2025 INSC 301
SUPREME COURT OF INDIA
(HON’BLE J.B.
PARDIWALA, J. AND HON’BLE R. MAHADEVAN, JJ.)
RAM LAL
Petitioner
VERSUS
JARNAIL SINGH (NOW
DECEASED) THROUGH
Respondent
Civil
Appeal No. 3245 of 2025 (@Petition for Special Leave to Appeal (C)
No.5638/2023)-Decided on 25-02-2025
Civil, Specific Performance
(A)
Specific Relief Act, 1963, Sections 10, 11(2), 14 , 16 and 28 – Civil Procedure
Code, 1908, Order 20 Rule 12-A, Order 21, Rule 34 - Limitation Act, 1963,
Article 54 –Specific performance - Execution of decree –
Deposit of balance sale consideration – Stipulation of time period – Extension
of time - In accordance with the provisions of Order 20 Rule 12A the trial
court while allowing the suit and granting the relief of specific performance
specifically stipulated two months’ time period for the plaintiff to deposit
the balance sale consideration and get the sale deed executed in his favour - However, the judgment and decree passed by
the trial court came to be challenged before the appellate court - Once the
judgment passed by the trial court is challenged before the appellate court the
judgment and order passed by the trial court would get merged with the judgment
of the appellate court irrespective of the fact whether the appeal is allowed
or dismissed - In the case on hand the appeal stood dismissed - Once the
appellate court affirmed the judgment and decree of the trial court, there was
evidently a merger of the judgment of the trial court with the decision of the
appellate court - Once the appellate court renders its judgment, it is the
decree of the appellate court which becomes executable – Appellate Court did
not specify in time limit to make payment of balance sale consideration - There
was a delay on the part of the decree holder in filing the execution petition
and thereby seeking permission to deposit the balance sale consideration - Just
because a decree of specific performance can be executed within 12 years from
the date of original decree or from the date the appellate court affirms such
decree that, by itself, does not mean that a decree holder deposits the balance
sale consideration at his own sweet will - If the appellate court had failed to
stipulate any particular time period then it is expected of the decree holder
to deposit the same within a reasonable period of time - High Court should not
have interfered with the order passed by the executing court - Impugned order
passed by the High Court liable to be set aside and that of the executing
court affirmed - Balance sale
consideration of Rs. 4,87,000/- came to be deposited by the decree holder way
back in 2019 and it shall now be disbursed in favour of the defendants with
interest accumulated thereon within a period of four weeks from today - Since
there was a delay of 2 years in filing the execution petition and delay of 4
years in depositing the balance sale consideration of Rs. 4,87,000/- the
respondents-herein (judgment-debtors) are entitled to simple interest at the
rate of 9 per cent per annum from the date of the judgment and order passed by
the appellate court till the date the balance consideration was deposited i.e.
20.05.2019 - The executing court shall calculate the interest amount at the rate
of 9 per cent simple interest and direct the appellant-herein to deposit the
said amount within a period of two weeks.
(Para
35, 36, 53, 55 and 56)
(B)
Specific Relief Act, 1963, Sections 10, 11(2), 14 , 16 and 28 – Civil Procedure
Code, 1908, Order 20 Rule 12-A, Order 21, Rule 34 - Limitation Act, 1963,
Article 54 –Specific performance - Execution of decree –
Deposit of balance sale consideration – Stipulation of time period – Extension
of time - The Decree for specific performance is in the nature of a preliminary
decree - Both the parties have reciprocal rights and obligations flowing out of
the decree - The decree may fix the time limit for performance and in some
cases may also provide for the consequence for non-performance within the time
limit or the decree may even be silent on this aspect - The decree enforces
specific performance of the contract - The contract between the parties is thus
not extinguished by passing of a decree for specific performance and it
subsists despite the decree. Section 28 (1) of the Act, makes it
clear that the Court does not become a functus officio after the grant of the
decree for specific performance and it retains its power and jurisdiction to
deal with the decree till the sale deed is executed - The Court has been conferred with the power
to extend the time to pay the amount and while taking into consideration the
delay that is sought to be condoned by the plaintiff, the Court does not
adjudge the same like an application under Section 5 of the Limitation
Act, where each day's delay must be explained - The Court is given the
discretion to extend the time and the provision therefore seeks to provide
complete relief to both the parties in terms of the decree for specific
performance - Appeal is a continuation of the original proceedings and the
power of the Court to extend the time for depositing the amount can be
exercised even in the appellate stage by the Court - Non-payment of the balance
sale consideration within the time period fixed by the Trial Court does not amount
to abandonment of the contract and consequent rescinding of the same - The real
test must be to see if the conduct of the plaintiff will amount to a positive
refusal to complete his part of the contract - There must be an element of
wilful negligence on the part of the plaintiff before a Court proceeds to
invoke Section 28 of the Act and rescind the contract.
(Para
44 to 49)
ORDER
1.
Leave granted.
2.
