2025 INSC 81
SUPREME COURT OF INDIA
(HON’BLE J.B.
PARDIWALA, J. AND HON’BLE R. MAHADEVAN, JJ.)
BALBIR SINGH
Petitioner
VERSUS
BALDEV SINGH (D)
THROUGH HIS LRS.
Respondent
Civil
Appeal Nos. 563-566 OF 2025 (Petitions for Special Leave to Appeal (C) Nos.
22802-22805 of 2022)-Decided on 17-01-2025
Civil, Specific Performance
(A)
Specific Relief Act, 1963, Section 28 – Specific performance - Recession of
contract – Application
for - Whether the defendants/ judgment debtors could have prayed for rescission
of contract on the ground that the plaintiffs/ decree holders had failed to
deposit the balance sale consideration within the stipulated time period of 20
days as prescribed in the original decree – Section 28 of the 1963 act
corresponds to Section 35(c) of the Specific Relief Act, 1877 (“the repealed
Act”) it was open to the vendor or
lessor in the circumstances mentioned in that section to bring a separate suit
for rescission - This section goes further and gives to the vendor or lessor
the right to seek rescission in the same suit, when after the suit for specific
performance is decreed the plaintiff fails to pay the purchase money within
the period fixed – Section 28 of the Act, 1963 seeks to provide complete
relief to both the parties in terms of a decree for specific performance in the
same suit without requiring one of the parties to initiate separate proceedings
- The object is to avoid multiplicity of suits - Likewise, under the present
provision where the purchaser or lessee has paid the money, he is entitled in
the suit for specific performance to the reliefs as indicated in sub-section
(3) like, partition, possession, etc. - A suit for specific performance does
not come to an end on passing of a decree and the court which has passed the
decree for specific performance retains the control over the decree even after
the decree has been passed - The decree
for specific performance has been described as a preliminary decree - The power
under Section 28 of the Act is discretionary and the court cannot
ordinarily annul the decree once passed by it - Although the power to annul the
decree exists yet Section 28 of the Act provides for complete relief
to both the parties in terms of the decree - The court does not cease to have
the power to extend the time even though the trial court had earlier directed
in the decree that payment of balance price to be made by certain date and on
failure the suit to stand dismissed - The power exercisable under this section
is discretionary.
(Para 25 and 26)
(B)
Merger of decree -
Effect of merger - of the trial
court’s decree with that of the decree passed by High Court in second appeals –
Held that once the High Court allowed the second appeals in favour of the
plaintiffs, there was evidently a merger of the judgment of the trial court
with the decision of the High Court - Once the High Court as an appellate court
in second appeal renders its judgment it is a decree of the second appellate
court which becomes executable hence, the entitlement of the decree holder to
execute the decree of the second appellate court cannot be defeated - 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.
(Para 27, 28 and 34)
(C)
Doctrine of merger –
Explained - Held that the doctrine
of Merger or the Merger doctrine in civil proceedings is a common law doctrine
that stems from the idea of maintenance of the decorum of the hierarchy of
courts and tribunals - The doctrine is based on the simple reasoning that there
cannot be, at the same time, more than one operative order governing the same
subject matter - To put it simply, if there are two orders passed on the same
subject matter, that is, one passed by a subordinate court like a tribunal and
another passed by a superior court like the High Court, the operative part of
the order by the subordinate court (tribunal in this instance) may be merged
with the order of the High Court.
(Para 49)
(D)
Civil Procedure Code, 1908, Section 148 - Specific Relief Act, 1963, Section 28
– Specific performance – Conditional decree – Enlargement of time - Recession
of contract – Application for -Section 148 of the Code empowers the Court
to deal with events that might arise subsequent to an order, for the purpose of
enlarging time for payment even though it had been peremptorily fixed - When
time for payment of money is extended, it does not mean a modification of the
decree - The trial court has power to extend the time, and the expression “such
further period as the court may allow” would mean the court which had
passed the decree, or, where the application under Section 28 of the
Act of 1963, is filed - Court does not lose its jurisdiction after the grant of
decree for specific performance nor it becomes functus officio - The very fact that Section 28 of the
Act itself gives power to grant order of rescission of the decree, the same
would indicate that till the sale deed is executed in execution of the decree,
the Trial Court retains its power and jurisdiction to deal with the decree of
specific performance - The Court has the discretion to extend time for
compliance of the conditional decree as mentioned in the decree for specific
performance.
