Article 54: (Art. 113 of the Act of 1908):
The period of limitation for a suit for specific performance of a contract is three years and the time of limitation starts to run from the date fixed for the performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused.
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According to the Contract Act, a ‘contract’ is an agreement enforceable by law. A contract is an agreement between two or more persons by which rights are acquired by one or more parties to define acts or forbearances on the part of other or others. So the contract is an agreement resulting its obligation. The ‘specific performance of a contract’ means its actual execution according to its terms and conditions.
When there is a breach the remedy available to the aggrieved party is damages for which provision has been made under Sections 73 and 74 of the Contract Act and the remedy is the suit for specific performance only in the circumstances as laid down in Chapter II of the Specific Relief Act, 1963.
In State v. Velayudhan, (AIR 1958 Ker. 366), it has been held that the limitation for suit for breach of contract is governed by Art. 55 and the Article 54 governs a suit for specific performance. When a suit is for damages then Article 54 cannot be attracted.
As per Halsbury, specific performance is equitable relief given by the Court to enforce against a defendant the duty of doing what he agreed by contract to do; the plaintiff may, therefore, obtain judgment of specific performance even though there has not, in the strict sense, been default by the defendant before the issue of the writ. The remedy of specific performance is in contrast with the remedy by way of damages for breach of contract, which gives pecuniary compensation for failure to carry out the terms of the contract.
In Dapai v. Dalla, (AIR 1970 All. 206), it has been held that when a suit is filed for recovery of sum due to the plaintiff under a contract which the defendant agreed to pay but refused to pay, the suit for recovery of such sum is a suit for breach of contract attracting Art. 55 and not the Art. 54.
In Khusi v. Munshi, (AIR 1940 Lah. 225), it has been held that when a person who has agreed to execute a lease deed fails to do so, a suit by the promisee for specific performance of the agreement for lease is governed by the Art. 54 and limitation under the Art. 54 commences from the date of refusal to execute the lease deed.