Procedural Compliance Mandated: High Court Stays Unlawful Termination of Service Agreement and Directs Strict Adherence to Contractual Cure Mechanism
Interim Relief Granted on Procedural Grounds: High Court Stays Radiology Services Agreement Termination Pending Arbitral Adjudication of Disputes
Delhi High Court
Justice Harish Vaidyanathan Shankar
February 26, 2026
Read the Judgment here
I. Introduction
The present judgment, delivered by the Hon’ble Mr. Justice Harish Vaidyanathan Shankar in the High Court of Delhi at New Delhi, concerns a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996. The petitioner, Mahajan Imaging Pvt Ltd, sought urgent interim measures against the respondents, Pushpawati Singhania Research Institute & Anr., primarily to restrain the operation and effect of a termination notice issued by the respondents for a Radiology Services Agreement. The core of the dispute revolves around the determinability of the contract and the validity of its termination.
II. Facts and Background of the case
The petitioner, Mahajan Imaging Pvt Ltd, a company incorporated under the Companies Act, 1956, and Respondent No. 1, Pushpawati Singhania Research Institute, a healthcare sector company, entered into a Radiology Services Agreement on May 2, 2016. This Agreement, with a term of fifteen years, entrusted the petitioner with the responsibility of establishing, managing, and operating the Radiology Department at Respondent No. 1’s hospital premises. The petitioner was obligated to provide competent and uninterrupted radiology services, ensure equipment met prescribed standards, and maintain all necessary statutory permits and licenses. The Agreement was set to remain in force until May 2, 2031, with termination provisions outlined in Clause 10, which allowed for termination due to a material breach, subject to a written notice and a forty-five-day cure period. Clause 13 established a dispute resolution mechanism, prioritizing mutual discussions before resorting to arbitration.
After several years of operation, a meeting was convened in December 2025 where Respondent No. 1 expressed its intention to independently operate the Radiology Department from April 1, 2026. Subsequently, communications were exchanged regarding various aspects of the radiological equipment, including commissioning, de-commissioning, servicing, maintenance, and compliance with the Pre-Conception and Pre-Natal Diagnostic Techniques (Prohibition of Sex Selection) Act, 1994 (PC-PNDT Act) and the Atomic Energy Act, 1962.
On January 2, 2026, Respondent No. 1 issued a Termination Notice, alleging breaches of contractual and statutory obligations by the petitioner and stating that the Agreement would be terminated effective February 2, 2026. The petitioner, in its reply dated January 8, 2026, disputed the validity of this notice, arguing that the Agreement was for a fixed tenure and could only be terminated due to a contractual breach or mutual consent, neither of which had occurred.
Alleging violations of contractual obligations, the petitioner approached the Delhi High Court under Section 9 of the Arbitration and Conciliation Act, 1996, seeking urgent interim measures. These measures included an ad-interim injunction against the termination notice, maintenance of status quo regarding the Radiology Department’s operation, management, and functioning, and a prohibitory ad-interim injunction preventing the respondents from creating third-party rights or installing new radiology equipment in the department. The petitioner also sought directions for timely payments and restraint on the respondents from dealing with the petitioner’s machinery and equipment.
III. Arguments
A. Petitioner’s (Mahajan Imaging Pvt Ltd) Arguments
1. Misconception of Determinable Contracts under SRA Section 14(d): The Petitioner argued that the Respondents’ reliance on Section 14(d) of the Specific Relief Act, 1963 (SRA) was entirely misplaced. They contended that not every contract containing a termination clause is inherently determinable. To support this, the Petitioner cited the Supreme Court’s judgment in *K.S. Manjunath and Others v. Moorasavirappa alias Muttanna Chennappa Batil*, specifically paragraphs 62, 64, and 65, which clarify that the determinability of a contract must be assessed based on its specific terms and the nature of the rights and obligations it creates.