(Para
42 to 25)
JUDGMENT
J.B. Pardiwala, J.:- Leave granted.
2.
Since the issues raised in all the captioned appeals are same, the parties are
also same and the challenge is also to the self-same judgment and order passed
by the High Court those were taken up for hearing analogously and are being
disposed of by this common judgment and order.
3.
These appeals arise from the judgment and order passed by the High Court
of Punjab & Haryana at Chandigarh dated 09.09.2022 in Civil Revision
No. 6706 of 2019, Civil Revision No. 6952 of 2019, Civil Revision No. 6980
of 2019 and Civil Revision No. 7053 of 2019 respectively by which the High
Court rejected all the four revision applications filed by the original
defendants by a common order and thereby affirmed the order passed by the
executing court permitting the original plaintiff to deposit the balance sale
consideration and rejecting the application filed by the defendants (judgment
debtors) under Section 28 of the Specific Relief Act, 1963 (For
short, “the Act”) for rescission of contract.
4.
The facts of this litigation giving rise to these appeals as recorded by the
High Court in its impugned judgment read thus:
“2. Four connected
revision petitions have come up for final disposal. The learned counsel
representing the parties are ad idem that these four revision petitions can,
conveniently, be disposed of by a common order.
3. Some peculiar facts
are required to be noticed. As many as four different suits for grant of
specific performance of the agreement to sell were decreed by the trial Court
on 16.08.1994. Four identical conditional decrees for specific performance of
the agreement to sell were passed while permitting the decree holder to deposit
the balance sale consideration in the Court within a period of 20 days and the
defendant was directed to get the sale deed executed in favour of the
plaintiffs. However, the judgments and decrees passed by the trial Court were
reversed on 24.11.1994 by the First Appellate Court, which led to filing of
four regular second appeals. The High Court allowed three regular second
appeals on 03.05.2018, whereas, the fourth one was allowed 24.05.2018.
Resultantly, the decrees passed by the trial Court were restored. The decree
sheets were prepared on 31. 05 .2018 and a copy thereof was supplied to the
plaintiffs. They filed four execution petitions on 04.09.2018. On 07.09.2018,
applications to deposit the amount were also filed. The judgment debtors also
filed an application under Section 28 of the Specific Relief Act,
1963 {hereinafter referred to as "the 1963 Act'') for rescission of the
contract on account of non-payment of the remaining sale consideration. The
decree holder as permitted by the Court, deposited the decreetal amount in the
Court on 07.09.2018. Consequently, on 16.08.2019, the Executing Court has
dismissed the application for rescission of the contract. These four revision
petitions have been filed for setting aside the orders dated 07.09.2018 and
16.08.2019.”
5.
The High Court proceeded to record the submissions canvassed by the parties as
under:
“5. On one hand, the
learned counsel representing the judgment debtors contends that as per the
trial Court's judgment dated 16.08.1994, the amount was required to be
deposited within a period of 20 days. Since the decree holders have failed to
deposit the amount within the stipulated time, the contract was required to be
rescinded.
He further contends
that the High Court, while allowing the regular second appeals, on 03.05.2018
and 24.05.2018, respectively, restored the judgment and decree passed by the trial
Court. He submits that at the most, the amount could be deposited within a
period of 20 days from 03.05.2018 and 24.05.2018, respectively. Since the
decree holders failed to deposit the amount, therefore, the contract should
have been ordered to be rescinded. He, in support of his submission~, relies
upon the judgment passed by the Supreme Court in Prem Jeevan v. K.S.
