Rein on court role in projects
New Delhi: The Union government on Friday introduced an amendment bill seeking to bar courts from granting injunctions in contract disputes involving central infrastructure projects that can hinder or delay the project.
The proposed Section 20A, sought to be added to the Specific Relief Act of 1963, also seeks to set up special courts to try such disputes within 12 months, with the possibility of a six-month extension after the court records the reasons.
Under the 1963 act, which relates to the enforcement of written as well as unwritten contracts, courts can take a wide array of decisions, from decreeing "specific performance" (full implementation of the contract) to awarding damages for cost escalation because of delay.
Defending the amendment, the Centre said the courts now "in majority cases award damages as a general rule and grant specific performance as an exception".
"It is proposed to do away with the wider discretion of courts... and to make specific performance of contract a general rule (rather) than (an) exception subject to certain limited grounds," the bill says.
It adds that the 1963 act is not in tune with the rapid economic growth happening in the country and the expansion of infrastructure that has become necessary. Commercial activities such as FDI, public-private partnerships and the like require extensive legal reforms to facilitate the enforcement of contracts and quick settlement of disputes.
The bill proposes to allow "substituted performance of contracts", which means that "where a contract is broken, the party who suffers would be entitled to get the contract performed by a third party or by his own agency and to recover expenses and costs, including compensation from the party who failed to perform his part of contract".