Compensation in lieu of or in addition to the relief of specific performance cannot be granted unless specifically prayed for.

In the matter of Universal Petro Chemicals Ltd. VS. B. P. PLC & Ors, Civil Appeal No. 3127 of 2009, decided by the Hon’ble Supreme Court of India on 18.02.2022.

Facts of the Case-

The Appellant entered into a Collaboration Agreement with Respondent No. 3 in 1994 by which the Appellant was given exclusive license regarding distribution, blending, rebranding and marketing of Aral lubricants in India. The Appellant obtained approval from GOI to extend the said collaboration agreement till 31.12.2009 and this approval was made an integral part of the collaboration agreement by execution of a supplementary agreement.

R3 however, issued a termination notice dated 14.04.2004 on the ground that the Collaboration Agreement would come to an end on 31.04.2004 as per Clause 5 of the said Agreement. Against this notice, the Appellant filed a civil suit for decree of specific performance and perpetual injunction. The Ld. Single Judge granted the decree of injunction, however, refused the decree of specific performance in view of the bar in sec 14(1)(b) of Specific Relief Act, 1963 because the contract involves performance of the future unspecified obligations and duties, and it would not be possible for the Court to enforce specific performance of the material terms of the contract. These findings were upheld by the Division Bench in Appeal.

Contentions of the Parties-

Before the Apex Court, it is the case of the Appellant that the relief of specific performance of the Collaboration Agreement cannot be granted as the agreement expired on 31.12.2009, however, the Appellant is entitled for damages even though such a relief was not specifically sought for either in the suit or appeal. He referred to the proviso to Sec 21(5) of SRA to contend that Appellant should be allowed to seek compensation at any stage of the proceeding.

Respondent No. 3 on the other hand contended that the Appellant did not raise the ground of payment of damages or seek to amend the relief during the pendency of this appeal for the past 13 years and is therefore not entitled for any such relief.

Observations of the Court-

The only issue that came before consideration of the Apex Court is whether the Appellant is entitled for damages. The Court observed that it is an admitted position of the Appellant that the relief for damages or compensation was neither claimed before the trial court nor before the appellate court.

In regard to the scope of sec 21(5), the Court relied on its earlier judgment in the matter of Shamsu Suhara Beevi v. G. Alex and Anr (2004) 8 SCC 569, wherein the Apex Court had referred to the Law Commission of India’s recommendation that in no case the compensation should be decreed, unless it is claimed by a proper pleading. However, the Law Commission was of the opinion that it should be open to the plaintiff to seek an amendment to the plaint, at any stage of the proceedings in order to introduce a prayer for compensation, whether in lieu or in addition to specific performance. The Apex Court in that case has held that ‘compensation u/s 21 in addition to the relief of specific performance in the absence of prayer made to that effect either in plaint or by amending the same at any later stage, cannot be granted. Grant of such a relief is in the teeth of express provisions of the statute to the contrary is not permissible’.

The Court in the present matter also noted that though the Appellant was interested in the relief of specific performance of the Collaboration Agreement when he filed the SLP in 2008 as the agreement subsisted till 31.12.2009, however, even thereafter no steps were taken by the Appellant to specifically plead the relief of damages or compensation. Therefore, the Court held that the Appellant is not entitled to claim damages as asked for.