Venkata Raman and Another 2017 (2) Civil Court Cases 1.
6. On the other hand,
the learned counsel representing the decree holders submits that the trial
Court has correctly extended the period and permitted the decree holders to
deposit the amount as ordered in the conditional decree. He submits that a
decree passed in favour of the decree holder cannot be permitted to be
defeated, unless the Court comes to a conclusion that the decree holder has
intentionally failed to honour the conditional decree.”
6.
The High Court ultimately while rejecting all the four revision petitions held
as under:
“12. From a careful
examination of the aforesaid judgments, it is apparent that Section
28 of the 1963 Act enables the Executing Court to extend the period
keeping in view the conduct of the parties. The Courts have also recognized
that the decree passed by the trial Court stands merged with the decree passed
by the Appellate Court. In this case, the High Court did not fix any time
period for deposit of the amount. The application for execution was filed
within a period of four months. Immediately, on filing the execution petition,
the decree holders have filed an application seeking permission to deposit the
remaining amount, which has been allowed. Undoubtedly, the judgment debtors
have filed the various applications for rescission of the contract before the
amount was deposited, however, in the facts of the case, this Court does not
find that there was any unreasonable delay particularly when the High Court did
not fix any period for deposit of the amount. The argument of learned counsel
representing the petitioner that 20 days' period, as directed by the trial
Court, shall revive, is to be examined in the facts of the present case.
The decree passed by the trial Court stands merged with the judgment and decree
passed by the High Court in the regular second appeal The question is
"whether the decree holder willfully failed to deposit the amount under
the decree particularly when the High Court did not fix the time for such
payment or there was, in fact, unreasonable delay on part of the decree holder
to deposit the amount?
13. In view of the
detailed discussion here-in-before the aforesaid question is answered in the
negative.
14. Keeping in view
the facts of the case, it is not considered appropriate to conclude that the
decree holders failed to honour the conditional decree. The trial Court has
exercised its discretion prudently while extending the time and this Court does
not find any reasonable ground to interfere with the order in the exercise of
its revisional jurisdiction, which has been passed in accordance with law.
Consequently, all the four revision petitions are
dismissed.”
7.
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 whether the High Court committed any error in passing the impugned
judgment and order?
8.
The original decree in one of the suits reads thus:
“In view of the
foregoing findings on the aforesaid issues, the suit of the plaintiff succeeds
and it is hereby decree with costs in his favour for possession by way of specific
performance of the agreement dated 5.4.1989 in respect of the suit land
mentioned in para no.1 of the plaint and against the defendant.
The plaintiff is
directed to deposit the balance sale consideration in the court within the
period of twenty days and all the defendant are directed to get the sale-deed
executed in favour of the plaintiff in terms of the agreement on or before
15.9.1994. In default, the plaintiff shall be entitled to get the sale-deed
executed and attested through the court. Decree sheet be prepared accordingly.
File be consigned to the record room.”
9.
Identical decrees as above were filed in the other connected suits too.
10.
Thus, the plain reading of the decree referred to above indicates
that the plaintiff was directed to deposit the balance sale consideration in
the court within a period of 20 days and the defendants, at the same time, were
directed to execute the sale deeds in favour of the plaintiff.
11.
Before the plaintiff could deposit the balance sale consideration as directed
by the trial court within the stipulated time period of 20 days the defendants
went in appeal before the district court. The appeals were preferred on 26th
August 1994. The first appellate court allowed the appeals vide judgment and
order dated 16th August 1994. Thus, the judgment and decree passed by the trial
court granting specific performance came to be set aside.
12.
In such circumstances referred to above the plaintiff went to the
High Court and filed regular second appeals. All the second appeals came to be
allowed vide judgment and order dated 03.05.2018 and the judgment and order
passed by the appellate court came to be set aside and the original decree passed
by the trial court granting specific performance came to be restored.
13.
