Holding

Section 28 of the Specific Relief Act, 1963 empowers the court, at its discretion, to rescind a contract for sale when the purchaser fails to pay the purchase money within the period fixed by the decree, and the trial court correctly exercised this power.

Summary

The plaintiff entered into an agreement to purchase land, paid earnest money and was required to pay the balance consideration and obtain execution of the sale deed within two months of the decree for specific performance. The trial court decreed specific performance, directing the defendants to execute the deed upon payment of the balance. The plaintiff failed to deposit the balance within the stipulated period and applied for execution of the decree. The defendants invoked Section 28 of the Specific Relief Act, 1963 to rescind the contract on the ground of the plaintiff's non‑payment, and the trial court rescinded the agreement, dismissing the execution application. The High Court upheld this order. On appeal, the Supreme Court held that Section 28 confers a discretionary power to rescind where the purchaser fails to pay within the time fixed, and that the trial court correctly exercised this power as the plaintiff had not deposited the balance; the appeal was dismissed.

Issues considered

Whether Section 28 of the Specific Relief Act, 1963 allows rescission of a contract for sale when the purchaser fails to pay the balance consideration within the period fixed by the decree.
Whether the court has discretion to extend the time for payment and whether such discretion was exercised in the present case.
Whether the plaintiff was required to deposit the balance consideration as a condition precedent to the defendants' execution of the sale deed.

Legislation cited

Subjects

Specific performanceRescissionSection 28Specific Relief ActDiscretionary powerContract of saleExecution of decreeCivil Procedure

Judgment

A CHANDA (DEAD) THROUGH LRS.
v.
RA TTNI AND ANR.

MARCH 23, 2007

B [DR.ARIJITPASAYATANDLOKESHWARSINGHPANTA,JJ.]

Specific Relief Act, 1963:

S.28-Power under-Held, is discretionary-On facts, decree ofspecific
C performance of contract passed-In execution proceedings, plaintiff's failure
to deposit the balance sale consideration-No prayer made by plaintiff
before trial Court and High Court for deposit or extension of time-Order
of rescission of contract rightly passed on application filed by defendant-
Specific Relief Act, 1877-s.35(c).
D The defendant-respondent enteretJ into an agreement to sell land to
' plaintiff-appellant and received earnest money. The sale deed was to be ...
executed on payment of balance sale consideration. Appellant filed suit for
specific performance of agreement to sell on the promise that respondent did
not execute the sale deed. Trial Court decreed the suit and directed respondent
E to execute sale deep on receipt of balance sale price and also to get it registered
within 2 months from the date of decree.

Appellant did not deposit the balance sale price within the time allowed
by Court. The respondents did not execute the sale deed.

F Appellant moved an application for execution of decree pleading that
since the respondents had failed to execute sale deed the same was to be
executed through Court. Respondents moved an application u/s.28 of the
Specific Relief Act, 1963 praying for rescission of the agreement to sell as
appellant had failed to deposit the balance sale consideration. The trial Court
allowed the application and rescinded the contract Accordingly, the execution
G application by appellant was dismissed. High Court dismissed the revision
petition. Hence the present appeal.

Dismissing the appeal, the Court

H 402
-+
CHANDA (DEAD) THROUGH LRS. v. RA TTNI 403
.,., 4 HELD: I. Section 28 of the Specific Relief Act, 1963 corresponds to s.
A
35 (c) of the Specific Relief Act, 1877 (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 B
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
c
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 as passed the decree for specific performance retains·the control over
the decree even after the decree has been passed. (Para 9) (407-E-G; 408-A)
D
2. The decree for specific performance has been described as a
""" preliminary decree. The power under s. 28 of the Act is discretionary and
j
the Court cannot ordinarily annul the decree once passed by it. Although the
power to annul the decree exists yet s.28 of the Act provides for complete
relief to both the parties in terms oftbe decree. The Court does not cease to
...... have the power to extent the time even though the trial Court had earlier E
directed in the decree that payment of balance price to be made by certain
date and on failure suit would stand dismissed. The power exercisable under
this Section is discretionary. (Para 10) (408-A-B)

3. The stand now taken by appellant that there was no direction to pay
within a particular time was not pleaded before the trial Court and High Court
F
...
and is clearly unsustainable. [Para 11) [408-D)

Kumar Dhirendra Mullick and Ors. v. Tivoli Park Apartments (P) Ltd,
[2005) 9 sec 262, distinguished.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5494 of2000. G

From the Final Judgment Order dated 21.5.1999 of the High Court of
Punjab and Haryana at Chandigarh in C.R.No. 4509 of 1998.

