Question

A contracts with B to construct a cold storage facility for 50 lakh within 6 months. After the expiry of the time period, B fails to perform the contract. A immediately hires C to complete the construction at 60 lakh and later files a suit against B claiming 10 lakh as the additional cost incurred. Which of the following statements is correct under the Specific Relief Act, 1963?

• A. A can recover only if the court first declares B guilty of breach.
• B. A must sue only for damages and not substituted performance.
• C. A can recover 10 lakh because B breached the contract.
• D. A cannot recover the cost because A did not give B prior notice.

Hint:

Remember the formula for substituted performance: \[ \text{Recoverable Amount} = \text{Cost of substitute performance} - \text{Original contract price} \] If the substitute costs more because of the promisor's breach, the difference can generally be recovered from the defaulting party.

Answer 1

The Correct Option is C

Step 1: Read the facts.
A hires B to build a cold storage for 50 lakh in 6 months. B fails. A at once hires C, who finishes it for 60 lakh. A then sues B for the extra 10 lakh. We must find the correct position under the Specific Relief Act, 1963.

Step 2: Know the key idea of substituted performance.
The Specific Relief (Amendment) Act, 2018 added Section 20A which deals with substituted performance. It allows an innocent party, when the other side breaks the contract, to get the work done by a third person and then recover the extra cost from the party who defaulted.

Step 3: Confirm there was a breach.
A and B had a valid contract for 50 lakh. B did not finish within the agreed time. That failure is a breach. Once B broke the contract, A could use the remedies the law gives him.

Step 4: Apply substituted performance.
Instead of waiting for B, A got C to complete the project. A paid C 60 lakh while the deal with B was 50 lakh. The extra amount is 60 lakh minus 50 lakh, which is 10 lakh. This extra cost arose only because B broke the contract.

Step 5: See what A can recover.
The aim of substituted performance is to put the innocent party in the same position as if the contract had been done properly. So A can recover the extra 10 lakh he had to spend because of B's default.

Step 6: Check the wrong options and conclude.
Option (A) is wrong because a separate court declaration of breach is not needed first. Option (B) is wrong because substituted performance is now allowed by the amended Act. Option (D) is wrong because the facts assume the substitute work was validly done. So A can recover 10 lakh because B breached the contract.
\[ \boxed{\text{A can recover 10 lakh because B breached the contract.}} \]