Against the judgment and order passed by the High Court in second appeals the
defendants came to this court seeking leave to appeal. While the SLPs filed by
the defendants were pending before this Court, the original plaintiff (decree
holder) preferred execution petition on 04.09.2018.
14.
The plaintiffs prayed for permission before the executing court to deposit the
balance sale consideration and the same was granted by the executing court vide
order dated 07.09.2018 on the very same day the plaintiff deposited the balance
sale consideration.
15.
On 18.01.2019 this Court dismissed all the SLPs filed by the defendants herein
thereby affirming the judgment and order passed by the High Court in second
appeals filed by the plaintiff.
16.
On 04.04.2019 the defendants/judgment debtors filed an application
under Section 28 of the Act to rescind the contract.
17.
The executing court vide order dated 16th August 2019 rejected the application
filed by the defendants under Section 28 of the Act referred to
above.
18.
What is important to note is that in 2019 the sale deeds were executed by the
defendants in favour of the plaintiffs.
19.
Vide the impugned judgment and order dated 23.09.2022 the challenge to the
orders passed by the executing court dated 07.09.2018 and 16.08.2019
respectively also failed.
20.
On 29.11.2022 the warrants of possession were issued for the purpose of
execution of the decree.
21.
On 07.12.2022 the execution petitions came to be dismissed as withdrawn as
possession of the suit lands was handed over to the plaintiffs.
22.
On 15.12.2022 this Court while issuing notice in the present SLPs stayed the
further proceedings of the execution petitions. It appears that it was not
brought to the notice of this Court that the execution petition had already
been disposed of and the possession of the suit lands had also been handed over
to the plaintiffs.
ANALYSIS:-
23.
In view of the aforesaid, two questions of law fall for our consideration.
First, the effect of merger of the trial court’s decree with that of the decree
passed by High Court in second appeals. Secondly, whether the defendants/
judgment debtors could have prayed for rescission of contract on the ground
that the plaintiffs/ decree holders had failed to deposit the balance sale
consideration within the stipulated time period of 20 days as prescribed in the
original decree.
24. Section
28 of the Act reads 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 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.”
25.
The present section corresponds to Section 35(c) of the Specific Relief Act,
1877 (hereinafter referred to as “the repealed Act”) under which it was open to
the vendor or lessor in the circumstances mentioned in that section to bring a
separate suit for rescission; but this section goes further and gives to the
vendor or lessor the right to seek rescission in the same suit, when after the
suit for specific performance is decreed the plaintiff fails to pay the
purchase money within the period
fixed. The present section, therefore, seeks to provide complete relief to both
the parties in terms of a decree for specific performance in the same suit
without requiring one of the parties to initiate separate proceedings. The
object is to avoid multiplicity of suits. Likewise, under the present provision
where the purchaser or lessee has paid the money, he is entitled in the suit
for specific performance to the reliefs as indicated in sub-section (3) like,
partition, possession, etc. A suit for specific performance does not come to an
end on passing of a decree and the court which has passed the decree for
specific performance retains the control over the decree even after the decree
has been passed.
26.
The decree for specific performance has been described as a preliminary decree.
The power under Section 28 of the Act is discretionary and the court
cannot ordinarily annul the decree once passed by it. Although the power to
annul the decree exists yet Section 28 of the Act provides for
complete relief to both the parties in terms of the decree. The court does not
cease to have the power to extend the time even though the trial court had
earlier directed in the decree that payment of balance price to be made by
certain date and on failure the suit to stand dismissed. The power exercisable
under this section is discretionary. [See : Chanda (dead) through Lrs. v.
Rattni and Anr. reported in (2007) 14 SCC 26]
27.
As stated above upon the decision of the High Court in the second appeals filed
by the plaintiffs (decree holders) there was a merger of the judgment of the
trial court with the decision which was rendered by the High Court in the
second appeals. Consequent upon the passing of the decree of the second
appellate court, the decree of the trial court merges with that of the same.
28.