Neeraj Kr. Jain, Sanjay Singh, Sandeep Chaturvedi and Ugra Shankar H
Prasad for the Appellants.
+
404 SUPREME COURT REPORTS [2007] 4 S.C.R.

A Naresh Kaushik, B.S. Methaila, Arnita Kalka!, and Lalita Kaushik for the
Respondent.

The Judgment of the Court was delivered by

DR. ARIJIT PASAYAT, J. 1. Challenge in this appeal is to the judgment
B of a learned Single Judge of the Punjab and Haryana High Court dismissing
the revision petition filed under Section 115 of the Code of Civil Procedure,
1908 (in short the 'Code').

·2. Background facts as projected by the plaintiff in a nutshell are as
follows:
c
3. Defendants-respondents entered into an agreement dated 25.3.1989 to
sell land measuring 54 Kanals 3 Marlas to the original plaintiff-Chandu and
received Rs.56,000/- as earnest money. The sale deed was to be executed on
or before 15 .6.1989 on payment of the balance sale consideration of Rs.1,39,000/
D -. Since the defendants did not execute the sale deed within the time specified
in the agreement, the plaintiff-appellant instituted a suit on 24.1.1990 for
specific performance of the agreement to sell. The suit was decreed ex parte
on 1.5.1992 and it is common case of the parties that the decree has become
final between them. Para 6 of the judgment of the trial court decreeing the
suit reads as under:-
E
"For the reasons discussed above, the suit succeeds. A decree for
possession of the suit land by way of specific performance is hereby
passed in favour of the plaintiff and against the defendants with
costs. Defendants are directed to execute the proposed sale deed on
payment of the balance sale price of Rs.1,39,000/- and get it registered
F within a period of two months from the date of this decree failing
which the plaintiff shall be at liberty to get the sale deed executed and
registered under Order 21 Rule 12 Code. Decree be drawn up
accordingly and file be consigned to the record room."

4. The plaintiff did not deposit the balance sale price within two months
G from the date of the decree, and the defendants did not execute the sale deed.
Plaintiff then moved an application on 10.10.1992 for the execution of the
decree pleading therein that since the judgment debtors-respondents had
failed to execute the sale deed the same was to be executed through court
and .that he (plaintiff) be allowed to deposit the balance sale price in court.
H During the pendency of this application, one Sarup Singh through his general
+
CHANDA (DEAD) THROUGH LRS. v. RA TTNI [PASA YAT, J.] 405

-- attorney moved an application for being impleaded as a party in the execution
proceedings on the plea that he was the owner in possession of the suit land
A

on the basis of a decree dated 26. 7.1991 which the defendants are alleged to
have suffered in his favour. The executing court as per its order dated
14.8.1995 allowed the applicant to be impleaded in the execution proceedings.
Sarup Singh then filed objections to the execution application which were B
dismissed as per order dated I 0.9.1998 and it was held that he was not a bona
fide purchaser of the suit' land. On 8.9 .1998, the judgment debtors-respondents
moved an application under Section 28 of the Specific Relief Act, 1963 (for
short the 'Act') with.a prayer that the agreement to sell dated 25.3.1989 be
rescinded since the plaintiff-appellant had failed to deposit the balance sale
consideration within the time allowed by the court. This application was C
contested by the appellant-plaintiff and on a consideration of the contentions
advanced by the counsel for the parties the trial court as per its order dated
15.9.1998 allowed the application and rescinded the original contract dated
25.3.1989 holding that the plaintiff had failed to deposit the balance sale
consideration within the time allowed by the Court. The execution application
filed by the plaintiff-appellant was consequently dismissed. The said order D
was assailed in the revision petition filed before the High Court.

