Specific Performance, Determinability & the Supreme Court’s Ruling in KS Manjunath v. Moorasavirappa
I. Introduction
When a party to a contract fails to perform, the innocent party may claim damages under the Contract Act,
1872 or compel actual performance under the Specific Relief Act, 1963 (‘the Act’). The 2018 Amendment
to the Act converted specific performance from a discretionary remedy into the general rule: courts ‘shall’
enforce contracts, subject only to the exceptions in Sections 11(2), 14, and 16.
The most frequently weaponised exception is Section 14(1)(d), which bars specific performance of ‘a
contract which is in its nature determinable.’ For decades, courts disagreed sharply on what ‘determinable’
means — whether it covers every contract with any termination clause, or only contracts terminable at the
unfettered will of a party without assigning any reason. The Supreme Court’s ruling in
KS Manjunath v. Moorasavirappa (Civil Appeal Nos. 13507–13508 of 2025) has finally settled this
question.
II. The Statutory Framework
Under the old regime, Section 20(1) vested wide discretion in courts (‘may, in its discretion’), treating
damages as the primary remedy and specific performance as exceptional. The Specific Relief (Amendment)
Act, 2018 replaced ‘may’ with ‘shall’, making specific performance the presumptive remedy — subject to
enumerated bars in Section 14. The Supreme Court affirmed this shift in B. Santoshamma v. D. Sarala
[(2020) 19 SCC 80].
Section 14 bars specific performance of: (a) contracts where substituted performance has been obtained;
(b) contracts requiring continuous court supervision; (c) contracts dependent on personal qualifications
of parties; and (d) contracts in their nature determinable. It is (d) that generates the most litigation,
because defendants routinely invoke it to argue that any contract they can terminate is immune from
specific performance — a reading that, if accepted, would hollow out the 2018 Amendment entirely.
Additionally, Section 16(c) requires the plaintiff to prove continuous readiness and willingness to perform
their obligations — a condition the Supreme Court in C.S. Venkatesh v. A.S.C. Murthy [(2020) 3 SCC 280]
confirmed must be demonstrated through conduct throughout the period from agreement to suit.
III. The Foundational Precedent: Indian Oil (1991) and Its Ambiguity
The Supreme Court first considered determinability in Indian Oil Corporation Ltd. v. Amritsar Gas Service
[(1991) 1 SCC 533]. A distributorship agreement contained two termination provisions: one triggered by
misconduct or specified events, and one permitting either party to terminate on 30 days’ notice without
any reason. The Court held the agreement determinable and denied specific performance, awarding only
damages for the 30-day notice period.
Crucially, the Court did not specify which clause made the contract determinable. This ambiguity allowed
later courts to read the judgment expansively — as if any termination clause (or even the general nature of
commercial contracts) sufficed — rather than narrowly, i.e., that it was the at-will clause alone that
mattered. That interpretive fork in the road produced three decades of contradictory rulings.
IV. The High Court Divergence
Delhi: The Expansive View
The Delhi High Court (Division Bench) in Rajasthan Breweries Ltd. v. Stroh Brewery Co. [2000 SCC
OnLine Del 481] held that contracts with event-based termination clauses were determinable — and went
further, ruling that even contracts with no termination clause at all were determinable by virtue of being
private commercial transactions, terminable on reasonable notice. Only damages, never specific
performance, was available. This sweeping position was followed in Turnaround Logistics v. Jet Airways
[2007 SCC OnLine Del 2085] and Inter Ads Exhibition v. Busworld International [2020 SCC OnLine Del
351], among others.
The Delhi High Court was, however, internally inconsistent. In DLF Home Developers v. Shipra Estate Ltd.
[2021 SCC OnLine Del 4902] and Affordable Infrastructure v. Segrow Bio Technics [2022 SCC OnLine Del
4436], coordinate benches held that a contract which cannot be terminated so long as the other party
remains ready and willing to perform is not determinable — aligning with the narrower view.