This appeal arises from the judgment and order passed by the High Court of
Punjab and Haryana at Chandigarh dated 30-8-2022 in Civil Revision Application
No.3723/2019 by which the Revision Application filed by the respondents –
herein (original defendants) came to be allowed thereby setting aside the order
passed by the Executing Court directing the defendants to execute the sale deed
in favour of the original plaintiff(s) decree holder on the plaintiff(s)
depositing the balance sale consideration of Rs.5,00,000/- within 15 days from
6-5- 2019.
3.
The controversy revolves around in a narrow compass.
4.
The appellant before us is the original plaintiff. He instituted a suit for
specific performance of contract based on an agreement of sale with the
respondents – herein (original defendants)/judgment debtors. The suit came
to be decreed in favour of appellant – plaintiff vide Judgment and order
dated 20-1-2012. The operative part of the decree passed by the Trial Court
reads thus:-
“Suit for possession by way of specific
performance of agreement of sale dated 16.11.2006 executed between the parties
regarding approximately actually comes to 7 Kanals 17 Marlas out of
agricultural land comprised in Khewat No.334 Khtauni No.720 to 736 measuring
161 Kanals 5 Marlas comprised in Khasra Nos. 424/1min (11-1), 425/1min (5-16),
1234/1 (1-4), 1237/1 (23-1), 1238/1, (28-1), 1241/1/2 (15-16), 1242 min (5-1),
1246/2 min (2-6), 1241/1/1 (1-0), 1242 min (3-0), 1241/2/1 (2-10), 1241/1
(1-0), 424min (2-10), 425/1 min (1-0), 424/1/1 (0-13), 424/1 min (1-7), 425/1
min (0-13), 1246/2 min (6-0), 424/1 min (1-7), 425/1 min (0-13), 1246/2 min
(6-0), 1241/2/2 min (2-15), 1241/2/2 min (2-0), 1234/2/1 (1-4), 424/1 min
(2-1), 4251/ min (2-0), 1234 min (8-0), 1234/1 (1-0), 1234/2 (2-13-1/2), 1234/2
(0-1/2), 1234/2 (3-6), 159/2/2 (4-10), 160/2/2 (8-1), 161/2/2 (2-15) and 423/2
(1-0), situated in the revenue limits of Village Naruana Tehsil and District
Bathinda on payment of Rs.7,00,000/- per killa of 8 Kanals, (in fact the land
with the Defendant remains 7 Kanals 17 Marlas after adjusting her other land in
ther Khata and value for ther land comes to Rs.6,86,875/- and after adjusting
the Rs.2,00,000/- paid in cash as earnest money and Rs. 50000/-paid by the
Plaintiff to the Co-Operative Society as loan payable on their payable by the
Defendant.
And Suit for permanent
injunction restraining the defendant from alienating or creating any
encumbrance over the same by creating mortgage with the above said bank or any
other person in any manner value of the said for the purpose of jurisdiction
Rs.7,00,000/- value of the said for the purpose of Court fee Rs.9176/-
This suit has come up
for final disposal before me (K.K. Singla Additional Civil Judge (Senior
Division) Bathinda) in the presence of Sh. Rajneesh Kumar Rana, counsel for
plaintiff and Sh.Rajdeep Goyal counsel for defendant. It is ordered that suit
filed by the plaintiff for possession by way of specific performance of
agreement to sale dated 16.11.2006 is decreed with costs and defendant is
directed to execute and registered the sale deed pertaining to 157/3225 share
out of the property detailed in the head note of the plaint within 3 months on
depositing the balance sale consideration by plaintiff within two months from
today.”
5.
The respondents – herein (original defendants) being dissatisfied with the
grant of decree of specific performance challenged the same by filing First
Appeal in the District Court. The appeal came to be dismissed vide Judgment and
order dated 21-4-2015. The operative part of the order passed by the first
appellate court reads thus:-
“xx xx xx xx
So, from the above
said discussion and findings, there is no merit in this appeal and hence, the
same stands dismissed with costs. Lower court record along with copy of this
Judgment be returned back. File be consigned to the record room. Decree should
be prepared separately”
6.
The defendants thereafter did not deem fit to file any second appeal. Thus, the
decree attained finality with the dismissal of the First Appeal.
7.
Sometime in January, 2017, the plaintiff filed execution petition seeking to
execute the decree of specific performance. The plaintiff also sought
permission of the executing court to allow him to deposit the balance sale
consideration. The execution petition came to be disposed of by the executing
court vide order dated 6-5-2019. The order passed by the executing court reads
thus:-
“Heard. It is
submitted that execution application is not maintainable in its present form as
filed and framed because the decree has been passed by this court of Sh.