5. Before the High Court the stand of the appellant was that the order
of the Trial Court was not sustainable as the court while decreeing the suit
for specific performance had directed the defendants-respondents to execute E
the sale deed within two months from the date of decree and since they failed
to do so the plaintiff was entitled to have the sale deed executed through the
court. According to him, there was no specific direction given.to the plaintiff
to deposit the balance share consideration within stipulated period and,
therefore, the Trial Court was not justified in rescinding the contract on
account of non-deposit of the balance sale price by the plaintiff. It was also F
contended that several imposters were set up which disentitled the applicant
from any relief. The High Court found that para 6 of the judgment of the Trial
Court as quoted above, clearly indicated that the defendants had been directed
to execute the sale deed within two months from the date of the decree on
payment of the balance sale price of Rs. l ,30,000/-. The same was, therefore, G
a condition precedent for execution of the sale deed. It was implicit in the
direction that the plaintiff was required to deposit the balance consideration
within a period in the first instance and it was only then defendants were
required to execute the sale deed. Since the plaintiff did not deposit the
balance amount, the order of court below was perfectly in order. Revision
petition was accordingly dismissed. H
-t
406 SUPREME COURT REPORTS (2007] 4 S.C.R.

A 6. In support of the appeal, learned counsel for the appellant submitted
that the scope and ambit of Section 28 of the Act has been examined in
-
various decisions. There was scope for extension of time and mere non
deposit did not deprive the appellant from getting any relief. There was no
unreasonable delay in making the request for extension of time to make
B deposit. Strong reliance was placed on the decision in Kumar Dhirendra
Mullick and Ors. v. Tivoli Park Apartments (P) Ltd., [2005] 9 SCC 262.

7. In response, learned counsel fo1 the respondents submitted that
execution of saie deed was to be done only after the payment or deposit in
court. The conduct of the decree-holder in not depositing is full of mala tides.
C He has not deposited the amount for long 6 years i.e. between the disposal
of the execution proceedings/rescission application. The court had interpreted
the decree to mean that the deposit was condition precedent. There was no
specific prayer for deposit or for extension of time. The factual position is
entirely different from Kumar Dhirendra 's case (supra). In that case there was
repeated assurance of payment but in the present case there is no such
D assurance.

8. 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 perfor.mance of which
E has been decreed.-(!) 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
F 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 (I), the
G 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 .
H (b) may. direct payment to the vendor or lessor of all the rents and
+
CHANDA(DEAD)THROUGHLRS.v. RATTNI[PASAYAT,J.] 407

profits which have accrued in respect of the property from the date A
on which possession was so obtained by the purchaser or lessee until
restoration of possession to the vendor or lessor, and if the j•1stice
of the case so requires, the refund of any sum paid by the vendee or
the lessee as earnest money or deposit in connection with the contract.

(3) If the purchaser or lessee pays the purchase money or other B
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:-
c
(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. D
(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 ofany proceedings under this section shall be in E
the discretion of the court."

9. 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 F
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. G
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 H
408 SUPREME COURT REPORTS [2007] 4 S.C.R.

A control over the decree even after the decree has been passed.

10. 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
B 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 suit to stand dismissed. The power exercisable
under this Section is discretionary.
c 11. As rightly contended by learned counsel for the respondents the
stand now taken was not pleaded before the trial Court attd the High Court.
The decision in Kumar Dhirendra's case (supra) is clearly distinguishable
on facts. In fact, it has been noted in that case that the decree-holder was
repeatedly assured of payment. The situation is not the same here. The only
D stand takert was that there was no direction to pay withirt a particular time.
This plea is clearly unsustainable and untenable artd has been rightly rejected.

12. Above being the position, there is no merit in this appeal which is
dismissed without any order as to costs.

E D.G. Appeal dismissed.