In a significant ruling, the Hon’ble Supreme Court has recently interpreted the Specific Relief Act, 1963 (the “Act”), particularly in terms of S.14 of the Act. Referring to a catena of cases, the court held that a unilateral termination of an agreement to sell by one party is impermissible in law except in cases where the agreement itself is determinable in nature in terms of Section 14 of the Act. 

On possible implications of a contrary interpretation, the Court observed as under: 

“43…If such unilateral termination of a non-determinable agreement to sell is permitted as a defence, then virtually every suit for specific performance can be frustrated by the defendant by placing an unfair burden on the plaintiff, who despite performing his part of the obligations and having showcased readiness and willingness, would require to also seek a separate declaration that the termination was bad in law. In such cases, the burden cannot be casted upon the plaintiff to challenge the alleged termination of agreement..”

On the course of action available to the non-terminating party, the Court also held that in the event of unilateral termination of a non-determinable contract, the non-terminating party can directly seek specific performance without first seeking a declaration. 

Keeping in line with the broader principle that specific performance cannot be defeated by unilateral termination unless the contract itself allows such action, the Supreme Court affirmed the High Court’s decree that the plaintiffs were entitled to specific performance of the agreement to sell, thereby directing the subsequent purchasers to execute requisite sale deeds and deliver possession.