K.K.Singla, then ACJ (SD), Bathinda on dt. 20.01.2012 in favour of the Raj
Kumari and now she had died and present execution application has been filed by
only one of the LR deceased Raj Kumar ie applicant Ram Lal and he is not
entitled to get execute the decree in his favour alone by excluding execution
application is not maintainable and the same is liable to be dismissed. The
alleged will propounded by the decree holder/applicant of the deceased Raj
Kumari is forged and fabricate document and decree holder/applicant is not
entitled to get execute in his favour alone basis of the alleged will executed
by deceased Raj Kumari. It is further submitted that decree holder did not
deposit the balance sale consideration, in court as per the directions of this
court, at the time of the filing of the present execution and without
depositing the balance sale consideration, present execution application
cannot be proceed further and as such the same is liable to be dismissed on
this score. It is further execution application of the decree holder is totally
false, frivolous and vexatious to the knowledge of the applicant and as such
the same is liable to be dismissed with costs. It is further submitted that
decree/applicant has wrongly mentioned the respondents no.2 and 4, in array of
the performa respondents, beyond the decree. Decree has been passed by this
court of Sh. K.K.Singla, then ACJ(SD) Bathinda, on dt. 20.01.2012 in favour of
the Raj Kumari and now she had died and present execution application has been
filed by only applicant Ram Lal and he is not entitled to get execute the
decree in his favour alone by excluding other legal heirs. Further decree
holder did not deposit the balance sala consideration. in court as per the
directions of this court, at the time of the film of the present execution
application cannot be proceed further. Besides judgment and decree dt.
20.01.2012 has been passed against Jarnail nam Sukhpal Singh his son. is minor
and prayed for dismissal of the same.
3. In reply to the
application, J.Ds has no cause of action standi to file the objections, the
objections has been filed to delay the proceedings. The objections raised are
false, frivolous and mala fide submitted that all the legal heirs of Raj Kumari
are make passing execution. It is pertinent to mention here that
respondent/decree he succession has acquired inheritance from Raj Kumar thorugh
will more on a matter between the heirs of original D.H & objections/Jds
has nothing with it. It is submitted that objector/Jds has no locus standi or
cause of ac raise this objection. Further more, it is a matter of interse
interest of the heirs of original D.H. It is further submitted that execution
application sought permission to deposit the remaining sale consideration. It
is furthe submitted that matter between the parties remained pending in the
court for a quite long time. Objection raised regarding the minority of
original J.Ds (Jarnail Singh) son namely Sukhpal Singh does not hold ground as
per law. Sale deed with the sanction & permission of court even by a minor
is legally valid. This ground has been raised by the Jds with malafide
intention to delay the execution proceedings and it is prayed for dismissal of
the same. 4. Rival submission considered. Ld Counsel for the JD had argued that
the decree had been passed by the Court of Sh. K.K Singla, Ld. ACJ (SD),
Bathinda and now JD had expired. DH is not entitled to execute the decree in
favour of LR, Decree Holder had not deposited sale consideration, so the
present execution be dismissed, he had relied on Md Hanif Khan Vs. Naresh
Parsad, Jharkhand High Court WP NO 1502 of 2005 decided on 07-092009 and
Civil Appeal No. 502,503,0f1999, decided on 03- 021999, VS Palachinamy
Chettar Firm Vs C Alagappan. Ld. Counsel for the Decree holder had argued
that the present objection had been filed to delay the proceedings, all the
legal heirs of the Raj Kumari had been made party to the execution, and prayed
that these objections be dismissed, and he relied on 2011 (1) PLR 271, Perusal
of the file shows DH had sought permission to deposit the balance sale
consideration and the application for impleading LR of defendant/JD had been
filed, the argument advanced by Ld. Counsel for JD, that the balance sale
consideration was not deposited is not tenable in view of the clear
law laid down by our own Hon'ble High Court in case titled as Gayatri
Devi vs Darshan Ram reported as 2017 (20 PLR429), wherein para 11 it was held
that if there was no defaulting clause stipulated in the decree for payment of
the balance sale consideration then the court had right to extend the time,
even If the balance sale consideration was not deposited, within stipulated
period, such extension of time can be ordered without application, mere failure
on the part of the Decree holder to deposit the amount does not render the
decree ineffective or release JD from his liability to satisfy the decree, it
is only a willful default that make the court to refuse the extension, the
court and court in its discretion can grant such extension of time and also
reliance is placed on 2007 (50 RCR Civil). 655. In view of the above said
factual matrix, these objections are dismissed, being not maintainable at this
stage, it is pertinent to mention here that the suit had already been decreed
by the court of Sh. K.K Singla Ld. Additional Civil Judge (Senior Division),
Bathinda on 20-01-12 and appeal had also been dismissed on 21.04-2015 by the
Court of Sh. Amarjeet Singh Ld. Additional District Judge, Bathinda. Decree
Holder is directed to deposit the balance sale consideration within 15 days of
this order and JD (Represented through LR) are directed to execute the sale
deed in favour of the Decree Holder, meanwhile on or before 06-07-2019, after
receiving the balance sale consideration. Rough sale deed be also filed.”
8.
