Canara Bank vs. K.L. Rajgarhia (D) 2025 INSC 1278 - Specific Performance Suits - Doctrine Of Severability Applicability
Specific Relief Act 1963 - While adjudicating suits, or when examining the validity of agreements or contracts, the Courts generally have the power to sever the invalid portion of an agreement from its valid portion and give effect to the latter. There is no bar on the application of the doctrine of severability in suits for specific performance. However, this power must be exercised with great caution and only in exceptional cases. (Para 20) The Court cannot remove the essential part of an agreement or the very object for which it was executed. We further caution that, while exercising such power, the Courts must refrain from re-writing or re-constructing the agreement between the parties to make it work. (Para 21) The power of the Court to sever the invalid portion of an agreement from its valid portion must be exercised sparingly and only in exceptional circumstances. While doing so, the Court cannot, under the guise of severance, redraft or reconstitute the fine tunes of the contract by removing its essential terms or altering its fundamental object which the parties had arrived at by way of their consensus ad idem, as such the exercise would amount to creating a new agreement between the parties, which is impermissible in law. (Para 22)
Public sector bank- It is not expected from the State or its instrumentalities to enter into camouflage agreements and especially where the object of the agreement would result in law being violated.(Para 27)
Specific Relief Act 1963 ; Indian Contract Act 1872 - Section 23 -Agreements contravening law cannot be enforced, as enforcing them would be in conflict with public interest -The doctrine of illegality and the principles ex turpi causa non oritur actio and ex dolo malo non oritur actio: The courts will not assist in enforcing illegal agreements even if both parties are ad idem on illegality- Adherence to statutory provisions and public interest being paramount in suits for specific performance. (Para 15-16)
Case Info
Case Details
- Case name: Canara Bank vs. K.L. Rajgarhia (D) Thru LRs.
- Neutral citation: 2025 INSC 1278.
- Coram: Justice Aravind Kumar; Justice Vipul M. Pancholi.
- Judgment date: October 9, 2025.
- Court: Supreme Court of India, Civil Appellate Jurisdiction.
- Appeal No.: Civil Appeal No. 2483 of 2014.
Caselaws and Citations
- Narayanamma & Anr v. Govindappa & Ors, (2019) 19 SCC 42.Emphasized the doctrine of illegality and refusal to enforce agreements contravening statutory prohibitions.
- Mayawanti v. Kaushalya Devi, (1990) 3 SCC 1.Held courts cannot rewrite contracts; specific performance requires a valid and enforceable contract.
- References within Narayanamma (as quoted):
- Immani Appa Rao (approval of maxims on illegality: ex turpi causa, in pari delicto).
- Kedar Nath (Hidayatullah, J.) and Taylor’s Law of Evidence; Story’s Equity Jurisprudence(principles on courts not aiding illegal agreements).
Statutes / Laws Referred
- Indian Contract Act, 1872:
- Section 23 — unlawfulness of consideration/object when forbidden by law or opposed to public policy.
- Specific Relief Act, 1963:
- Section 12 — specific performance of part of contract; court’s limits on severability.
- Master Plan for Delhi & Building Bye-Laws, 1983:Dwelling unit limits and basement usage; governing legality of proposed construction on 300 sq. yd plots.
- Contextual statutory reference in caselaw discussion:
- Karnataka Land Reforms Act — Section 61 (in Narayanamma, illustrating enforcement bar during non-alienation period).
#SupremeCourt holds that doctrine of severability can be applied in suits for specific performance, but with great caution and only in exceptional cases ! https://t.co/A9oMPISUrz pic.twitter.com/U1TNgZwMvk
— CiteCase 🇮🇳 (@CiteCase) November 1, 2025
It is not expected from the State or its instrumentalities to enter into camouflage agreements and especially where the object of the agreement would result in law being violated.#SupremeCourt observed while upholding dismissal of a specific performance suit filed by… https://t.co/A9oMPISUrz pic.twitter.com/ALEm4UQzjZ
— CiteCase 🇮🇳 (@CiteCase) November 1, 2025