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. The doctrine has been discussed and
explained succinctly by this Court in Surinder Pal Soni v. Sohan Lal
(Dead) through Legal Representatives, (2020) 15 SCC 771.
29. In Kunhayammed
v. State of Kerala, (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.”
30.
Further, while explaining the position that emerges on the grant of special
leave to appeal by this Court, it was observed:
“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.”
31.
This position of law 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., (2019) 4 SCC 376.
32.
The decision in Kunhayammed (supra) was followed by a three-Judge
Bench decision of this Court in Chandi Prasad v. Jagdish Prasad, (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.”
33.
The decision in Chandi Prasad (Supra) was followed by a two-Judge
Bench of this Court in Shanthi v. T.D. Vishwanathan, (2019) 11 SCC 419 :
(2019) 4 SCC (Civ) 787, 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.”
34.
Thus, once the High Court allowed the second appeals in favour of the
plaintiffs, there was evidently a merger of the judgment of the trial court
with the decision of the High Court. Once the High Court as an appellate court
in second appeal renders its judgment it is a decree of the second appellate
court which becomes executable hence, the entitlement of the decree holder to
execute the decree of the second appellate court cannot be defeated.
35.
The issue may be looked at from another perspective in terms of the provisions
of Section 28 of the Act referred to earlier.
36. Interpreting
the provisions of Section 28 of the Act, a three-Judge Bench of this
Court held in Sardar Mohar Singh v. Mangilal, (1997) 9 SCC 217:
“4. From the language
of sub-section (1) of Section 28, it could be seen that the court does not
lose its jurisdiction after the grant of the decree for specific performance
nor it becomes functus officio. The very fact that Section
28 itself gives power to grant order of rescission of the decree would
indicate that till the sale deed is executed in execution of the decree, the
trial court retains its power and jurisdiction to deal with the decree of
specific performance. It would also be clear that the court has power to
enlarge the time in favour of the judgment-debtor to pay the amount or to
perform the conditions mentioned in the decree for specific performance, in
spite of an application for rescission of the decree having been filed by the
judgment-debtor and rejected. In other words, the court has the discretion to
extend time for compliance with the conditional decree as mentioned in the
decree for specific performance.”
37. In Bhupinder
Kumar v. Angrej Singh, (2009) 8 SCC 766 : (2009) 3 SCC (Civ) 556, this Court
held thus :
“21. It is clear
that Section 28 gives power to the court either to extend the time
for compliance with the decree or grant an order of rescission of the
agreement. These powers are available to the trial court which passes the
decree of specific performance. In other words, when the court passes the
decree for specific performance, the contract between the parties is not
extinguished. To put it clearly the decree for specific performance is in the
nature of a preliminary decree and the suit is deemed to be pending even after
the decree.
22. Sub-section (1)
of Section 28 makes it clear that the court does not lose its
jurisdiction after the grant of decree for specific performance nor it becomes
functus officio. On the other hand, Section 28 gives power to the
court to grant an order of rescission of the agreement and it has the power to
extend the time to pay the amount or perform the conditions of decree for
specific performance despite the application for rescission of the
agreement/decree. In deciding an application under Section 28(1) of
the Act, the court has to see all the attending circumstances including the
conduct of the parties.”
38.
The learned counsel appearing on behalf of the respondents placed reliance on
the decision in V.S. Palanichamy Chettiar Firm v. C. Alagappan, (1999) 4
SCC 702. While adverting to the decision of this Court in Ramankutty
Guptan v. Avara, (1994) 2 SCC 642, the two-Judge Bench 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.”
39.
In the above case, the facts before this Court were that 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 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.”
40.
The facts noted in the above extract from the judgment indicate a situation
which is factually distinct. In that case, the balance of the sale
consideration was sought to be deposited three years after the confirmation of
the decree by the appellate court. In the present case the balance sale
consideration came to be deposited immediately after the second appeals came to
be allowed by the High Court in 2018 by seeking permission of the executing
court.
41.
