agreement inked in 2004... More

Rajasthan eyes solar projects of 2000 MW from recent SECI, NTPC auctions
Rajasthan is a frontrunner to get more than half of the 5180 megawatt solar projects auctioned in the past two months by Solar Energy Corporation of India (SECI), NTPC and Maharashtra government under the open access system... More

‘NTPC open to buying stressed power assets’
Power generator NTPC is undertaking due diligence of some of the stressed power assets in the country... More

India all set to introduce cap on solar power tariffs
The ministry of new and renewable energy is set to cap India’s solar power tariffs at ₹ 2.5 and ₹ 2.68 per unit for developers using domestic, and imported solar cells and modules, respectively, according to an internal note reviewed by Mint... More

MoU with Korea will promote cooperation in railways: Cabinet
The Union Cabinet on Wednesday said that an MoU signed between Research Designs and Standards Organisation (RDSO) and Korea Railroad Research Institute (KRRI) last month will strengthen scientific and technical cooperation in railways... More

India plans 362km railway to improve connections with largest container port
A 362km railway line is been planned for west-central India to link the country’s largest container port with the Manmad in the state of Maharashtra, and Indore, the state capital of Madhya Pradesh... More

 
Firm News
 

FICCI invites Mr. Atul Sharma, Managing Partner on a panel discussion on the topic “Regulation in Secondary Real Estate Market"
The Federation of Indian Chambers of Commerce and Industry (FICCI) recently organised a Conference on “Improving Transparency in Secondary Real Estate Market” in New Delhi to highlight the importance of transparency, current trends and regulations in the secondary real estate market. More

Mr. Atul Sharma, Managing Partner addresses at India Infrastructure Forum’s Roundtable on the topic “Dispute Resolution Mechanism”
India Infrastructure Forum, an initiative of India Infrastructure Publishing recently held a roundtable on Infrastructure sector on the topic “Dispute Resolution Mechanism” at India International Centre, New Delhi. More

Link Legal hosts an Infrastructure Focused Event in Tokyo, Japan
Link Legal jointly with Atsumi & Sakai, a leading Japan based law firm organised a knowledge sharing session on “Indian Infrastructure Sector – Opportunities, Challenges & Risks” at Tokyo on Thursday, July 5, 2018 at Embassy of India, Tokyo. More

Link Legal adds Apurbalal Mallik as Associate Partner in Hyderabad
Link Legal India Law Services has expanded its Corporate practice with Apurbalal Mallik re-joining the Firm as an Associate Partner. He will be based out of Firm’s Hyderabad office. More

Link Legal conducts an interactive session at Pravin Gandhi College of Law, University of Mumbai
As part of our continuing campus outreach program initiative, Link Legal India Law Services was invited by Pravin Gandhi College of Law affiliated to the University of Mumbai on July 28, 2018. More

 
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Previous Issues:
July 2018
June 2018
May 2018
January 2018
November 2017
October 2017
September 2017
August 2017
July 2017
June 2017
May 2017
April Part I 2017
April Part II 2017
March 2017
December 2016
November 2016
October 2016
September 2016
August 2016
April 2016
March 2016
February 2016
 
CERTAINTY OF PERFORMANCE


The Government of India in its continuous efforts of improving the parameters for ‘ease of doing business in India’ has undertaken to amend the Specific Relief Act, 1963 (“Act”). The Specific Relief (Amendment) Act, 2018 (“Amendment Act”), which attempts to radically change the Act, has been passed by both the houses of Parliament and has also received the Presidential assent on August 01, 2018. Most of the amendments in the Amendment Act are premised on the recommendations of an Expert Committee set up for examining the Act in the context of delays of several infrastructure projects and the changed scenario involving contract-based infrastructure development, public private partnership and other public projects involving huge investments. The Amendment Act primarily drives towards changing the approach from damages being the rule and specific performance being the exception as under the Act to specific performance being the rule and damages being the alternate remedy. In this article we have analyzed some of the principal changes and the possible effect it is likely to have going forward.

 
Prelude
The Act laid the remedial law in case of breach of a contract which are specifically enforceable. The mutually exclusive remedies provided under the Act is to either require the defaulting party to perform the obligations as under the terms of the contract, or, require the defaulting party to offer monetary compensation in place of performing contractual obligations. More often than not, payment of damages and monetary compensation was the end result.

In view of the constant pile-up of delayed infrastructure projects resulting from ongoing disputes between the contracting parties, enforcement of contractual laws needed to be made more stringent. The Amendment Act has introduced changes which take away the wide discretion granted to courts for granting specific performance under the Act and obliges the courts to grant specific relief as a rule. It has also introduced the remedy of substituted performance, whereby the promisee is entitled to deploy a third party to substitute the defaulting party, for specific performance of contractual obligations, the cost of which will be reimbursed by the defaulting party. Introduction of specific timelines and special courts for dealing with matters relating to specific performance under infrastructure projects further lends certainty to developers and contractors with respect to the outcome. The Amendment Act thus aims to bring about simple and speedy enforcement of contractual obligations.
 