The defendants being dissatisfied with the order passed by the executing court,
referred to above, challenged the same by filing civil revision
application before the High Court. The High Court allowed the civil revision
application holding as under:-
“In the present case
the permission to deposit the balance sale consideration was sought by
respondent No.1 while filing the execution petition on 02.12.2017. The appeal
of the defendant (Jarnail Singh) was dismissed by the lower Appellate Court on
21.04.2015. There is no explanation forthcoming as to why the plaintiff (Raj
Kumari) or her successor respondent No.1 did not take any steps to deposit the
balance sale consideration upon dismissal of the appeal by the lower Appellate
Court on 21.04.2015. No cogent or compelling reasons are also forthcoming in
the execution petition or in the reply to the objections for not having
deposited the balance sale consideration within the time granted or within a reasonable
time after the dismissal of the appeal by the lower Appellate Court.
Keeping in view the
law as discussed above as well as the peculiar facts of the present case, it is
clear that in case there is no compliance of the judgment and decree, except when
there had been compelling circumstances for not depositing the amount, time
cannot be extended. In my view, in the present case the decree had become
unexecutable. The Executing Court has committed an illegality and perversity in
granting time to the respondent No.1 to deposit the balance sale consideration.
For the reasons aforementioned, the impugned order is set aside and the
revision petition stands allowed. Pending applications, if any, also stand
disposed off.”
9.
Thus, the High Court took the view that it was too late in the day for the
appellant-herein (original plaintiff/decree holder) to deposit the balance sale
consideration as almost three years had elapsed since the date the First Appeal
filed by the judgment debtors came to be dismissed. According to the High Court
the appellant-herein as decree holder should have acted promptly to show his
bona fide.
SUBMISSIONS
ON BEHALF OF THE APPELLANT/DECREE HOLDER:
10.
The learned counsel appearing for the appellant-herein vehemently submitted
that the High Court committed a gross error in passing the impugned order. She
would submit that mere delay of three years in filing the execution petition
and seeking permission of the executing court to deposit the balance sale
consideration would not render the decree of specific performance inexecutable.
She would submit that even otherwise a decree of specific performance can be
executed within a period of 12 years in accordance with Article
136 of the Limitation Act.
11.
The learned counsel further submitted that indisputably no application was
filed by the respondents-herein/judgment debtors for rescission of the contract
under Section 28 of the Specific Relief Act. It was further pointed
out that after the executing court passed the order the appellant herein
deposited the entire balance sale consideration of Rs. 4,87,000/- on 20th May
2019.
12.
In such circumstances referred to above the learned counsel prayed that there
being merit in her appeal, the same may be allowed and the impugned order
passed by the High Court may be set aside.
SUBMISSIONS
ON BEHALF OF THE RESPONDENTS/JUDGMENT DEBTORS:
13.
On the other hand, the learned counsel appearing for the respondents-herein
vehemently submitted that no error, not to speak of any error of law, could be
said to have been committed by the High
Court
in passing the impugned order. He would submit that there was a gross delay of
two years in seeking permission of the executing court to deposit the balance
sale consideration. He would submit that the trial court in its decree had
directed that the balance sale consideration shall be deposited by the
plaintiff within two months from the date of the judgment and decree. He would
submit that after the appeal of his clients came to be dismissed by the
appellate court, the plaintiff should have deposited the balance sale
consideration within a period of two months thereafter.
14.
The learned counsel further submitted that just because the respondents did not
file any application under Section 28 of the Specific Relief Act for
rescission of the contract that by itself would not be sufficient to condone
the delay of four years in depositing the balance sale consideration. In other
words, he would submit that merely because rescission of contract was not
sought by the respondents- herein/judgment debtors the same does not
automatically result in extension of time.
15.
The learned counsel in support of his aforesaid submissions placed reliance on
the following decisions of this Court:-
i. Prem Jeevan v.
K.S. Venkata Raman and Another. reported in (2017)11 SCC 57 ii. V.S.
Palanichamy Chettiar Firm v. C. Alagappan reported in (1999)4 SCC 702.
16. In
such circumstances referred to above the learned counsel prayed that
there being no merit in this appeal the same may be dismissed.
ANALYSIS
17.
Having heard the learned counsel appearing for the parties and having gone
through the materials on record the only question that falls for our
consideration is whether the High Court committed any error in passing the
impugned order?
18.
The following facts are not in dispute:-
a) The suit filed by
the appellant-herein seeking specific performance of contract based on an
agreement of sale executed by the respondents-herein came to be allowed on 20th
January 2012.
b) In the decree
passed by the trial court the plaintiff was directed to deposit the balance
sale consideration within two months.
c) The judgment and
decree passed by the trial court was challenged by the defendants in appeal.
The appeal came to be dismissed on 21.04.2015.
d) While dismissing
the appeal the appellate court did not prescribe any particular time limit to
deposit the balance sale consideration. In other words, the appellate court did
not say anything as to within what period of time the decree holder should
deposit the balance sale consideration and get the decree executed.
e) After a period of
two years from the date the appeal came to be dismissed the decree holder
preferred execution petition wherein he sought permission to deposit the balance
sale consideration. The executing court permitted the decree holder to
deposit the balance sale consideration vide order dated 06.05.2019. It is not
in dispute that the balance sale consideration came to be deposited on 20th May
2019.
19.
Before adverting to the rival submissions canvassed on either side, we must
look into two decisions of this Court, on which strong reliance has been placed
by the respondents-herein. We start with the decision in Prem
Jeevan (supra).
