Ramankutty Guptan v. Avara wherein
the Honourable Supreme Court, while dealing with an application under Section 28(1) for rescission of contract held that after passing decree for specific performance, the Court does not cease to have any jurisdiction. The Court retains control over the decree even after the decree has been passed. It is open to the Court to exercise the power under Section 28(1) of the Act either for extension of time or for rescinding the contract as claimed for. Therefore, where the execution application has been filed with the same Court in which the suit was filed namely the Court of first instance, instead of treading the application for rescission on the execution side, it should have as well been numbered as an interlocutory application treating it to be on execution side, instead of transferring it on the original side.
Madras High Court
M. Mohammad Aslam And Ors. vs C.N.A. Gowthaman on 3 March, 2003
Equivalent citations: AIR 2003 Mad 248
1. The applicants herein are the legal heirs of the deceased Plaintiff, who has filed the suit for specific performance of the agreement of sale deed 8-4-1995 and supplementary agreement dated 18-5-1996 which was decreed by this Court on 21-3-2001 granting time for deposit of balance consideration by eight weeks. It was also further directed by this Court that the defendant shall not be allowed to withdraw the amount without redeeming the mortgage created in favour of Bank of Baroda, Nungambakkam Branch, Chennai. After the death of the Decree-holder-Plaintiff, his legal heirs have filed application in Diary No. 28075 of 2002 seeking permission of this Court to withdraw the sum of Rs. 11,17,000/- deposited to the credit of the above suit, which was rejected. This Application No. 5418 of 2002 is filed by the legal heirs to rescind the contract entered into between the deceased plaintiff and the defendant and to direct the defendant to pay the sum of Rs. 6,18,000/- with interest @ 18% from 18-5-1996 till the date of realisation and Application No. 5419 of 2002 is filed seeking permission of this Court to withdraw the amount of Rs. 11,70,000/-.
2. Mr. Satish Parasaran, learned counsel appearing for the applicants submitted that the applicants 2 to 6 have given a power of attorney dated 25-6-2002 to the 1st applicant to represent them and by order dated 10-10-2002 this Court recognised the applicants herein as legal heirs of the deceased plaintiff; that the suit filed by the plaintiff was decreed on 21 -3-2001 thereby the plaintiff was directed to deposit the balance sale consideration of Rs. 11,70,000/- within eight weeks from the date of decree; that the last date for deposit of the said, sum was 15-5-2001, but by oversight the last date for deposit was wrongly noted by the counsel as 17-5-2001 with the result the same could not be deposited in time; that the plaintiff has filed an application and sought extension of time for depositing the amount and the same was also ordered and the amount was deposited into the Court; that the defendant neither complied with the terms of the decree nor withdrawn the sale consideration and executed the sale deed in their favour. In the meanwhile, the plaintiff had passed away on 27-2-2002 leaving behind the applicants herein as his legal heirs; that the applicants require funds for performing marriage, to improve the business etc; that an application was filed by the applicants seeking permission of this Court to withdraw the sum of Rs. 11,70,000/- which was rejected by this Court on the ground that the applicants have not chosen to execute the decree passed; that the respondent has allegedly filed a petition to set aside the decree, which was passed ex parte, which shows that the respondent is not interested to comply with the decree and for that reason and for other reasons, the applicants have not intended to execute the decree and prayed for allowing the applications.
3. Mr. Prakash Goklaney, learned counsel appearing for the respondent, relying on the common counter filed in both the applications submitted that the applicants have filed an application similar to O. A. No. 5419 of 2002, which came up for maintainability before this Court and the same was rejected on 22-11-2002; that having obtained a decree for specific performance, it is not open to the applicants to go back; that no other alternate relief was claimed by the plaintiff in the suit; that the applications are contrary to the decree passed by this Court and prayed for dismissal.
4. Now we look into the relevant provisions of Specific Relief Act, 1963 which runs as follows :--
Section 28 -- Rescission in certain circumstances of contracts for the sale or lease of immovable property, the specific performance of which has been decreed :--
1. Wherein in any suit a decree for specific performance of a contract for the sale or lease of immovable property has been made and the purchaser or lessee does not, within the period allowed by the decree or such further period as the Court may allow, pay the purchase money or other sum which the Court has ordered him to pay, the vendor or lessor may apply in the same suit in which the decree is made, to have the contract rescinded and on such application the Court may, by order, rescind the contract either so far as regards the party in default or altogether, as the justice of the case may require.
