SUPREME COURT HOLDS THAT AN APPLICATION UNDER SECTION 28 OF THE SPECIFIC RELIEF ACT, 1963, CAN BE MADE BEFORE THE TRIAL COURT, REGARDLESS OF WHETHER THE APPELLATE COURT GRANTED THE DECREE FOR SPECIFIC PERFORMANCE

A Two Judge Bench of the Supreme Court comprising of Justice J. B. Pardiwala and Justice Manoj Misra passed a Judgment dated 03-09-2024 in the matter of Ishwar (Since Deceased)Thr. Lrs & Ors. vs. Bhim Singh & Anr., Special Leave Petition (C) No.29899 of 2017 and observed that the Execution Court had jurisdiction to handle applications under Section 28[i] of the Specific Relief Act, 1963. However, it further stated that the Execution Court should have addressed the application as part of the original suit, rather than treating it as an execution matter.

FACTS:

1)  That the Appeal above filed before the Supreme Court by one, Ishwar (Since Deceased) Thr. Lrs &Ors (Appellants) against one, Bhim Singh & Anr. (Respondents), challenged the Order dated 11.01.2017 passed by the Hon’ble High Court of Punjab and Haryana at Chandigarh (High Court) which dismissed a Civil Revision No.8105 of 2016 and upheld the Execution Court’s decision dated 03.11.2016 to grant the Respondents additional time to deposit the remaining balance for the sale.

2) The Respondents filed a Suit for Specific Performance against the Appellants (including their predecessor in interest) to enforce an Agreement to sell dated 18.05.2005. In their Plaint, they claimed that the Appellants had agreed to sell the disputed property for a total consideration of Rs.18 lakhs, out of which Rs.9.77 lakhs was paid in advance. Despite receiving a notice requesting the execution of the sale deed, the Appellants failed to carry out the execution.

3) On 28.02.2011, the Court of Additional Civil Judge, Senior Division, Kaithal (Trial Court) partially decreed the Suit, directing the Appellants to refund the earnest money with interest, among other directions.

4) Aggrieved, with the Trial Court’s rejection of their prayer for specific performance, the Respondents appealed. On 12.01.2012, the Court of Additional District Judge, Kaithal (Appellate Court) allowed the Appeal, granting the Respondents’ request for specific performance. The Court directed the Appellants to execute the sale deed in favour of the Respondents upon payment of the balance sale consideration within two months from the date of the decree. Failing this, the decree holders were permitted to have the sale deed executed through the Court.

5) On 20.03.2012, the Respondents (Decree Holders) filed an Execution Application before the Trial Court, requesting the Court to have the Sale Deed executed and registered by appointing a local commissioner, deliver possession to the Decree Holders, deposit the balance sale price with the Court for payment to the Judgment Debtors (JDs), and recover the costs of the Suit and Appeal from the JDs.

6) While the Execution Application was pending, the Appellants (Judgment Debtors) challenged the Appellate Court’s Decree by filing Second Appeal No. 3730 of 2012 before the High Court, which the Court dismissed on 07.11.2013.

7) After the High Court dismissed the Second Appeal, the Respondents (Decree Holders) filed an Application before the Execution Court on 24.03.2014, seeking permission to deposit the balance sale consideration in the Court. Opposing this, the Appellants (Judgment Debtors) submitted an Application under Section 28 of the Specific Relief Act, 1963, requesting rescission of the contract, arguing that the Decree Holders had failed to deposit the balance within the two months directed by the Appellate Court.

8) On 03.11.2016, the Execution Court rejected the Appellants’ Application for rescission of the contract and simultaneously allowed the Respondents to deposit the balance sale consideration.

9) The Appellants (Judgment Debtors), aggrieved by the Execution Court’s Order, filed a Civil Revision before the High Court, which was dismissed by the Impugned Order.

TRIAL COURT: 

The Trial Court partially decreed the suit on 28.02.2011. The Court directed the Appellants to refund the earnest money, which amounted to Rs. 9.77 lakhs, along with interest. However, the Trial Court denied the Respondents’ request for specific performance of the agreement to sell​.

APPELLATE COURT:

The Appellate Court reversed the Trial Court’s decision regarding specific performance. It allowed the Respondents’ Appeal and granted their request for specific performance of the Agreement to Sell.

In its Judgment dated 12.01.2012, the Appellate Court directed the Appellants to execute the Sale Deed in favour of the Respondents upon payment of the remaining balance of the sale consideration within two months from the date of the Decree.

The Court provided the Respondents with the liberty to have the sale deed executed through the Court if the Appellants failed to comply with it within the specified time frame​. 