20. In Prem
Jeevan (supra) a decree for specific performance was granted in favour of
the respondent-plaintiffs on 25-9-2008 as follows:-
“In the result, the
suit of the plaintiff is decreed with costs directing Defendant 1 to execute
and register sale deed in favour of the plaintiff in respect of the suit
schedule property within two months from the date of this order after receipt
of balance sale consideration of Rs 10,50,000 (sic with interest) at 6% per
annum from 27-9-2002 i.e. from the date of agreement of sale. It is further decreed
that in case Defendant 1 refuses to receive the balance sale consideration with
interest the plaintiff is at liberty to deposit the said amount into the Court
and to obtain regular sale deed through Court.”
21.
The respondents therein claimed to have a cheque on 4-12-2008 for the amount in
question but the same was returned, as not accepted by the judgment-debtor,
appellant therein. Thereafter the decree- holders applied for execution
sometime in the year 2010, after making the deposit of the decretal amount on
7-10-2010.
22.
The judgment-debtor filed an application before the executing court objecting
to the execution of the decree as the amount in question was not deposited by
the decree-holders within the stipulated time, rendering the decree in executable
in the absence of extension of time.
23.
The executing court upheld the objection holding:-
“There is no
documentary proof to show that he sought enlargement of time for paying the
purchase money under Section 28(1) of the 1963 Act. Without seeking
extension of time the respondent herein filed this EP on 7-10-2010 i.e. after a
period two years two months. As per the decision in Suggula Venkata
Subrahmanyam v. Desu Venkata Rama Rao [Suggula Venkata Subrahmanyam v. Desu
Venkata Rama Rao, (2010) 5 ALD 807 : 2010 SCC OnLine AP 670] the execution
petition for obtaining specific performance is not maintainable.”
24.
On a revision having been filed by the decree-holders, the High Court reversed
the order of the executing court and held:-
“17. 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.
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.”
25.
In such circumstances referred to above, this Court held as under:-
“8. Reference
to Order XX Rule 12A CPC shows that in every decree of specific
performance of a contract, the court has to specify the period within which the
payment has to be made. In the present case, the said period was two months
from the date of the decree.
9. In absence of the
said time being extended, the decree-holder could execute the decree only by
making the payment of the decretal amount to the judgment-debtor or making the
deposit in the court in terms of the said decree. In the present case, neither the
said deposit was made within the stipulated time nor extension of time was
sought or granted and also no explanation has been furnished for the delay in
the making of the deposit. No doubt, as contended by the learned counsel for
the decree-holders, relying on the judgment of this Court in Ramankutty
Guptan v. Avara reported in (1994) 2 SCC 642, in an appropriate case the
court which passed the decree could extend the time as envisaged in
the Specific Relief Act, 1963. In the present case no such steps have been
taken by the decree-holders.
10. In the 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 the 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.”
26.
Thus, the ratio of the decision in Prem Jeevan (supra) should be
understood as laying down a proposition of law that it is incorrect to say 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 the period for deposit, with the only
obligation on the part of the decree holders to pay interest. In the said case
this Court ultimately took the view that merely because rescission of contract
was not sought by the judgment debtor the same would not automatically result
in extension of time.
27.
What is important to note in the decision referred to above is that
this Court was looking into the decree passed by the trial court prescribing
two months time period to deposit the balance sale consideration. What was
directly in consideration before this Court was the decree passed by the trial
court. It appears that in the said case the matter was not carried further in
appeal. In the case on hand the original decree passed by the trial court was
challenged by the defendants in First Appeal and the said First Appeal
came to be dismissed. Therefore, in Prem Jeevan (supra) this
Court directly considered the effect of non compliance of the time period
prescribed in the original decree passed by the trial court for the purpose of
deposit of the balance sale consideration.
28. In V.S.
Palanichamy Chettiar Firm (supra) this Court while adverting to the
decision of this Court in Ramankutty Guptan v. Avara reported in
(1994) 2 SCC 642, held:-
“15. … This Court
observed that when the decree specifies the time for performance of the
conditions of the decree, on its failure to deposit the money, Section
28(1) itself gives power to the court to extend the time on such terms as
the court may allow to pay the purchase money or other sum which the court has
ordered him to pay. The Court held, after noticing the conflict of decisions by
the Bombay [Maruti Vishnu Kshirsagar v. Bapu Keshav Jadhav, 1969 SCC
OnLine Bom 39 : AIR 1970 Bom 398] High Court and the Andhra Pradesh [Ibrahim
Shariff v. Masthan Shariff, 1966 SCC OnLine AP 251 : (1967) 2 An WR 60] High
Court, that when the court which passed the decree and the executing court is
the same, application under Section 28 can be filed in the executing
court. However, where a decree is transferred for execution to a transferee
executing court then certainly the transferee court is not the original court
and the executing court is not the “same court” within the meaning
of Section 28 of the Act. But when an application has been made in
the court in which the original suit was filed and the execution is being
proceeded with, then certainly an application under Section 28 is
maintainable in the same court.”
