Supreme Court: What is the duty of executing court while executing decree for specific performance of contract?

The executing court was not clear, both as regards the facts and as to law. On facts, it did not take into account, the real purport of the decree. The relevant portion has already been extracted. The stipulation of two months was for the first Respondent to execute the decree. That stipulation, no doubt, is coupled with the right to receive the balance of consideration. There was nothing on record to indicate that he ever made any effort to collect or demand the balance of consideration from the Petitioner, within that time. The plea of the Petitioner that when he offered the amount, the Respondents refused to receive; remained unrebutted. The first Respondent did not file any rejoinder to the counter-affidavit. As observed in the preceding paragraphs, the executing court did not record any evidence of the parties. Therefore, the finding recorded by the trial court, in this behalf, cannot be sustained. When valuable rights accrued to a party, on account of the suit for specific performance being decreed, they cannot be taken away, on the basis of such an untenable finding.

{Para 17}

18. On the aspect of law, the executing court proceeded as though Section 28 of the Act gets attracted, though it did not mention in so many words. Firstly, the first Respondent himself did not invoke that provision. Secondly, the provision gets attracted only where, (a) the court, which passed the decree, directs the decree-holder to pay the purchaser money (balance of consideration) within a period, stipulated by it, and (b) the decree-holder failed to comply with the direction. It is then, and only then, that the court can consider the feasibility of directing rescission of contract. In the instant case, the time stipulated by the trial court in its decree was for the first Respondent to execute the decree, and not directly for the Petitioner to deposit the amount.

19. There is nothing on record to disclose that the first Respondent has ever made any effort to receive the amount, stipulated in the decree. On the other hand, the plea of the Petitioner that, when he offered to pay the amount, the first Respondent did not receive the same; remained unrebutted. The court must ensure strict compliance with the conditions stipulated in a provision, which has the effect of nullifying a decree. Even where two views are possible on the facts of the case, the one, which would sustain the decree, must be adopted.

 IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 563-566 of 2025.

Decided On: 17.01.2025

Balbir Singh and Ors. Vs. Baldev Singh (D) through His Lrs and Ors.

Hon'ble Judges/Coram:

J.B. Pardiwala and R. Mahadevan, JJ.

Author: J.B. Pardiwala, J.

Citation: MANU/SC/0079/2025.

Print Page

Judgment analysis of Balbir Singh & Anr. v. Baldev Singh (D) Through His LRs & Ors., in IRAC Format

 Case Title: Balbir Singh & Anr. v. Baldev Singh (D) Through His LRs & Ors., Civil Appeal Nos. 563-566 of 2025

Court: Supreme Court of India

Date of Judgment: January 17, 2025

Issue

1.       Whether the High Court erred in rejecting the defendants' application under Section 28 of the Specific Relief Act, 1963, for rescission of the contract due to the plaintiffs' failure to deposit the balance sale consideration within the stipulated time.

2.       Whether the doctrine of merger applies when an appellate court modifies or restores a trial court's decree and its implications on execution timelines.

Print Page

How to appreciate evidence if judgment debtor is claiming rescission of contract as per S 28 of Specific relief Act?

The Hon'ble Supreme Court in the case reported in MANU/SC/0934/2004 : 2005 (9) SUPREME COURT CASES 262 (supra) following it's earlier decision in the case of HUNGERFORD INVESTMENT TRUST LTD. Vs. HARIDAS MUNDHRA reported in MANU/SC/0684/1972 : (1972) 3 SUPREME COURT CASES 684 at paragraph 27 has held as under:-

"27. In the case of Hungerford Investment Trust Ltd. v. Haridas Mundhra it has been held that when the court passes the decree for specific performance, the contract between the parties is not extinguished. That the decree for specific performance is in the nature of preliminary decree and the suit is deemed to be pending even after the decree. Hence, the court retains control over the entire matter even after the decree. Since the court retains control over the matter, despite the decree, it is open to the court to order rescission of the agreement, when it is found that the decree-holder is not ready and willing to abide by his obligations under the decree."

23. A large area in a suit for Specific Performance of contract since has been left to the discretion of the Court, the conduct of the parties to the suit assumes utmost significance in exercise of such discretion. The decree holder put the decree into execution and proceeded with the said execution case, took all steps required to be taken by him for the satisfaction of the said decree even before the said decree had attained finality. Whereas the judgment debtor in spite of receipt of the notice did not appear in the said execution case and allowed the decree holder to take those steps to get the decree matured. The conduct of the decree holder, therefore, favours him for exercise of the said discretion to protect the decree.

IN THE HIGH COURT OF CALCUTTA

CO 4271 of 2016 and CO 454 of 2017

Decided On: 01.10.2019

 Sabyasachi Ghosh  Vs. Pushparani Das

Hon'ble Judges/Coram:

Biswajit Basu, J.

