A Long Stop Date Is Not Decorative—It Is Decisive: Bombay High Court Refuses Specific Performance

“Once the Long Stop Date passed, the Agreement between the parties cannot be re-ignitioned”— In a landmark Bombay High Court, speaking through Justice Milind N. Jadhav, ruled that a Term Sheet for joint development of prime real estate—executed between M/s. Everhome Properties Pvt. Ltd. and M/s. Aditya Developers & Others—was not a concluded contract but a contingent commercial understanding that automatically terminated upon failure to meet the Long Stop Date.

Refusing to grant interim injunction sought by the Plaintiff and upholding the Defendants' right to deposit ₹11 crores as refundable security deposit, the Court declared:

“The effect of a Long Stop Date in a contract, if not complied with, would automatically determine the contract. A Long Stop Date prevents the agreement from remaining open indefinitely. It is a drop-dead deadline for commercial certainty.”

The judgment dismisses the Appeal from Order No. 541 of 2025, affirming the trial court's ruling and delivering clarity on contract law, specific performance, and enforceability of contingent agreements.

“Clause 12 Begins With a Non-Obstante—It Is Not Just Any Clause; It Overrides the Entire Contract”

Delivering a blow to the Plaintiff's assertion that the Term Sheet dated 12 April 2023 was an enforceable agreement for joint development, the Court zeroed in on the Validity Clause 12, which included a non-obstante clause, stipulating that:

“JP shall complete due diligence and accept or reject the title... and execute and register the Transaction Documents on or before the Long Stop Date.”

Clause 12 further provided that failure to comply would:

“ipso facto stand terminated... and neither party shall have any claim of any nature whatsoever against the other.”

Justice Jadhav emphasized that this clause was not merely procedural but substantive and dispositive, stating:

“Clause 12 of the Term Sheet is a stand-alone, self-operative, default-neutral clause that comes into effect regardless of which party is at fault. Its language is automatic and non-negotiable.”

“Not Just an Agreement to Develop—But an Agreement to Agree”: Court Declares Term Sheet Unenforceable

Rejecting the Plaintiff's plea that Clause 11 of the Term Sheet—stating that the agreement was “enforceable”—should prevail, the Court held that no enforceability could survive the expiry of a non-fulfilled Validity Clause:

“The Validity Clause overrides all other clauses. Plaintiff’s failure to accept title or execute documents before the Long Stop Date renders the agreement unenforceable. Mere use of the word ‘enforceable’ cannot override the legal consequence of unmet preconditions.”

Despite the Plaintiff’s claim that the Term Sheet had been “acted upon,” the Court refused to interpret post-deadline conduct—such as issuance of a draft Joint Development Agreement in October 2024—as implied extension:

“Silence of the parties cannot amount to affirmation or extension of the Long Stop Date. Such conduct, at best, shows fresh negotiation, not continuation of a terminated agreement.”

“A Commercial Deal Cannot Be Rewritten in Equity—Certainty is the Soul of Contract Law”

The Court rejected arguments urging an equitable view of the arrangement, warning against judicial dilution of commercial certainty:

“A Long Stop Date is not like a tentative deadline. It is sacrosanct in commercial jurisprudence. It safeguards both parties from uncertainty and indefinite commitment.”

Referring to English precedent (Ruven Cohen v. Teseo Properties Ltd.), the Court reiterated that:

“The commercial objective of the parties was that they should with certainty know where they stood if one came to the end of the Long Stop Date... Without such finality, the contract becomes an illusion.”

Refund, Not Specific Performance: Court Limits Plaintiff's Right To Recovery of ₹11 Crores Only

In rejecting the Plaintiff’s request for interim injunction and specific performance of the Term Sheet, the Court ruled that:

“Upon expiry of the Long Stop Date, the only surviving obligation is the refund of ₹11 crores... The Plaintiff has no right to enforce development rights after contractual expiry.”

The Defendants had already deposited the ₹11 crores in compliance with trial court directions. The Court found this to be adequate relief under law and dismissed the Plaintiff’s alternate claim for injunction.

Referring to Sections 14(1)(a) and (c) of the Specific Relief Act, 1963, the Court reiterated:

“A contract which is in its nature determinable, or where compensation in money is adequate, cannot be specifically enforced. The Term Sheet was both.”

“A Sunset Clause Ends the Contract—Not the Possibility of Future Deals”

Justice Jadhav carefully distinguished between the termination of the current contract and the freedom of parties to re-negotiate fresh terms. But absent mutual agreement to extend the Term Sheet, the original agreement had lapsed irreversibly:

“The Term Sheet, by its own language, became unenforceable after 11 April 2024. No subsequent act by either party, unless mutually agreed and evidenced, can revive it.”

Court Applies Sections 31 and 35 of Indian Contract Act: “This Was a Contingent Contract That Expired on Its Own Terms”

The Court relied on Sections 31 and 35 of the Indian Contract Act, 1872, which define contingent contracts and their expiry upon non-fulfillment of the triggering event within fixed time:

“A contingent contract to do or not do something, if a specified uncertain event does not happen within a fixed time, becomes void.”

Justice Jadhav held:

“This was a classic contingent contract. Due diligence, title acceptance, and document execution were specified events. Their non-occurrence within time renders the contract void under statutory law.”

Trial Court’s Order Found “Well-Reasoned, Balanced and Without Infirmity”—Appeal Dismissed

The Bombay High Court upheld the trial court’s order dated 3 June 2025, which had rightly refused interim injunction and permitted refund deposit:

“The impugned order is well-reasoned and balanced. No infirmity or arbitrariness is found. It is therefore confirmed and upheld.”

Accordingly, the Appeal From Order was dismissed, with a four-week continuation of interim relief to allow the Plaintiff to pursue remedies before the Supreme Court, if so advised.

 “Once the clock strikes the Long Stop Date—what remains is not enforcement, but exit.”

The Bombay High Court has delivered a clear message to the commercial and real estate community: contractual deadlines are not cosmetic; they are fundamental to enforceability.

This ruling reiterates the primacy of intention, structure, and time-bound obligations in real estate joint ventures and reinforces that open-ended commercial arrangements are inherently untenable.

In sum, the Court has not only resolved the dispute but also clarified Indian contract law’s position on conditional agreements, enforceability of term sheets, and the legal consequence of Long Stop Dates.

Date of Decision: 17 November 2025