In a given case the trial court while passing a conditional decree in a suit
for specific performance may say so in so many words that if the plaintiff
fails to deposit the balance sale consideration within a particular period of
time stipulated by the court while allowing the suit, the failure to make such
deposit within the time prescribed would have the effect of dismissal of suit.
In other words, there could be a decree which may say that if the plaintiff
fails to deposit the balance sale consideration within the stipulated time
period, the suit shall automatically stand dismissed. If such is the nature of
the decree then will the court concerned become “functus officio” and
would have no jurisdiction to grant extension of time fixed by the decree for
the purpose of deposit? This is one issue that the Supreme Court one day in an
appropriate case may have to consider and decide. We say so because there are
conflicting views of different High Courts, including to some extent of this
Court. In the present case, it is not necessary for us to look into and decide
this issue because the decree is not of such a nature.
42. In
the case of Mahanth Ram Das v. Ganga Das, AIR 1961 SC 882, this Court has
taken the view that Section 148 of the Code of Civil Procedure
(C.P.C.) empowers the Court to deal with events that might arise subsequent to
an order, for the purpose of enlarging time for payment even though it had been
peremptorily fixed, but in that connection the Court observed as follows:
“…Such procedural
orders, though peremptory (conditional decrees apart) are, in essence, in
terrorem, so that dilatory litigants might put themselves in order and avoid
delay. They do not, however, completely estop a Court from taking note of
events and circumstances which happen within the time fixed.”
43.
The aforesaid gives an impression whilst laying down, in effect, that s. 148
must be liberally construed, the Court has excluded from its ambit conditional
decrees.
44.
It is well settled position of law that when time for payment of money is
extended, it does not mean a modification of the decree. The trial court has
power to extend the time, and the expression “such further period as the court
may allow” would mean the court which had passed the decree, or, where the
application under Section 28 of the Act of 1963, is filed.
45. In
the case of Sardar Mohar Singh (supra), this Court had held that the Court
does not lose its jurisdiction after the grant of decree for specific
performance nor it becomes functus officio. This Court had further held that
the very fact that Section 28 of the Act itself gives power to grant
order of rescission of the decree, the same would indicate that till the sale
deed is executed in execution of the decree, the Trial Court retains its power
and jurisdiction to deal with the decree of specific performance. The Court has
the discretion to extend time for compliance of the conditional decree as
mentioned in the decree for specific performance.
46.
One very unusual contention was raised by the learned counsel appearing for the
appellant as regards the failure on the part of the decree-holder(plaintiff) to
deposit the balance sale consideration within 20 days from the date of the
judgment passed by the High Court in second appeal. The argument is that the
trial court while allowing the suit filed by the plaintiff for specific
performance had specifically directed that the plaintiff shall deposit the
balance sale consideration with the court within 20 days from the date of the
judgment passed by the trial court. According to the learned counsel this very
decree passed by the trial court came be affirmed by the High Court in
second appeal and, therefore, the plaintiff was obliged to deposit the balance
sale consideration within 20 days from the date the High Court delivered its
judgment in second appeal. This argument proceeds applying the doctrine of
Merger.
47.
We do not find any merit in the aforenoted submission canvased on behalf of the
appellant herein.
48. In
the aforesaid context, we may refer to the observations made by the Chief
Justice M.C. Chagla (as His Lordship then was) in the case of Commissioner
of Income Tax, Bombay v. Tejaji Farasram reported in AIR 1954 BOM 93. We
quote the relevant observations as under:
“It is a well
established principle of law that when an appeal is provided from a decision of
a tribunal and the appeal Court after hearing the appeal passes an order, the
order of the original Court ceases to exist and is merged in the order of the
appeal Court, & although the appeal Court may merely confirm the order of
the trial Court, the order that stands and is operative is not the order of the
trial Court but the order of the appeal Court.”
49.
The doctrine of Merger or the Merger doctrine in civil proceedings is a common
law doctrine that stems from the idea of maintenance of the decorum of the
hierarchy of courts and tribunals. The Court in the case of Gojer Bros. (Pvt.)
