Defects could derail the Specific Relief (Amendment) Bill, 2017

The Specific Relief (Amendment) Bill, 2017, introduces sweeping changes to the law concerning the court’s power to grant specific relief in the context of contractual disputes. Though the Bill makes changes to contracts in general, its intended target seems to be infrastructure contracts.

A key intent of the Bill seems to be to tackle infrastructure projects stuck in different stages of litigation. A new provision, Section 20A, prevents a court from granting an injunction in cases where such an injunction would hinder or delay infrastructure projects of the categories listed out in a Schedule introduced into the law. The Union government has also been empowered to amend the Schedule from time to time.

The other critical change sought to be introduced is the creation of special courts to tackle suits involving infrastructure projects within a timeline of a maximum of 18 months (including extensions). However, there are serious concerns whether the Bill will have the intended effect.

Problems with the bill

The first glaring and obvious problem is the conflict of interest issue. The government, often a party to infrastructure contracts, has the power to decide whether or not the amended law should apply to a specific infrastructure project. The discretionary power granted to the government to add new infrastructure sectors to the Schedule is wide and unguided. The use of this power could seriously prejudice the other party as it could foreclose the option of obtaining an injunction to preserve its rights.

The clause relating to the injunction is another problem with the Bill. It is poorly drafted and confuses two different kinds of injunctions as they are understood in law. The first kind, and the one which is more often used is the temporary injunction awarded under Order XXXIX of the Code of Civil Procedure, 1908, and is intended to operate during the course of a litigation to ensure status quo. The second kind of injunction (a permanent or mandatory injunction) is usually what a successful party obtains after winning a claim, and is part of the court’s final judgement and order. Section 20A talks about injunctions in the contexts of suits filed under the Specific Relief Act, 1963, without specifying which of the two it is talking about. 

A third problem has to do with the fact that this law seems to have been drafted with no reference to the existing Comm­er­cial Courts, Commercial Divisions and Commercial Appellate Divisions of High Courts Act, 2016. The effect of this is that both these laws effectively deal with the same kind of dispute with no clarity on which will prevail over the other. A “commercial dispute” under the Commercial Courts Act is wide enough to cover every kind of contractual dispute, including those related to infrastructure projects. What happens to cases pending in the Comm­ercial Divisions of the High Courts and in Commercial Courts? It is also not clear if pending cases be transferred to the set up under this law. 

That also raises a fourth problem with the present bill — special courts. Enough studies have shown that simply creating such courts with no accompanying changes in the procedure, training or infrastructure serves absolutely no purpose. Whether for criminal or civil purposes, special courts are nothing but regular courts with a different designation. 

The deeper, underlying problem with the Bill, however, is a misdiagnosis of the problem. As the government’s own numbers indicate no large-scale industrial project is currently being held up because of contractual issues or court cases. A far greater majority are held up as a result of land acquisition difficulties and failure to obtain clearances under environmental laws. Such delays are the government’s own failings and cannot be attributed to the courts or contractors. Though there was a need to update some aspects of the law on specific relief (which had not been amended since 1963), it is not clear what the problems that the provisions relating to infrastructure projects are trying to solve.

Whether the Expert Commi­ttee took cognizance of this empirical data is not clear. No copy of the committee’s report is available in the public domain. There is little to suggest that the committee undertook wide-ranging deliberations on this law. It is not even clear if all the members of the committee signed on to the report. 

It is deeply unfortunate that this Bill was passed with little or no discussion in the Lok Sabha. One hopes that at least the Rajya Sabha might take note of the obvious problems with this Bill.

Chandrashekaran and Kumar are senior resident fellows at the Vidhi Centre for Legal Policy