EXECUTION COURT:

The Execution Court, in its Order dated 03.11.2016, rejected the Application filed by the Appellants (Judgment Debtors) seeking rescission of the contract under Section 28 of the Specific Relief Act, 1963. The Appellants argued that the Decree Holders had failed to deposit the balance sale consideration within the two months specified by the Appellate Court.

The Execution Court simultaneously granted permission to the Decree Holders to deposit the remaining balance of the sale consideration, allowing them to proceed with the execution of the Sale Deed​.

High Court:

The High Court dismissed the Civil Revision filed by the Appellants (Judgment Debtors) challenging the Execution Court’s Order dated 03.11.2016. The Appellants had sought rescission of the contract under Section 28 of the Specific Relief Act, 1963, arguing that the Decree Holders had failed to deposit the balance sale consideration within the time directed by the Appellate Court. After hearing parties the High Court upheld the Execution Court’s Order, which had rejected the Appellants’ plea for rescission of the contract and had allowed the Decree Holders to deposit the balance sale consideration.

SUPREME COURT:

Aggrieved by the Order dated 11.01.2017 of the High Court, the Appellant filed Special Leave Petition SLP(Civil) No. 28899 / 2017, thereby challenging the High Court Order that upheld the Execution Court decision.

ISSUES:

• Whether the Execution Court has the authority to handle applications for (a) rescission of contract and (b) extension of time for depositing the remaining sale consideration.
• If the Execution Court had such authority, should those applications have been addressed as part of the original suit. If so, does this warrant interference under Article 136 of the Constitution of India.

OBSERVATION:

The Supreme Court observed that the Execution Court indeed had jurisdiction to handle applications for both rescission of the contract and extension of time for deposit under Section 28(1) of the 1963 Act. The Apex Court clarified that the term “the same suit” in Section 28 should be interpreted broadly to include not only the Original Court but also the Execution Court when it is the Court of first instance. This interpretation aligns with the principles laid down in earlier judgments, confirming that the Execution Court can entertain such Applications if it is the Court that passed the decree or if it falls within the scope defined by Section 37[ii] of the Code of Civil Procedure 1908 CPC[iii].

The Bench further elaborated that Applications under Section 28 should ideally be decided as part of the original suit rather than the execution proceedings. This principle is established in previous rulings, which emphasize that even though the Execution Court is handling the case, such applications should be treated as if they are part of the ongoing suit to ensure justice is properly administered.

Regarding the issue of whether interference under Article 136 of the Constitution was warranted, the Supreme Court highlighted that this jurisdiction is discretionary and not a matter of right. The Court noted that interference is not automatic just because there is a procedural error. Instead, the focus is on whether substantial justice has been done. In this case, despite the procedural error of treating the Application on the execution side, the Court found that the Decree Holders had shown genuine intent to comply with the Decree, and thus, substantial justice had been served.

The Court reviewed the facts of the case and concluded that the Execution Court had rightly exercised its discretion in favor of allowing the deposit of the balance consideration. The Decree Holders had consistently shown their intention to fulfil their obligations under the Decree, and the delay was attributed to the pendency of Appeals. The Court deemed that there was no deliberate fault on their part, and therefore, the decision to allow the deposit was justified and equitable.

CONCLUSION:

Based on the aforementioned facts, the Supreme Court decided not to interfere with the Impugned Order solely on the grounds of procedural technicality. The Apex Court emphasized that doing so would cause undue hardship to the Decree Holders and would not serve the interests of justice. Thus, the Appeal was dismissed, with the Court concluding that the Execution Court’s decision was fair and that substantial justice had been achieved.

 

 

Sakshi Raghuvanshi

Senior Legal Associate

The Indian Lawyer

[i] Section 28.   Rescission in certain circumstances of contracts for the sale or lease of immovable property, the specific performance of which 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 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 the lessee as earnest money or deposit in connection with the contract.

 

(3) If the purchase 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.

 

[ii] Section 37.   Definition of Court which passed a decree.

The expression “Court which passed a decree,” or words to that effect, shall, in relation to the execution of decrees, unless there is anything repugnant in the subject or context, be deemed to include,

 

• where the decree to be executed has been passed in the exercise of appellate jurisdiction, the Court of first instance, and
• where the Court of first instance has ceased to exist or to have jurisdiction to execute it, the Court which, if the suit wherein the decree was passed was instituted at the time of making the application for the execution of the decree, would have jurisdiction to try such suit.

 

1[Explanation.– The Court of first instance does not cease to have jurisdiction to execute a decree merely on the ground that after the institution of the suit wherein the decree was passed or after the passing of the decree, any area has been transferred from the jurisdiction of that Court to the jurisdiction of any other Court; but, in every such case, such other Court shall also have jurisdiction to execute the decree, if at the time of making the application for execution of the decree it would have jurisdiction to try the said suit.]