A. Specific Relief Act, 1963 (47 of 1963), Section 14 -- Unilateral termination of the agreement to sell – Scope of –

(i) Unilateral termination of the 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 of 1963;

(ii) 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;

iii) Where a party claims to have valid reasons to terminate or rescind a non-determinable agreement to sell, with a view to err on the side of caution, it should be such terminating party, if at all, who ideally should approach the court and obtain a declaration as to the validity of such termination or rescission, and not the non-terminating party. However, this must not mean that the defendant (the terminating party) in such cases would mandatorily be required to seek a declaration because Sections 27 and 31 of the Act of 1963 respectively, while using the phrase “may sue” merely give an option to any person to have the contract rescinded or adjudged as void or voidable;

(iv) Once the alleged termination of a non-determinable agreement in question is found to be not for bona fide reasons and being done in a unilateral manner on part of the defendant, it cannot be said that any declaration challenging the alleged termination was required on part of plaintiff;

(v) If a contract itself gives no right to unilaterally terminate the contract, or such right has been waived, and a party still terminates the contract unilaterally then that termination would amount to a breach by repudiation, and the nonterminating party can directly seek specific performance without first seeking a declaration; and

(vi) In the event it is found that the termination of agreement to sell by the defendant was not valid, then such an agreement to sell will remain subsisting and executable.

(Para 43)

B. Specific Relief Act, 1963 (47 of 1963), Section 19(b) -- Bonafide purchaser – Failure to make enquiry – Effect of -- Subsequent purchasers had sufficient notice of the facts that an ATS dated 28.04.2000 existed; the names and addresses of the original vendees; that an earnest money amounting to Rs. 2,00,000/- had been paid by the original vendees to the original vendors; that the original vendors had sought to terminate the ATS due to their inability to execute the sale deed in favour of the original vendees on account of a status quo order; that the date of actual termination could not have coincided with the date of notice; and that deemed termination would have arose only if the original vendees had failed to claim the earnest money within one month; and that despite the issuance of the notice of termination in 2003, the original vendees continued to contest the impleadment application in the Original Suit No. 30 of 2001 until 2005 -- These circumstances should have reasonably aroused suspicion or at the very least prompted further inquiry by any prudent bona fide purchaser -- Yet the subsequent purchasers despite having ample opportunity to become aware of these facts abstained from making any such inquiries -- It is therefore beyond cavil that the subsequent purchasers cannot take shelter under Section 19(b) of the Act of 1963.

(Para 81)