2. Where a contract is rescinded under Sub-section (1), the Court --
(a) shall direct the purchaser or the lessee, if he has obtained possession of the property under the contract, to restore such possession to the vendor or lessor; and
(b) may direct payment to the vendor or lessor of all the rents and profits which have accrued in respect of the property from the date on which possession was so obtained by the purchaser or lessee until restoration of possession to the vendor or lessor, and if the justice of the case so requires, the fund of any sum paid by the vendee or the lessee as earnest money or deposit in connection with the contract.
(3) If the purchaser or lessee pays the purchase money or other sum which he is ordered to pay under the decree within the period referred to in Sub-section (1), the Court may, on application made in the same suit, award the purchaser or lessee such further relief as he may be entitled to, including in appropriate cases all or any of the following relief, namely,--
(a) the execution of a proper conveyance or lease by the vendor or lessor;
(b) the delivery or possession, or partition and separate possession, of the property on the execution of such conveyance or lease.
4. No separate suit in respect of any relief which may be claimed under this section shall lie at the instance of a vendor, purchaser, lessor or lessee, as the case may be.
5. The costs of any proceedings under this section shall be in the discretion of the Court.
5. Mr. Satish Parasaran, learned counsel appearing for the applicant relied on the following decisions in support of his case.
i) (Mohammadalli Sahib v. Abdul Khadir Saheb) reported in Madras Law Journal 1927 (59) 351 wherein a Division Bench of this Court held that in a decree for specific performance directed the payment of arrears of sale consideration by the plaintiff within three months from the date of judgment, the plaintiff committed default and applied for extension of time after expiry of the time allowed in the decree. It was held that the Court has power to enlarge the time and the powers can be exercised on sufficient cause shown even if the application is made after the date fixed by the decree.
ii) (Akshayalingam Pillai v. Ayyambal-ammal reported in 1933 MLJ (64) 536 : (AIR 1933 Madras 386). In this case, the plaintiff obtained a decree for specific performance of the contract to sell immovable property; first defendant was the vendor under the contract and defendants 7, 8 and 13 are alienees of different portions of the property from the 1st defendant with notice of the contract. A decree for specific performance was granted by the Court directing the plaintiff to deposit the sale consideration within six months with interest and on deposit the 1st defendant on his own behalf and on be-half of his sons namely defendants 2 to 5 and defendants 7, 8 and 13 to execute and register a conveyance in respect of the respective properties in the plaint. It was further held that the deed of conveyance should be joint or several according as the plaintiff desires and that all costs in connection with the execution and registration of conveyance should be borne by the plaintiff. It is also mentioned in the decree that plaintiff do get possession of the property with mesne profits to be determined in the execution as from the date of deposit of the money, defendants 1, 7, 8 and 13 being severally liable for mesne profits according to the extent of property held by each. The defendants 7, 8 and 13 do have a charge on the money in deposit according to the respective stake on the properties as per the sale deed obtained by them or their predecessor. The said decree is in some respects somewhat curious, hence the Division Bench held that a decree for specific performance enures not only for the benefit of the plaintiff but also of the defendant. The passing of the Decree does not terminate a suit for specific performance and all the reliefs open to the plaintiff after judgment are equally available to the defendant. The defendant, whether he be purchaser or vendor, is therefore entitled, after judgment to require specific performance from the unwilling plaintiff in the same action.
iii) Mahendra Nath v. Smt. Baikunthi Devi (FB). In this case, the Full Bench of Allahabad High Court held that the Court, in a suit for specific performance of a contract for sale has to specifically enforce the contract, if possible. If it is not possible, the agreement, would be hit by the rule of frustration and such a contract could not be enforced nor a decree passed on the basis of such a contract could be executed.
iv) Ramankutty Guptan v. Avara wherein
the Honourable Supreme Court, while dealing with an application under Section 28(1) for rescission of contract held that after passing decree for specific performance, the Court does not cease to have any jurisdiction. The Court retains control over the decree even after the decree has been passed. It is open to the Court to exercise the power under Section 28(1) of the Act either for extension of time or for rescinding the contract as claimed for. Therefore, where the execution application has been filed with the same Court in which the suit was filed namely the Court of first instance, instead of treading the application for rescission on the execution side, it should have as well been numbered as an interlocutory application treating it to be on execution side, instead of transferring it on the original side.