2. Contractual Termination Requires Breach and Cure Period: The Petitioner emphasized that, according to *K.S. Manjunath*, a contract is “in its nature determinable” only if it can be terminated at the unilateral will of a party, without reference to any breach or contingency. In the present case, Clause 10 of the Radiology Services Agreement (RSA) explicitly conditions termination on the existence of a material breach and mandates a 45-day cure period after written notice. Since the RSA does not grant a unilateral or “no-fault” right of termination, the Petitioner argued that it cannot be characterized as inherently determinable under Section 14(d) of the SRA, especially as long as the Petitioner was ready and willing to perform and no established default existed.
3. Misapplication of SRA Section 14(b) Regarding Continuous Duty: The Petitioner further argued that the Respondents’ reliance on Section 14(b) of the SRA was equally unfounded. This section bars specific performance of contracts requiring continuous judicial supervision. The Petitioner asserted that the interim relief sought—preservation of the existing contractual framework and enforcement of negative covenants pending arbitration—does not necessitate continuous judicial oversight or day-to-day monitoring of reciprocal obligations. The Agreement had operated for nearly nine years without such supervision, and the requested protection was limited, thus not attracting the statutory bar of Section 14(b).
4. Allegations of Breach are Misconceived and Unsubstantiated: The Petitioner contended that the Respondents’ claims of “End-of-Life” communications, temporary equipment downtime, and alleged irregularities under the PC-PNDT Act and other legal frameworks were baseless. They argued that the equipment remained licensed, duly maintained, and compliant, and no adverse orders had been issued by any competent authority. The Petitioner characterized these allegations as internal audit observations and selective readings of documents, insufficient to demonstrate fundamental violations warranting the termination of a long-term commercial contract.
5. Impugned Termination Notice is Contractually Invalid: The Petitioner argued that the Impugned Termination Notice was *ex facie* contrary to the contractual mechanism. Even if a breach had occurred, Clause 10.2(a) of the RSA mandatorily required the Respondents to issue a notice granting a 45-day cure period. Since no such cure notice was issued, the termination was arbitrary, in breach of the express terms of the Agreement, and therefore legally unsustainable. The Petitioner asserted that disregarding the foundational requirement of a contractual cure period vitiated the termination and all subsequent actions.
6. Unilateral Determination of Incurable Breaches is Invalid: The Petitioner challenged the Respondents’ unilateral determination that the alleged breaches were “incurable.” They argued that such a determination, made without adhering to the contractual framework and without providing the stipulated cure period, was invalid. The Agreement’s terms required a process for addressing breaches, which the Respondents failed to follow.
7. Satisfaction of Triple Test for Injunction: The Petitioner contended that the well-established “triple test” for granting an injunction was satisfied. They highlighted the irreparable injury that would be caused by the termination, including loss of reputation and erosion of goodwill, which are intangible and cannot be adequately compensated by damages or monetary relief. This irreparable harm, according to the Petitioner, necessitated the Court’s injunctive protection to preserve the status quo pending arbitration.
B. Respondent’s Arguments
1. Statutory Bar to Specific Performance (Section 14(d) of the Specific Relief Act, 1963): The Respondents contended that the reliefs sought by the Petitioner, particularly the injunction against the termination notice and the continuation of the agreement, are statutorily barred by Section 14(d) of the Specific Relief Act, 1963 (SRA). They argued that the Radiology Services Agreement, by virtue of Clause 10 which provides for termination in specified contingencies, is “in its nature determinable.” Citing the judgment in *National Highways Authority of India v. HK Toll Road Pvt. Ltd.*, the Respondents asserted that any contract allowing for termination upon the occurrence of specific events is determinable. Therefore, granting an injunction to stay such a termination would effectively amount to specific enforcement or restoration of a determinable contract, which is impermissible under law.
2. Remedy for Determinable Contracts is Compensation, Not Specific Performance: Building on the argument of determinability, the Respondents further submitted that even if the termination were to be found illegal, the appropriate remedy for the aggrieved party (the Petitioner) would be to seek compensation for wrongful termination, not specific performance of the agreement. They relied on the Supreme Court’s decision in *Indian Oil Corporation Ltd. v. Amritsar Gas Service* and the Delhi High Court’s ruling in *Rajasthan Breweries Ltd. v. Stroh Brewery Co.* to support the proposition that for determinable contracts, specific performance is not an available remedy. Thus, the Petitioner’s prayer to restrain or nullify the termination and continue the agreement is legally untenable.