Citation: AIR 2020 Cal 17

Print Page

Whether vendor can get contract of sale rescinded after passing of decree for specific performance of contract?

Section 28 in The Specific Relief Act, 1963

28. Rescission in certain circumstances of contracts for the sale or lease of immovable property, the specific performance of which has been decreed.—

(1) Where 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—

Print Page

Whether relief of rescission of contract can be granted after execution of sale deed?

The challenge as raised by the applicant is principally on the aspect of lack of diligence and delayed steps taken by the non-applicant to pay the balance amount of consideration pursuant to the decree for specific performance. Though it is true that the relief of rescission of contract can be sought by a transferee pendente lite and while deciding such application, the Court only decides antecedent rights, the fact that such right of rescission is sought to be exercised after execution of sale-deed in favour of the original plaintiff is a fact fatal for the applicant. The sale-deed having been executed on 19th January, 2009, the executing Court lost its jurisdiction to consider the prayer for rescission of the contract. It is relevant to note that initially on 28th December, 2009, the applicant sought review of the order dated 10th February, 2009, by which the warrant of possession came to be issued and the order dated 13th November, 2009, by which the warrant of possession was claimed to have been executed. It is only after the challenge to the decree for specific performance attained finality on 4th August, 2014, that the applicant for the first time attempted to seek rescission of the contract under Section 28 of the said Act. The application in that regard is dated 25th September, 2014. This is more than five years after execution of the sale-deed in favour of the non-applicant. In view of this admitted position on record, I find that the prayer for rescission of the contract as made by the applicant under Section 28 of the said Act was not at all tenable. In fact, the executing Court lost its jurisdiction to consider the prayer for rescission of the contract after the sale-deed came to be executed. For the purposes of the record, it may also be mentioned that the applicant himself pleaded in Ground A of the review application dated 28th December, 2009 that the Court had become functus officio on execution of the sale-deed.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Civil Revision Application No. 95 of 2016

Decided On: 07.04.2017

 Vinod Vs. Chandulal

Hon'ble Judges/Coram:

A.S. Chandurkar, J.

Citation: AIR 2017 Bom 237

Print Page

Whether decree for specific performance of contract will remain executable inspite of expiry of period for deposit?

In above circumstances, the contention, advanced on behalf of the decree-holders, Respondents herein, that unless the judgment-debtor seeks rescission of the contract in terms of Section 28 of the Specific Relief Act, the decree remains executable in spite of expiry of period for deposit, with the only obligation on the part of the decree-holders to pay interest, cannot be accepted.

11. Section 28 of the Specific Relief Act is as follows:

28. Rescission in certain circumstances of contracts for the sale or lease of immovable property, the specific performance of which has been decreed.--

(1) Where 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 refund of any sum paid by the vendee or 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 reliefs, namely:

(a) the execution of a proper conveyance or lease by the vendor or lessor;

(b) the delivery of 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.

12. There is no doubt that the above provision permits the judgment-debtor to seek rescission of a contract and also permits extension of time by the Court but merely because rescission of contract is not sought by the judgment-debtor, does not automatically result in extension of time.

IN THE SUPREME COURT OF INDIA

C.A. Nos. 608-609 of 2017 (Arising out of SLP (C) Nos. 147-148 of 2015)

Decided On: 17.01.2017

 Prem Jeevan Vs. K.S. Venkata Raman and Ors.

Hon'ble Judges/Coram:

A.K. Goel and U.U. Lalit, JJ.

Citation: (2017) 11 SCC 57.

Print Page

Whether court can rescind contract as per S 28 of specific relief Act if decree holder fails to deposit balance consideration?

 In the case of Chanda (supra) though there was no specific direction of the Trial Court to the decree holder to pay the sale consideration within a particular time but the conduct of the decree holder in not depositing the amount for a long six years was held to be full of mala fide. The contention of the plaintiff that there was no specific direction given to the plaintiff to deposit the balance sale consideration within the stipulated period was not found justified. The direction of the Trial Court was to execute the sale-deed within two months from the date of the decree on payment of balance of sale consideration. It was held that the payment of balance sale consideration was a condition precedent for execution of the sale-deed. It was implicit in the direction that the decree holder was required to deposit the balance consideration in the first instance and it was only then the judgment debtors were required to execute the sale-deed. Since the decree holder did not deposit the balance amount, the order of the Trial Court in rescinding the original contract was found perfectly in order.

Equivalent Citation: AIR2015All180, 2015(6) ALJ 27, 2015 (111) ALR 889, 2015 129 RD144,AIR 2015 ALLAH180

IN THE HIGH COURT OF ALLAHABAD

Writ-C No. 57407 of 2008

Decided On: 26.05.2015

Radhey Shyam and Ors. Vs.  Harendra Pal Rathi

Hon'ble Judges/Coram:Sunita Agarwal, J.

Print Page

Whether Court retains control in suit for specific performance of contract even after passing of decree?

 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

Print Page