Ltd. v. Ratan Lal Singh reported in (1974) 2 SCC 453 correctly summed up
the meaning of the doctrine as “the doctrine is based on the simple reasoning
that there cannot be, at the same time, more than one operative order governing
the same subject matter”. To put it simply, if there are two orders passed on
the same subject matter, that is, one passed by a subordinate court like a
tribunal and another passed by a superior court like the High Court, the
operative part of the order by the subordinate court (tribunal in this
instance) may be merged with the order of the High Court.
50. In
the case of Commissioner of Income Tax, Bombay v. Amritlal Bhogilal &
Co. reported in (1958) 34 ITR 130, this Court in para 10 observed as
under:
“10. There can be no
doubt that, if an appeal is provided against an order passed by a tribunal, the
decision of the appellate authority is the operative decision in law. If the
appellate authority modifies or reverses the decision of the Tribunal, it is
obvious that it is the appellate decision that is effective and can be
enforced. In law, the position would be just the same even if the appellate
decision merely confirms the decision of the Tribunal. As a result of the
confirmation or affirmance of the decision of the tribunal by the appellate
authority, the original decision merges in the appellate decision and it is the
appellate decision alone that subsists and is operative and capable of
enforcement.”
51.
Thus, the Supreme Court merely reiterated the observation of Bombay High Court
in the case of Tejaji Farasram (supra) and stated that the hierarchy
of courts and tribunals is to be maintained when the decision is reversed by
the superior court and even when the superior court merely affirms the decision
of the subordinate court.
52.
Thus, the High Court while allowing the second appeal filed by the original
plaintiff had not issued any specific direction as regards the deposit of the
balance sale consideration within a particular period of time. It is incorrect
on the part of the appellant herein to say that since the trial court had
directed that the balance sale consideration shall be deposited within 20 days,
the same direction would be applicable even after the judgment of the High
Court in second appeal.
53.
Before we close this matter, we must deal with the judgment of this Court in
the case of Prem Jeevan vs. K.S. Venkata Raman and Another reported
in (2017) 11 SCC 57 on which strong reliance has been placed by the learned
counsel appearing for the appellants herein. In the said case a decree for
specific performance was granted in favour of the plaintiff 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.”
54.
The plaintiffs therein claimed to have issued a cheque on 04.12.2008 for the
amount in question but the same was returned as not accepted by the judgment
debtor, who was the appellant before this Court. Thereafter the decree holders applied
for execution sometime in the year 2010, after making the deposit of the
decretal amount on 07.10.2010. 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 inexecutable in the absence of extension of time.
55.
The executing court upheld the objection holding as under:
“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.”
56.
On a revision having been filed by the decree holders the High Court reversed
the order of the executing court and held as under:
“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.”
57.
This Court looked into Order XX Rule 12-A C.P.C. which provides 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 said case the period
was two months from the date of the decree. The Court took notice of the fact
that in the 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.
This Court also took notice of the fact that neither the said deposit was made
within the stipulated time nor extension of time was sought or granted and also
no explanation had been furnished for the delay in making of the deposit.
58.
In such circumstances referred to above, this Court rejected the contention
advanced on behalf of the decree holders that unless the judgment debtor
seeks rescission of the contract in terms of Section 28 of the
Act, the decree would remain executable in spite of expiry of the period for
deposit.
59.
This Court while allowing the appeals filed by the judgment debtor held that
although Section 28 of the Act permits the judgment debtor to seek
rescission of a contract and also permits extension of time by the court yet
merely because rescission of contract was not sought by the judgment debtor
would not automatically result in extension of time. Thus, the decision of this
Court in Prem Jeevan (supra) was altogether in a different factual
scenario. The same is of no avail to the appellants herein.
60.
In the overall view of the matter, we are convinced that the High Court
committed no error much less any error of law in passing the impugned judgment.
61.
In the result, the appeals fail and are hereby dismissed.
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