Is Suit For Specific Performance Maintainable Even Without Seeking Declaration That Termination Of Contract Was Invalid?: Supreme Court Answers

The Supreme Court has explained whether the Suit for specific performance is maintainable even without seeking declaration that termination of contract was invalid in law.

The Court was deciding Civil Appeals arising from two Suits instituted for specific performance of agreement for sale.

The two-Judge Bench comprising Justice J.B. Pardiwala and Justice Manoj Misra observed, “For example, a contract may give right to the parties, or any one of the parties, to terminate the contract on existence of certain conditions. In terms thereof, the contract is terminated, a doubt over subsistence of the contract is created and, therefore, without seeking a declaration that termination is bad in law, a decree for specific performance may not be available. However, where there is no such right conferred on any party to terminate the contract, or the right so conferred is waived, yet the contract is terminated unilaterally, such termination may be taken as a breach of contract by repudiation and the party aggrieved may, by treating the contract as subsisting, sue for specific performance without seeking a declaratory relief qua validity of such termination.”

The Bench said that a declaratory relief would be required where a doubt or a cloud is there on the right of the Plaintiff and grant of relief to the Plaintiff is dependent on removal of that doubt or cloud, however, whether there is a doubt or cloud on the right of the Plaintiff to seek consequential relief, the same is to be determined on the facts of each case.

AOR M.P. Parthiban represented the Appellant, while AOR Priya Aristotle represented the Respondents.

Court’s Observations

The Supreme Court in view of the facts of the case, noted, “… what is clear is that though a plea regarding maintainability of the suit, even if not raised in written statement, may be raised in appeal, particularly when no new facts or evidence is required to address the same, the issue whether a declaratory relief is essential or not would have to be addressed on the facts of each case.”

The Court enunciated that in a case where the contract between the parties confers a right on a party to the contract to unilaterally terminate the contract in certain circumstances, and the contract is terminated exercising that right, a mere suit for specific performance without seeking a declaration that such termination is invalid may not be maintainable.

“This is so, because a doubt /cloud on subsistence of the contract is created which needs to be cleared before grant of a decree enforcing contractual obligations of the parties to the contract”, it added.

The Court further said that the Plaintiff had an option to treat the contract as subsisting and sue for specific performance more so when termination was a void act, no longer permissible under the varied contract, and, therefore, the suit for specific performance was maintainable even without seeking a declaration that termination of the contract was invalid in law.

Conclusion

The Court also held that the High Court’s conclusion that Plaintiff had set up a false case of additional payment is unsustainable and, therefore, cannot be a ground to decline discretionary relief of specific performance.

“We are, therefore, of the firm view that this was not a fit case where discretionary relief of specific performance should have been denied. … the High Court erred in law by interfering with the decree of specific performance passed by the first appellate court”, it concluded.

Accordingly, the Apex Court allowed the Appeals, set aside the High Court’s Judgment, restored that of the First Appellate Court, and directed the Appellant to deposit the balance amount in the Execution Court within one month.

Cause Title- Annamalai v. Vasanthi and Others (Neutral Citation: 2025 INSC 1267)

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