A termination clause is a standard clause in a commercial contract that may allow a party to exit without cause. A "determinable" contract, therefore, throws up the issue of whether a court can restrain termination of a contract via an injunction under Section 9 of the Arbitration and Conciliation Act, 1996, at the stage of pre-arbitration interim reliefs. The issue routinely arises in transactions for the sale/ purchase of property where a seller seeks to terminate the agreement for sale and the buyer applies to the court for specific performance and to prevent the seller from terminating the agreement. The seller usually invokes a defence under the laws of specific performance that specific performance cannot be granted for any agreement that can be terminated.

Section 14(d) of the Specific Relief Act, 1963 (SRA) bars specific performance of a determinable contract. The rationale behind section 14(d) is that if a court were to grant specific performance and/ or prevent termination, a subsequent termination would have the effect of nullifying the court order. Courts, however, grant relief where the subject matter of the contract is unique, damages may be inadequate, or negative covenants have been breached. This article summarises some of the important case laws on the issue, demonstrating that a party to a determinable contract can secure an interim injunction in certain scenarios.

A determinable contract, as per Section 14(d) of the SRA is a contract which is terminable by either party to the contract without reason. Section 14(d) bars specific performance of a determinable contract.

In Indian Oil Corporation Ltd. v. Amritsar Gas Service (1991 (1) SCC 533), a three-judge Bench of the Supreme Court declined specific performance of a distributorship agreement terminable without cause, deeming it inherently determinable.

In TO Abraham v. Jose Thomas, (2017) 4 KLT 1023), a Division Bench of the Kerala High Court took a view that "inherently determinable” used in erstwhile Section 14(1)(c) means that the contract can be terminated by either party without reason.

In Murugan v Rainbow Foundation, a Single Judge of the Madras High Court sought to distinguish an "inherently determinable" contract from a contract terminable in certain situations, including breach. The Single Judge interpreted the phrase “inherently determinable” used in erstwhile Section 14(1)(c) to be a contract which is by nature determinable, and not any contract that may be determined. The Single Judge expressed the same view in Jumbo World Holdings v Embassy Property Developments, which was upheld by a Division Bench of the Madras High Court in Jumbo World Holdings, and by the Supreme Court (see Jumbo World Holdings, MANU/SCOR/29272/2025).

The issue arises in arbitration proceedings when a party seeks interim measures under Section 9 of the Arbitration and Conciliation Act, 1996.  Section 9 of the Arbitration Act empowers a court to grant "just and convenient" interim measures before, during, or post-arbitration (pre-enforcement). Yet, SRA constraints apply. The general rule, as established in Rajasthan Breweries Ltd. v. Stroh Brewery Co. (AIR 2000 Del 450), is that a commercial agreement is terminable by reasonable notice, even without an explicit termination clause. Wrongful termination entitles an aggrieved party to claim damages, not injunction or specific performance. Section 9(1)(ii)(e) of the Arbitration Act cannot override SRA Sections 14(1)(c) and 41(e), limiting interim relief in determinable contracts.

Section 42 of the SRA offers a critical exception: Courts may enjoin breaches of negative covenants (express or implied) even if positive obligations are unenforceable. This preserves contractual integrity in contracts involving exclusive distribution, confidentiality, or non-compete agreements where damages are inadequate. Indian courts have developed exceptions based on the contract’s "peculiar nature," as seen in these illustrative cases:

Uniqueness of Subject Matter: In Frankfinn Aviation Services Pvt. Ltd. v. B.C. Gupta (2007 SCC OnLine Del 1981), a Single Judge of the Delhi High Court upheld an injunction for a unique Airbus training fuselage, unavailable elsewhere in India. Citing substantial investments, legal liabilities, and reputational harm, the court invoked the Explanation to Section 10, which permits relief for items of special value.

Inadequacy of Damages and Negative Covenants: In Vijaya Minerals Pvt. Ltd. v. Bikash Chandra Deb (AIR 1996 Cal 314), a Single Judge of the Calcutta High Court ordered specific performance for location-specific manganese and iron ores, tied to a negative covenant barring third-party sales. The ores’ non-commodity status and restrictive terms rendered damages inadequate.

Special Business Value: In Jabalpur Cable Network v. ESPN Software India Pvt. Ltd. (AIR 1999 MP 271), a Single Judge of the Madhya Pradesh High Court granted interim relief to prevent termination of broadcasting signals, deemed irreplaceable and unavailable in the market, averting irreparable harm.

These cases highlight four  factors which a Court may take into account to grant specific performance of a determinable contract:

1. Unique Subject Matter: Goods or services not readily substitutable (eg: rare ores, specialized equipment).

2. Inadequate Damages: Monetary compensation fails to address business disruption or reputational loss.

3. Integral Negative Covenants: Restrictions (eg, non-compete clauses) tied to affirmative duties.

4. Status Quo Preservation: Injunctions maintain existing arrangements without enforcing the entire contract.

Courts address the issue of interim relief in determinable contracts using judicial discretion in the facts and circumstances. While laws of specific performance bar grant of injunction to restrain termination, a court may intervene when contracts involve unique subject matter, inadequate damages, or enforceable negative covenants. By balancing statutory constraints with commercial pragmatism, Indian courts ensure that determinable contracts are not wholly immune to interim injunctions.

About the authors: Ajay Bhargava is a Senior Partner and Nandita Chauhan is a Principal Associate at Khaitan & Co.

Views expressed are personal.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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