29.
In the above referred case, an agreement to sell had been executed nineteen
years earlier on 16-2-1980 and no explanation was forthcoming as to why the
balance of the sale consideration was not deposited within the time granted by
the court. No application for extension was made under Section 28 of
the Specific Relief Act. This Court observed that merely because a suit was
filed within a period of three years prescribed by Article 54 of
the Limitation Act, 1963, that did not absolve the vendee-plaintiff from
demonstrating that he was ready and willing to perform the agreement and
whether the non-performance was on account of obstacles placed by the vendor or
otherwise. In that context, this Court held:-
“17. … The court has
to see all the attendant circumstances including if the vendee has conducted
himself in a reasonable manner under the contract of sale. That being the
position of law for filing the suit for specific performance, can the court, as
a matter of course, allow extension of time for making payment of balance
amount of consideration in terms of a decree after 5 years of passing of the
decree by the trial court and 3 years of its confirmation by the appellate
court? It is not the case of the respondent decree-holders that on account of
any fault on the part of the vendor judgment-debtor, the amount could not be
deposited as per the decree. That being the position, if now time is granted,
that would be going beyond the period of limitation prescribed for filing of
the suit for specific performance of the agreement though this provision may
not be strictly applicable. It is nevertheless an important circumstance to be
considered by the Court. That apart, no explanation whatsoever is coming from
the respondent decree-holders as to why they did not pay the balance amount of
consideration as per the decree except what the High Court itself thought fit
to comment which is certainly not borne out from the record. Equity demands
that discretion be not exercised in favour of the respondent decree-holders and
no extension of time be granted to them to comply with the decree.” Thus, under
the above circumstances, this Court held that the vendee, who had applied for
extension of time to deposit the balance price, was not entitled to such
extension. This Court observed that in deciding application under Section
28(1), the court has to see all the attendant circumstances including the
conduct of the parties. On facts, this court found that there was no default on
the part of the vendor judgment- debtor. That no explanation whatsoever came
from the vendee decree-holder for failure to deposit the balance price. In the
circumstances, on facts, this Court refused extension of time to deposit the
balance price.
30. Order
XX Rule 12A of the CPC reads thus:-
“12A. Decree for
specific performance of contract for the sale or lease of immovable property. –
Where a decree for the specific performance of a contract for the sale or lease
of immovable property orders that the purchase- money or other sum be paid by
the purchaser or lessee, it shall specify the period within which the payment
shall be made.”
31.
The Law Commission for insertion of Rule 12A stated:-
“This rule is new, and
is intended to provide that a decree for specific performance of contracts for
the sale or lease of immoveable property should specify the period within which
the purchase-money or other amount is to be paid.
An elaborate provision
regarding decrees for specific performance of such contracts was suggested in
an earlier report of the Law Commission. The recommendation there was to the
effect, that complete relief (such as possession, etc., rescission, refund of
earnest money, etc.) in such a suit should be available by application in the
suit itself (instead of in execution as at present), and that appropriate
provision should be made in the Civil Procedure Code enabling such applications
to be made and orders thereon and also for appeals.
It is considered, that
so far as a provision authorising the making of an application and orders
thereon is concerned, Section 28 of the Specific Relief Act, 1963
(read with Section 22) would be adequate. So far as appeals from such
orders are concerned, the orders, it is considered, would fall within the definition
of ‘decree’ given in Section 2(2) of the Civil Procedure Code. It is
thought, that the only specific provision which is payment required is to the
effect that the decree should specify the period for of the purchase-money or
other amount due under the decree.
Necessary
amendment is proposed.”
32.
The Joint Committee also observed:-
“The Committee,
therefore, feel that the proper place for the proposed rule is in Order XXI and
not in Order XX. The Committee also note that the proposed Rule 12-B is almost
a verbatim copy of Rule 34 of Order XXI subject to certain modifications. The
Committee, therefore, feel that the proposed Rule 12-B should be omitted from
Order XX, and, instead of omitting Rule 34, modifications, as suggested by the
Law Commission, should be made therein. Proposed Rule 12-B has been omitted
accordingly.”
33.
In the Statement of Objects and Reasons, it has been said:-
“Clause 73, sub-clause
(viii). – New Rule 12-A seeks to provide that the decree for specific
performance of contracts for sale or lease of immovable property should specify
the period within which the purchase-money or other amount is to be paid”
34.
Rule 12A of Order XX, as inserted by the Amendment Act, 1976 enacts that a
decree for specific performance of contract for sale or lease of immoveable
property should specify the period within which purchase money or other sum
should be paid by the purchaser or by the lessee as the case may. Rule 12A
makes it obligatory for the court to specify in the decree for specific
performance of contract for sale or lease of immovable property the date by
which purchase money or other sum should be paid by the vendee or lessee. The
trial court has jurisdiction to fix time-limit for depositing the money by the
decree- holder under Section 28 of the Specific Relief Act, 1963. The
decree is preliminary in nature and the court retains control over it.
35.
