Contracts Terminable For Breach With Cure Period Not Determinable: Delhi High Court

The Delhi High Court has recently observed that a contract which permits termination only for material breach and subject to a mandatory cure period is not “in its nature determinable” under Section 14(d) of the Specific Relief Act.

Justice Harish Vaidyanathan Shankar stayed the operation and effect of the termination notice dated January 2, 2026, issued by Pushpawati Singhania Research Institute (PSRI) to Mahajan Imaging Pvt Ltd. He also directed both sides to maintain status quo until the dispute is decided through arbitration.

Mahajan Imaging and PSRI had signed a 15-year Radiology Services Agreement on May 2, 2016. The agreement is valid until May 2, 2031. Under it, Mahajan Imaging was to establish, manage and operate the radiology department at PSRI's hospital.

Clause 10 of the agreement governs termination. Clause 10.2(a) permits termination only in the event of a material breach. It requires the party alleging breach to issue a written notice. The breaching party must be given 45 days to remedy the breach before termination can take effect.

On January 2, 2026, PSRI issued a termination notice alleging contractual and statutory violations. The notice stated that the agreement would stand terminated with effect from February 2, 2026.

Mahajan Imaging moved the High Court under Section 9 of the Arbitration and Conciliation Act, seeking interim protection pending arbitration.

In response, PSRI contended before the Court that the agreement was “determinable” within the meaning of Section 14(d) of the Specific Relief Act. It contended that since the agreement contained a termination clause, it could not be specifically enforced, and no injunction could be granted.

Mahajan Imaging argued that not every contract containing a termination clause is determinable. It submitted that contracts which can be terminated at will or without cause are regarded as determinable in law. In the present case, termination was permitted only for material breach and subject to a mandatory 45-day cure period.

The Court examined Section 14 of the Specific Relief Act and the termination clause in the agreement. It relied on the principles laid down by the Supreme Court in K.S. Manjunath and other precedents.

The Court clarified that only those contracts which can be revoked at will, or terminated unilaterally without cause, are treated in law as determinable. By contrast, contracts that can be ended only for breach and after giving notice and an opportunity to cure do not fall in that category.

Applying this principle, the Court held that Clause 10.2(a) does not give either party an unfettered or at-will right to terminate the agreement.The right to terminate is contingent upon the occurrence of a material breach. It is further subject to issuance of a written notice granting a 45-day cure period.

The Court observed:

“Clause 10.2(a) of the present Agreement does not confer an unfettered, unilateral, or at-will right of termination. The right to terminate is expressly contingent upon the occurrence of a material breach and is further circumscribed by the mandatory requirement of issuance of a written notice granting a cure period of forty-five (45) days.”

The Court further held that the mere existence of such a clause does not render a contract determinable. It stated:

“The mere existence of such a clause, particularly one conditioned upon the occurrence of breach and compliance with a cure mechanism, cannot operate as a statutory embargo against consideration of interim protection.”

On the facts, the Court observed that even assuming breaches were alleged, the contractual requirement of granting a 45-day cure period had to be followed. It noted:

“In the considered opinion of this Court, the impugned act of termination appears to have been effected in undue haste, placing the cart before the horse, and is prima facie not in consonance with the procedure and safeguards expressly incorporated in the Agreement.”

The Court also rejected the argument that the relief sought was barred under Section 14(b) of the Specific Relief Act on the ground of continuous supervision. The Court noted that the relief sought was confined to protecting the agreement from termination until the disputes are decided in arbitration, and did not involve the Court stepping in to supervise the day-to-day performance of the contract.

Applying the settled principles for grant of interim relief under Section 9, the Court found that Mahajan Imaging had made out a prima facie case. It observed that a premature termination could result in harm that may not be adequately compensated by damages, and that the balance of convenience lay in favour of granting protection.

In view of this, the High Court stayed the operation and effect of the termination notice dated January 2, 2026, and directed both parties to maintain status quo pending the arbitral proceedings.

For Petitioner (Mahajan Imaging Pvt Ltd): Senior Advocate Sandeep Sethi with Advocates Varun Shankar, Ishita Dahiya, Harsh Rastogi, Ujjwal Barwal, Krishna Gambhir, Naman Maheshwari, Shreya Sethi and Riya Kumar

For Respondents (Pushpawati Singhania Research Institute & Anr.): Senior Advocate Rajeev K. Virmani with Advocates Ritu Bhalla, Siddhartha Das, Himanshu Goel, Siddharth Gautam, Shriya Gambhir and Diva Saigal