Research- Determinable Contracts

Short Definition: The word "determinable" used in clause (c) to Subsection (1) of Section 14
of the Specific Relief Act, 1963 (the "Act") means that which can be put an end to.

Long Definition: It is to be noted that if any contract entitles either party to terminate a
contract for convenience subject to notice period then as per the provisions of the Act and
precedents, such a contract may qualify as "determinable"; hence, not capable of being
specifically enforced. Meaning thereby, in such cases specific performance may not be 'the'
remedy, but a claim for compensation could be resorted to. Further, it should be borne in
mind that even when contract is determined prior to its stipulated term, the performing (non-
terminating) party should get paid in proportion to the obligations fulfilled by such party.
NOTE: In our case, the term agreement does not have a ‘termination’ agreement, and hence
should not be considered as ‘determinable’.

CASE LAW
1. Rattan Lal (since deceased) v. S.N. Bhalla and Anr.
AIR 2012 SC 3094
DHC
Comment: In a matter titled Rattan Lal (since deceased) v. S.N. Bhalla and Anr. the
Hon'ble High Court of Delhi observed an agreement to sale with a clause that the same
shall be terminated if the requisite approvals are not received within six months, to be
determinable and hence, not specifically enforceable under the Act. However, the
Supreme Court in its decision of the appeal against Delhi High Court's decision observed
that the relevant clause of the agreement in question was never meant to provide the
obligated party with an escape route if they themselves failed to discharge their
responsibility and that in the absence of any material on record to show that they had
made positive efforts for procuring the necessary sale permission and clearance
certificates, they were not entitled to determine the Agreement and hence the agreement
was held to be wrongly terminated. But due to the step hike in the real estate prices the
Court instead of decreeing the suit for specific performance decreed the suit for costs to
the Appellant.
Source Link: https://www.mondaq.com/india/contracts-and-commercial-
law/408322/determinable-contracts

2. T.O. Abraham v. Jose Thomas & Ors.

Kerala HC
(2018) 1 KLJ 128
Comment: The Kerala High Court assigned a more plausible meaning to the term
‘determinable’ in T.O. Abraham v. Jose Thomas & Ors. In a suit for specific performance

1
 of an agreement for sale of equity shares, the court laid down the following principles: (a)
for a contract to become determinable, the defendant has to first show that its clauses and
terms are such that it would become possible for either of the parties to terminate it
without assigning any reason, and (b) a contract which can be terminated by either of the
parties at their own will, without assigning any further reason and without having to show
any cause, is inherently determinable.

3. Turnaround Logistics (P) Ltd. v. Jet Airways (India) Ltd. & Ors.
DHC
MANU/DE/8741/2006: (OS) 574/2006
Comment: In Turnaround Logistics (P) Ltd. v. Jet Airways (India) Ltd. & Ors., the Delhi
High Court held that all revocable deeds and voidable contracts are determinable
contracts. It held that specific performance of such agreements would not be granted
because the court will not go through the idle ceremony of ordering the execution of a
deed or instrument, which is revocable and ultimately cannot be enforced. The court also
held that not only voidable contracts, but even contracts which provide for termination on
the happening of a particular event would be determinable in nature.