In the case on hand, in accordance with the provisions of Order XX Rule 12A
referred to above the trial court while allowing the suit and granting the
relief of specific performance specifically stipulated two months time period
for the plaintiff to deposit the balance sale consideration and get the sale
deed executed in his favour.
36.
However, the judgment and decree passed by the trial court came to be
challenged before the appellate court. Once the judgment passed by the trial
court is challenged before the appellate court the judgment and order passed by
the trial court would get merged with the judgment of the appellate court
irrespective of the fact whether the appeal is allowed or dismissed. In the
case on hand the appeal stood dismissed.
37.
The law in the aforesaid context is well settled. The doctrine of merger is
founded on the rationale that there cannot be more than one operative decree at
a given point of time. The doctrine of merger applies irrespective of whether
the appellate court has affirmed, modified or reversed the decree of the trial
court.
38. In Kunhayammed
v. State of Kerala reported in (2000) 6 SCC 359, while explaining the
doctrine of merger, this Court held thus:-
“12. The logic
underlying the doctrine of merger is that there cannot be more than one decree
or operative orders governing the same subject-matter at a given point of time.
When a decree or order passed by an inferior court, tribunal or authority was
subjected to a remedy available under the law before a superior forum then,
though the decree or order under challenge continues to be effective and
binding, nevertheless its finality is put in jeopardy. Once the superior court
has disposed of the lis before it either way — whether the decree or order
under appeal is set aside or modified or simply confirmed, it is the decree or
order of the superior court, tribunal or authority which is the final, binding
and operative decree or order wherein merges the decree or order passed by the
court, tribunal or the authority below. However, the doctrine is not of
universal or unlimited application. The nature of jurisdiction exercised by the
superior forum and the content or subject-matter of challenge laid or which
could have been laid shall have to be kept in view.”
39.
Further, while explaining the position that emerges on the grant of special
leave to appeal by this Court, it was observed in Kunhayammed (supra)
that:-
“41. Once a special
leave petition has been granted, the doors for the exercise of appellate
jurisdiction of this Court have been let open. The order impugned before the
Supreme Court becomes an order appealed against. Any order passed thereafter
would be an appellate order and would attract the applicability of doctrine of
merger. It would not make a difference whether the order is one of reversal or
of modification or of dismissal affirming the order appealed against. It would
also not make any difference if the order is a speaking or non-speaking one.”
40.
The position of law as aforesaid has been affirmed and reiterated by a
three-Judge Bench decision of this Court in Khoday Distilleries Ltd. v.
Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd. reported in (2019) 4 SCC
376.
41.
The decision in Kunhayammed (supra) was followed by a three- Judge
Bench decision of this Court in Chandi Prasad v. Jagdish Prasad, reported
in (2004) 8 SCC 724 , which held thus:-
“23. The doctrine of
merger is based on the principles of propriety in the hierarchy of the justice
delivery system. The doctrine of merger does not make a distinction between an
order of reversal, modification or an order of confirmation passed by the
appellate authority. The said doctrine postulates that there cannot be more
than one operative decree governing the same subject-matter at a given point of
time.
24.
It is trite that when an appellate court passes a decree, the decree of the
trial court merges with the decree of the appellate court and even if and
subject to any modification that may be made in the appellate decree, the
decree of the appellate court supersedes the decree of the trial court. In
other words, merger of a decree takes place irrespective of the fact as to whether
the appellate court affirms, modifies or reverses the decree passed by the
trial court.”
42.
The decision in Chandi Prasad (supra) was followed by a two- Judge
Bench of this Court in Shanthi v. T.D. Vishwanathan reported in
(2019) 11 SCC 419 rendered on 24-10-2018 in the following terms:-
“7. … When an appeal
is prescribed under a statute and the appellate forum is invoked and
entertained, for all intents and purposes, the suit continues. When a higher
forum entertains an appeal and passes an order on merit, the doctrine of merger
would apply. The doctrine of merger is based on the principles of the propriety
in the hierarchy of the justice delivery system. The doctrine of merger does
not make a distinction between an order of reversal, modification or an order
of confirmation passed by the appellate authority. The said doctrine postulates
that there cannot be more than one operative decree governing the same
subject-matter at a given point of time.”
(Emphasis
supplied)
43.
The doctrine of merger operates as a principle upon a judgment being rendered
by the appellate court. In the present case, once the appellate court affirmed
the judgment and decree of the trial court, there was evidently a merger of the
judgment of the trial court with the decision of the appellate court. Once the
appellate court renders its judgment, it is the decree of the appellate court
which becomes executable.
44.
The decree for specific performance is in the nature of a preliminary decree.
Both the parties have reciprocal rights and obligations flowing out of the
decree. The decree may fix the time limit for performance and in some cases may
also provide for the consequence for non-performance within the time limit or
the decree may even be silent on this aspect.
45.
The decree enforces specific performance of the contract. The contract between
the parties is thus not extinguished by passing of a decree for specific
performance and it subsists despite the decree. Section 28 (1) of the
Act, makes it clear that the Court does not become a functus officio after the
grant of the decree for specific performance and it retains its power and
jurisdiction to deal with the decree till the sale deed is executed.