6. Taking into consideration of the arguments advanced by the learned counsel and the judgments relied on by them, I proceed to analyse the case on hand.
7. In this case, the applicants have filed Application in Diary No. 28075 of 2002 to permit them to withdraw the sum of Rs. 11,70,000/- deposited into the Court on 11-7-2001. This Court, by order dated 22-11-2002 rejected the said application on the ground that without filing execution petition to execute the decree, it was not open to the applicants to withdraw the said amount. It is further held in the said order that after a decree has been passed, the only remedy available to the applicants is to file an execution petition to execute the decree and thereafter only they could seek other remedies. Admittedly, the applicants have not filed any appeal against the said order dated 22-11-2002. The relief sought for in the other application is to rescind the contract. In the circumstances, it is to be decided as to whether the applicants are entitled to the relief sought for in these applications.
8. Decree for specific performance of a contract of sale is in the nature of a preliminary decree. The power contemplated under Section 28 is discretionary and the Court cannot ordinarily annul the decree once passed by it. A reading of Section 28 of the Specific Relief Act would make it clear that if a case of default has been found out, the Court can order for rescinding the contract by nullifying the decree for specific performance. Section 28 of the Specific Relief Act, no doubt seeks to provide complete relief to both the parties in terms of the decree for specific performance without having resort to separate proceedings.
9. The Division Bench of this Court in Akshayalingam Pillai v. Ayyambalammal, (AIR 1933 Mad 386) cited supra has held that Section 35 (c) of the old Act equivalent to Section 28 of the new Act applies to both the plaintiffs Vendor and Defendant's vendor and it enables them to have the contract rescinded in the very action in which the decree for specific performance was made. The Division Bench also held that the right of rescission is not confined to a vendor where the plaintiff or defendant, it must be equally open to purchaser, it being immaterial whether he appear in the action as plaintiff or defendant. Now, the Section 28 of the Act, 1963 made it clear that it seek to provide complete relief to both the parties, as pointed out by me supra. The above said judgment and other decisions relied on by the learned counsel for the applicants are relating to extension of time/agreement hit by rule of frustration which are no way applicable to the facts and circumstances of the case on hand.
10. It is alleged by the applicants that the respondent has neither complied with the terms of the decree nor has withdrawn the sale consideration and executed a sale deed in their favour. It is an admitted fact that the mortgage on the property was discharged by the respondent. The plaintiff has paid the balance sum of Rs. 11,70,000/- into the Court only after obtaining the order of extension on 11-7-2001. The application filed by the applicant for withdrawal of the said sum similar to Application No. 5419 of 2002 was also rejected on 22-11-2002. The present applications have been filed on 23-12-2002. It is evident that the applicants have not taken any efforts to file execution petition to execute the decree. While so, it is not proper to say that the respondent has not compiled with the terms of the decree.
11. Sub-clause 3 of Section 28 contemplates that if purchaser or lessee pays the money or other sum ordered to pay under the decree within the period, the Court may, on application made in the suit award the purchaser or lessee such further relief as he may be entitled to, including in appropriate cases all or any of the following reliefs namely execution of proper conveyance, the delivery of possession on the execution of such conveyance; and under Sub-clause (4) no separate suit shall lie at the instance of the vendor purchaser as the case may be. Though it appears that the right to rescind the decree under Section 28(1) and (2) can arise only if the purchaser commits default in paying the sale consideration etc., equities shall be done by the Court between the parties where a decree for specific performance is to be set aside. Courts can invoke the jurisdiction under Section 28(3)(5) to grant remedy to the person, who is aggrieved by the act of the defaulting person. Ex-facie no default of the respondent is found. The averment that the respondent has filed a petition to set aside the decree, which was passed ex-parte is not a valid ground for the applicants to seek the remedy for rescinding the contract. The other reasons that the plaintiff died, there are domestic problems and financial constrains etc., are not valid reasons to invoke the provisions of Section 28(3) and (5) of the Act. In view of the said finding, the Application No. 5419 of 2002 is also unsustainable in law.
In the result, both the applications are liable to be dismissed as devoid of merits and accordingly dismissed. No costs.
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