Features of the Amendment Act

  • Specific Performance: The Amendment Act has removed the concept of the court’s discretionary power in granting specific relief entirely. The amended Section 10 states that specific performance of a contract shall be enforced by the court subject to the limited grounds of refusal defined in other provisions of the Amendment Act. The Act was based on the premise that specific performance could not be granted or enforced in a situation where monetary compensation was an adequate relief. The Amendment Act has replaced Section 14 and has limited the grounds under which specific performance can be refused such as the contract so dependent on personal qualifications of the parties that court cannot possibly enforce specific performance on material terms etc. As the courts no longer have the discretion to decide upon granting specific relief, there is far more certainty that the parties will be successful in obtaining specific relief (Section 10 and 14 of the Amendment Act).
     
  • Substituted Performance: In the past, Indian courts have awarded substituted performance as a remedy but there was no express provision in the Act. By way of the Amendment Act, there is now a more uniform process by which this remedy can be availed. It mandates that a notice be served on the defaulting party, giving him time of thirty (30) days to begin acting upon the contractual obligations. If the defaulting party/ promisor does not act upon it during the notice period the aggrieved party/promisee can remedy the same by carrying out risk purchase, for which the promisor can appoint a third party to fulfil the terms of the contract at the expense of the promisor (Section 20 of the Amendment Act).  The intent being exact fulfilment of an obligation (specific performance) and to make good the loss suffered by the promisee. The remedy of substituted performance must be availed in addition to right to claim damages and shall not be an alternative remedy. The Amendment Act also lays down an elaborate and exhaustive procedure, by which these remedies can be availed.

    Earlier, upon a breach of contract, a party could, in appropriate circumstances, have the contract performed through another party. In such circumstances, there would be a claim of compensation under S. 73 of the Indian Contract Act, 1872 which required the party obtaining substituted performance to ensure that cost mitigation measures are taken, and that compensation would relate only to foreseeable costs. The introduction of a specific provision, allowing recovery of costs, pursuant to substituted performance, would reduce the risks and uncertainty around the ability to claim complete costs of substituted performance.
     
  • No Injunction for infrastructure projects:  Injunction has been a custom since the implementation of the Act. Many infrastructure projects have been held up for years on account of delay in timely completion of projects. Delay and exorbitant escalation costs have often rendered the contracts unexecuted. No injunction can be granted by the court in a suit under the Amendment Act involving a contract relating to an infrastructure project if such injunction would cause delay or impediment in the progress or completion of the infrastructure project (Section 20 (A) (1) of the Amendment Act).
     
  • Special Courts: This amendment was built in consultation with the State Governments. The Amendment Act provides for mechanism to designate certain civil courts as special courts, after consulting with Chief Justice of the state high courts, to deal with infrastructure cases. The courts are under the obligation to dispose of the cases within a year from date of receipt of summons by the defendant. It is extendable for a period of next six months upon the courts ponderance. This would ensure expedient adjudication of disputes which is a precondition for development and growth (Section 20 B and 20 C of the Amendment Act).
     
  • Appointment of experts: The courts have been given discretionary powers to engage and seek the opinion of experts on any issue as it may deem fit and proper. Such opinion or report will form part of the records of the suit and the court. The experts can be subjected to examination by the parties in open court with the permission of the court. The costs, fees or expenses of the expert shall be payable by the parties in the proportion determined by the court (Section 14 A (1) of the Amendment Act).
India ranks 164th in the World Bank rankings for ‘enforcing contracts’ and at 100 for ‘ease of doing business’. While the changes reflect the Government’s intent to reduce bottle-necks plaguing the infrastructure sector and improve these rankings, this Amendment Act is also likely to reduce litigations and/or expedite the disposal of cases. On the flip side, completely taking away the court’s discretion in granting specific performance may create strange situations where the courts will have to order specific performance irrespective of the incumbent facts and circumstances, which may create unreasonable hardships for the promisor. The Amendment Act also does not specify whether the amendments will be applicable based on the date a contract is signed, is breached or at the time of seeking the relief. Some of these, we believe will get addressed in the course of implementation of the Amendment Act by the courts through judicial pronouncements.

Author: Milind Jha is a Partner with the Firm’s General Corporate & Commercial law practice. He also has rich experience in Aviation and Projects, Infrastructure and Energy law matters.
 
 
Law Firm of the Year Domestic by IDEX Legal Awards 2018.
Ranked # 2 for two consecutive years in Asia (excluding Japan) and Australasia in Project Finance League Table - Dealogic Rankings (January 1- December 31, 2016) and (January 1- December 31, 2017) 
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Recognised as outstanding law firms of 2017-18 in Aviation and Energy, Projects & Infrastructure by India Business Law Journal
Recommended highly in the Aviation, Antitrust and Competition, Banking and Finance, Corporate and M&A, Construction, Infrastructure and Projects & Energy, Dispute Resolution, Restructuring and Insolvency, TMT, Investment Funds, Labour & Employment Practices, Shipping and Maritime Practice Areas by various directories including Chambers and Partners, Legal 500, IFLR1000, Benchmark Asia-Pacific and Asia law. 
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