46.
The Court has been conferred with the power to extend the time to pay the
amount and while taking into consideration the delay that is sought to be
condoned by the plaintiff, the Court does not adjudge the same like an
application under Section 5 of the Limitation Act, where each day's
delay must be explained. The Court is given the discretion to extend the time
and the provision therefore seeks to provide complete relief to both the
parties in terms of the decree for specific performance.
47.
The power and jurisdiction granted under Section 28 (1) of the Act,
enables the Court to extend the period for payment of the purchase money if it
has not been paid within the period allowed by the decree. It also enables the
judgment debtor to seek for rescinding the contract for non-compliance of the
directions given in the decree and while considering this application, the
Court is given the discretion to rescind the contract or in an appropriate case
to even extend the time for paying the purchase money.
48.
It should also be borne in mind that appeal is a continuation of the original
proceedings and the power of the Court to extend the time for depositing
the amount can be exercised even in the appellate stage by the Court.
49.
In the considered view of this Court, the Appellate Court, after deciding the
appeal on merits, could have called upon the plaintiff to deposit the balance
sale consideration by fixing a time limit. This would have at least given an
opportunity to the plaintiff to fulfil his obligation. The non-payment of the
balance sale consideration within the time period fixed by the Trial Court does
not amount to abandonment of the contract and consequent rescinding of the
same. The real test must be to see if the conduct of the plaintiff will amount
to a positive refusal to complete his part of the contract. There must be an
element of wilful negligence on the part of the plaintiff before a Court
proceeds to invoke Section 28 of the Act and rescind the contract.
(See: Krishnamoorthy v. Shanmugasundaram & Anr., 2022 SCC OnLine Mad 963)
50.
This litigation is an eye-opener for the appellate courts reminding that they
owe a duty to comply with the provisions of Order XX Rule 12A of the CPC.
Where an appeal is filed against the decree passed by the trial court and the
appeal is disposed of, the appellate court should specify time to deposit the
balance sale consideration. It is too much to say that since the trial court
had granted two months time to the decree holder to deposit the balance sale
consideration the same time period would apply even to the decree that may be
drawn by the appellate court. What is executable is the decree passed by the
appellate court. The appellate court owes a duty to specify the time period. If
during the specified time period the decree holder is not in a position to
deposit the balance sale consideration or, in other words, fails to deposit the
balance sale consideration and later upon expiry of the specified time period
seeks permission to deposit, then it would be within the discretion of the
trial court to grant further time to deposit the balance sale consideration or
decline. This discretion has to be exercised judiciously keeping in mind
various factors like bona fide of the decree holder, the cause for failure to
deposit the balance sale consideration in time, the length of delay and also
the equities that might have been created during the interregnum period in
favour of the judgment debtor. It is the cumulative effect and considerations
of such factors that should weigh with the court concerned while permitting the
decree holder to deposit the balance sale consideration beyond the time period
that might have been prescribed by the trial court in its final decree.
51.
In the case on hand, undoubtedly, there was a delay on the part of the decree
holder in filing the execution petition and thereby seeking permission to
deposit the balance sale consideration. Just because a decree of specific
performance can be executed within 12 years from the date of original decree or
from the date the appellate court affirms such decree that, by itself, does not
mean that a decree holder deposits the balance sale consideration at his own
sweet will.
52.
If the appellate court had failed to stipulate any particular time period then
it is expected of the decree holder to deposit the same within a reasonable
period of time.
53.
As noted earlier, the balance sale consideration of Rs. 4,87,000/- came to be
deposited by the decree holder way back in 2019. In the overall facts and
circumstances of the case we have reached the conclusion that High Court should
not have interfered with the order passed by the executing court.
54. In Ramankutty
Guptan (supra) this Court while holding that the application for extension
of time for payment of balance amount of consideration can be filed in the
Court of the first instance as well as in the appellate court, observed that.
“It is to be seen that the procedure is hand-maid for justice and unless the
procedure touches upon jurisdictional issue, it should be moulded to
subserve substantial justice. Therefore, technicalities would not stand in the
way to subserve substantive justice”
55.
The balance sale consideration deposited by the appellant-plaintiff way back on
20-05-2019 i.e. Rs. 4,87,000/- shall now be disbursed in favour of the
defendants with interest accumulated thereon within a period of four weeks from
today. Since there was a delay of 2 years in filing the execution petition and
delay of 4 years in depositing the balance sale consideration of Rs. 4,87,000/-
we are of the view that the respondents-herein (judgment-debtors) are entitled
to simple interest at the rate of 9 per cent per annum from the date of the
judgment and order passed by the appellate court till the date the balance
consideration was deposited i.e. 20.05.2019. The executing court shall
calculate the interest amount at the rate of 9 per cent simple interest and
direct the appellant-herein to deposit the said amount within a period of two
weeks from today.
56.
In view of the aforesaid, the appeal succeeds and hereby allowed. The impugned
order passed by the High Court is set aside and that of the executing court is
affirmed.
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