3. Bar Due to Continuous Supervisory Duty (Section 14(b) of the Specific Relief Act, 1963): The Respondents also argued that the reliefs sought are barred under Section 14(b) of the SRA. They contended that the Agreement involves continuous and reciprocal obligations that require sustained performance over a prolonged period. Granting the requested injunctions would necessitate constant judicial supervision of this performance, which is impractical and impermissible for a court. A contract that requires continuous duties that the court cannot supervise is not specifically enforceable.
4. Petitioner’s Breaches Justified Termination: The Respondents asserted that the Impugned Termination Notice was not arbitrary but was preceded by and founded upon multiple and serious breaches committed by the Petitioner. These breaches included:
Non-compliance with statutory requirements under the Pre-Conception and Pre-Natal Diagnostic Techniques (Prohibition of Sex Selection) Act, 1994 (PC-PNDT Act) and the regulatory framework under the Atomic Energy Act, 1962.
Operation and continued use of equipment that had reached its “end-of-life” and “end-of-support” status.
Failure to obtain or update requisite registrations and endorsements for the installation and transfer of equipment.
Engagement of unauthorized service agencies for maintenance.
Disruption of uninterrupted radiology services due to the non-functioning of critical equipment.
The Respondents argued that these cumulative violations constituted fundamental breaches of the Agreement, thereby justifying their decision to terminate the contract.
IV. Court’s Reasonings
1. Limited Scope of Section 9 Jurisdiction: The Court began by emphasizing the limited nature of its jurisdiction under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act). It clarified that this power is interim and protective, aimed at preserving the subject matter of arbitration and safeguarding the efficacy of the arbitral process. The Court’s role at this stage is to assess whether the well-established parameters for granting interim relief—prima facie case, balance of convenience, and likelihood of irreparable injury—are met. It cited ArcelorMittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd. (2022) and Essar House Pvt. Ltd. v. Arcelor Mittal Nippon Steel India Ltd. (2022) to underscore that interim relief applications require urgent disposal to prevent irreparable harm and ensure the arbitral award is not rendered infructuous.
2. Determinability of the Agreement under Section 14(d) of the SRA: The central controversy revolved around whether the Radiology Services Agreement was “in its nature determinable” under Section 14(d) of the Specific Relief Act, 1963 (SRA). The Court reproduced Section 14 of the SRA and then meticulously analyzed Clause 10 of the Agreement, which governs termination. Clause 10.2(a) states that termination can occur “by either Party forthwith upon written notice to the other Party in the event of a material breach... which breach has not been remedied by the Breaching Party within forty-five (45) days of receipt of written notice requiring remedy of the such breach.”
3. Interpretation of “Determinable Contracts” based on K.S. Manjunath: The Court relied heavily on the Supreme Court’s authoritative pronouncement in K.S. Manjunath and Others v. Moorasavirappa alias Muttanna Chennappa Batil (2025). This judgment, which extensively reviewed precedents on Section 14(d) of the SRA, clarified that contracts are “in their nature determinable” only if they are terminable at the will of a party, without reference to any breach or contingency. The Court specifically highlighted paragraph 64 of K.S. Manjunath, which approved the classification from A Murugan v. Rainbow Foundation Ltd (2019). This classification distinguishes between:
(i) contracts inherently revocable (e.g., licenses, partnerships at will) and
(ii) contracts terminable unilaterally on a “without cause” or “no fault” basis (both falling under Section 14(d)).
In contrast, contracts terminable for cause, especially those requiring a breach notice and an opportunity to cure (the fourth category), are *not* considered determinable in nature.