Kerala, Bombay, and Madras: The Narrower View
Kerala HC in T.O. Abraham v. Jose Thomas [2017 SCC OnLine Ker 19872] held that for a contract to be
determinable, the defendant must show that its terms allow either party to end it without assigning any
reason. Bombay HC in Narendra Hirawat v. Sholay Media Entertainment [2020 SCC OnLine Bom 391]
adopted the memorable formulation that a determinable contract is one terminable at the ‘sweet will’ of
a party — without reference to breach, external event, or any reason whatsoever. This was reaffirmed in
Kheoni Ventures v. Rozeus Airport Retail [2024 SCC OnLine Bom 773].
Madras HC in Jumbo World Holdings v. Embassy Property Developments [2020 SCC OnLine Mad 61]
contributed the most structured analysis: a five-category taxonomy of contracts ranked by ease of
termination. Categories I (inherently revocable relationships, e.g., partnerships at will) and II (at-will, no
fault termination) are determinable. Categories IV (cause + notice + cure) and V (no clause; breach of
condition only) are not. Category III (immediate termination for cause, no cure) is generally not
determinable, though ease of termination may factor into the court’s equitable assessment.
The Madras Court’s observation was pointed: if every contract with any termination clause were treated as
determinable, virtually no commercial contract could be specifically enforced — an absurd result entirely
at odds with the 2018 Amendment.
V. KS Manjunath v. Moorasavirappa: The Supreme Court Settles the Law
Facts
An agreement for sale of immovable property was executed in April 2000. The purchasers paid an advance,
obtained land use conversion, and arranged relocation of tenants in possession. The vendors then
purported to terminate unilaterally — citing pending litigation and the death of a co-vendor — and sold the
property to third parties. The purchasers sued for specific performance. Both the Trial Court and the
Karnataka High Court decreed specific performance. The vendors and third-party purchasers appealed to
the Supreme Court, raising (inter alia) the determinability bar.
The Supreme Court’s Ruling
The Supreme Court upheld the decree of specific performance and settled the law in clear terms:
Not all terminable contracts are ‘determinable.’ A contract is determinable only if a party can
terminate it at its sweet will, without assigning any reason or cause, even where the other party
is ready and willing to perform the agreement. Contracts terminable only upon breach or
occurrence of specified events are not determinable in nature, and can be specifically performed.
The Court reviewed the full run of authorities and the Kerala, Bombay, Madras, and Delhi High Court
decisions — and endorsed the narrower, at-will formulation. Since the agreement before it had no at-will
termination clause, and the purchasers had continuously been ready and willing to perform, it was
specifically enforceable. The Karnataka High Court’s decree was affirmed.
VI. Key Implications
- Pro-enforcement mandate preserved: A broad reading of Section 14(1)(d) would have negated the
- 2018 Amendment, since most commercial contracts contain some termination provision. The ruling
- gives the Amendment real operational content.
- Forum-shopping curtailed: The previous doctrinal inconsistency had made jurisdiction-choice
outcome-determinative for specific performance claims involving termination clauses. A uniform
national standard now applies. - Tactical terminations foreclosed: The common tactic of serving a termination notice after a suit is
filed — to argue the contract has become determinable — is unavailable where the contract contains
no at-will clause. - Drafting implications: Parties seeking immunity from specific performance should ensure their
termination clause genuinely permits at-will termination. A clause that requires a contractual
trigger (breach, event, default) will not suffice.
VII. Conclusion
KS Manjunath v. Moorasavirappa closes a three-decade chapter of doctrinal uncertainty. The governing
test is now unambiguous: a contract is ‘in its nature determinable’ under Section 14(1)(d) of the Specific
Relief Act, 1963 only if a party may terminate it at will — without cause, without a specified event, without
reference to the other party’s default. Contracts terminable solely for cause remain specifically enforceable.
The ruling is doctrinally sound, commercially sensible, and faithful to the legislative intent of the 2018
Amendment. For practitioners, the first question in any specific performance dispute involving a
termination clause must now be: does this clause truly permit termination without any reason? If not, the
determinability defence fails — and the court shall enforce the contract.