4. Application of K.S. Manjunath to the Present Agreement: Applying these principles, the Court found that Clause 10.2(a) of the present Agreement does not grant an unfettered, unilateral, or at-will right of termination. Instead, termination is expressly contingent upon a material breach and is further circumscribed by a mandatory 45-day cure period. This contractual stipulation squarely places the Agreement within the fourth category identified in K.S. Manjunath, meaning it is *not* determinable in nature. Therefore, the bar under Section 14(d) of the SRA is not attracted, and the Court can consider granting interim protection. The Court also referenced HK Toll (supra), which similarly held that contracts terminable only upon specific contingencies or breaches, and not at will, are not determinable.
5. Rejection of Section 14(b) Objection (Continuous Duty): The Respondents’ objection under Section 14(b) of the SRA, which proscribes specific performance of contracts involving continuous duties that the Court cannot supervise, was also rejected. The Court reasoned that the relief sought was confined to protection against termination pending arbitration, not the enforcement of continuous or minute operational obligations requiring constant judicial oversight. The Agreement had operated for nine years without such supervision, and the interim relief merely sought to preserve the existing contractual framework.
6. Prima Facie Assessment of the Termination Notice: While refraining from a detailed examination of the merits of the underlying disputes (which fall within the Arbitral Tribunal’s domain), the Court made a prima facie assessment of the Impugned Termination Notice. It noted the Petitioner’s detailed tabular response to the Respondents’ allegations regarding equipment issues (e.g., “end-of-life” status, maintenance, PC-PNDT Act compliance). The Court found that even if deficiencies existed, the Respondents were contractually bound to adhere to the termination mechanism in Clause 10. This mechanism required issuing a notice specifying the alleged material breach and providing a 45-day cure period.
7. Non-Compliance with Contractual Cure Mechanism: The Court concluded that the Respondents failed to comply with this mandatory contractual procedure. There was no evidence of a prior notice identifying the alleged material breach and affording the Petitioner the contractually mandated opportunity to cure it within 45 days. The Respondents’ unilateral determination that the alleged defects were “incurable” without following the agreed cure mechanism was deemed contrary to the express terms of the Agreement. The Court characterized the termination as having 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.”
8. Satisfaction of Triple Test for Injunction:
Prima Facie Case: The Court found a prima facie case based on the Respondents’ apparent non-adherence to the termination mechanism prescribed in Clause 10 of the Agreement.
Balance of Convenience: The balance of convenience tilted in favor of the Petitioner. Allowing the termination to operate would divest the Petitioner of valuable contractual rights for the remaining five-year tenure, potentially rendering the arbitral process illusory. Preserving the status quo was deemed essential.
Irreparable Injury: The Petitioner demonstrated a credible apprehension of serious prejudice to its reputation, goodwill, and commercial standing, which are intangible harms not adequately compensable by monetary damages. This established the element of irreparable injury, warranting protective intervention.
9. Decision: Based on the detailed analysis, the Court stayed the operation and effect of the Impugned Termination Notice. It directed the parties to maintain the status quo regarding the Agreement’s operation, implementation, and performance as it existed immediately prior to the termination notice. The Court explicitly clarified that its observations were confined to the interim relief application and did not constitute a final opinion on the merits of the disputes, reserving all rights and contentions for the Arbitral Tribunal.
V. Conclusion
In this judgment, the Delhi High Court addressed a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief against the termination of a Radiology Services Agreement. The court concluded that the termination clause in the agreement was not “in its nature determinable” under Section 14(d) of the Specific Relief Act, 1963, as it required a material breach and a 45-day cure period, rather than allowing unilateral termination at will. The court also rejected the argument that Section 14(b) of the SRA applied, as the relief sought did not require continuous judicial supervision. Finding a prima facie case that the termination was effected in “undue haste” and not in accordance with the contractually agreed procedure, the court stayed the Impugned Termination Notice. It directed the parties to maintain the status quo, emphasizing that premature termination would cause irreparable harm to the Petitioner’s reputation and commercial standing, which could not be adequately compensated by monetary damages. The court clarified that its observations were limited to the interim relief and did not constitute a final opinion on the merits of the underlying disputes, which are reserved for the Arbitral Tribunal.