Supreme Court clarifies jurisdiction for Section 28 Specific Relief Act Applications in Specific Performance Cases: Ishwar vs. Bhim Singh (2024)

Date of the Judgment: September 3, 2024
Citation: 2024 INSC 651
Judges: J.B. Pardiwala, J. and Manoj Misra, J.
Can an execution court, which is also the court of first instance, entertain an application under Section 28 of the Specific Relief Act, 1963, even when the decree for specific performance was passed by the appellate court? The Supreme Court of India recently addressed this question in a case concerning the sale of immovable property. The court clarified that the execution court does indeed have the jurisdiction to hear such applications, provided it is the same court where the original suit was filed, thereby ensuring that the ends of justice are met.

Case Background

The case involves a suit for specific performance filed by the respondents, Bhim Singh and another, against the appellants, Ishwar (since deceased) and others. The respondents sought to enforce an agreement to sell dated May 18, 2005, for a property, where they had paid Rs. 9.77 lakhs as advance out of a total consideration of Rs. 18 lakhs. The appellants failed to execute the sale deed despite notice.

Initially, the trial court only directed a refund of the earnest money with interest on February 28, 2011. However, on appeal, the appellate court on January 12, 2012, ordered the appellants to execute the sale deed upon payment of the balance within two months, failing which, the respondents could execute the sale deed through the court.

The respondents filed an execution application on March 20, 2012. While the execution application was pending, the appellants filed a second appeal before the High Court, which was dismissed on November 7, 2013. Subsequently, the respondents sought permission to deposit the balance amount on March 24, 2014, which was opposed by the appellants, who filed an application under Section 28 of the Specific Relief Act, 1963, seeking rescission of the contract due to the respondents’ failure to deposit the amount within the stipulated two months.

Timeline

Course of Proceedings

The trial court initially ruled against specific performance, ordering only a refund of the earnest money. The appellate court reversed this decision, directing the execution of the sale deed. The appellants then unsuccessfully challenged this order in the High Court and subsequently in the Supreme Court. During the execution proceedings, the appellants sought to rescind the contract under Section 28 of the Specific Relief Act, 1963, arguing that the respondents had failed to deposit the balance amount within the two-month period stipulated by the appellate court. The execution court rejected this application and allowed the respondents to deposit the balance, which was upheld by the High Court.

Legal Framework

The primary legal provision in question is Section 28 of the Specific Relief Act, 1963, which deals with the rescission of contracts for the sale or lease of immovable property when a decree for specific performance has been made. It states:

“(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.”

The Supreme Court also considered Section 37 of the Code of Civil Procedure (CPC), which defines the “Court which passed a decree” for execution purposes. This section is crucial in determining which court has the jurisdiction to hear applications under Section 28 of the Specific Relief Act, 1963, especially when the decree has been passed by an appellate court. It states:

“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-
(a) Where the decree to be executed has been passed in the exercise of appellate jurisdiction, the Court of first instance, and
(b) 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.”

Arguments

Appellants’ Submissions:

• The execution court lacked jurisdiction to extend the time for depositing the balance consideration, as the decree was passed by the appellate court.
• The decree was executable only on payment within two months. Since no application for extension was made within this period, the court could not extend the time.
• The execution court erred in extending the time to deposit the balance amount four years after the appellate court’s decree.

Respondents’ Submissions:

• The execution application was filed in the same court where the original suit was instituted, giving the court jurisdiction to extend the time.
• The decree did not specify the mode of payment, and there was no direction to deposit the balance in court. The respondents had to seek court permission to deposit the amount, especially since the appellants were not cooperating.
• The respondents were ready to perform their part of the contract. The appellants delayed the process by filing a second appeal and a Special Leave Petition (SLP) before the Supreme Court.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the Execution Court had jurisdiction to deal with the application(s) for (a) rescission of contract and (b) extension of time to deposit the balance sale consideration?
2. If the Execution Court had the jurisdiction, whether those applications ought to have been decided as one in the suit (i.e., original side)? If yes, then, whether, in the facts of the case, on that ground alone, the impugned order warrants interference in exercise of jurisdiction under Article 136 of the Constitution of India?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following cases:

• Ramankutty Guptan Vs. Avara [(1994) 2 SCC 642] – The Supreme Court held that an application under Section 28 of the Specific Relief Act, 1963, is maintainable in the court of first instance even when the decree has been passed by the appellate court. It also clarified that such applications should be treated as part of the original suit, not as execution proceedings.
• K. Kalpana Saraswathi Vs. P.S.S. Somasundaram Chettiar [(1980) 1 SCC 630] – The Supreme Court allowed an oral prayer for extension of time to deposit the balance amount, emphasizing that the court retains control over the decree even after it has been passed.
• V.S. Palanichamy Chettiar Firm Vs. C. Alagappan and Anr. [(1999) 4 SCC 702] – The Supreme Court reiterated that the executing court can entertain an application for extension of time if it is the same as the trial court. It also held that the vendor can seek rescission of the contract in defense to bar the execution of the decree.
• Sanjay Shivshankar Chitkote Vs. Bhanudas Dadarao Bokade (Died) through L.Rs. [Civil Appeal No.8022 of 2023] – The Supreme Court set aside the order of the execution court and directed that the applications under Section 28 be transferred to the file of the civil suit.
• Chanda v. Rattni [(2007) 14 SCC 26] – The Supreme Court held that the power to rescind the contract under Section 28 of the Specific Relief Act, 1963, is discretionary and is to do complete justice to the parties. The Court has the power to extend the time even if the decree specifies a date for payment.

The Supreme Court also considered the following legal provisions:

• Section 28(1) of the Specific Relief Act, 1963 – This section empowers the court to rescind a contract if the purchaser fails to pay the purchase money within the stipulated time.
• Section 37 of the Code of Civil Procedure (CPC) – This section defines the “Court which passed a decree” for execution purposes, including the court of first instance when the decree is passed in appeal.

Authorities Table

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court followed Ramankutty Guptan Vs. Avara [(1994) 2 SCC 642]* to establish that the execution court had jurisdiction and that applications under Section 28 should be treated as part of the original suit.
• The Supreme Court followed K. Kalpana Saraswathi Vs. P.S.S. Somasundaram Chettiar [(1980) 1 SCC 630]* to support the view that the court retains control over the decree and can extend time for payment.
• The Supreme Court followed V.S. Palanichamy Chettiar Firm Vs. C. Alagappan and Anr. [(1999) 4 SCC 702]* to support the view that the execution court can entertain an application for extension of time if it is the same as the trial court.
• The Supreme Court followed Sanjay Shivshankar Chitkote Vs. Bhanudas Dadarao Bokade (Died) through L.Rs. [Civil Appeal No.8022 of 2023]* to reinforce that applications under Section 28 must be transferred to the file of the civil suit.
• The Supreme Court followed Chanda v. Rattni [(2007) 14 SCC 26]* to support the view that the power to rescind the contract under Section 28 is discretionary.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to ensure substantial justice and to prevent a party from taking advantage of technicalities to avoid fulfilling their contractual obligations. The Court emphasized that the power under Section 28 of the Specific Relief Act, 1963, is discretionary and should be exercised to do complete justice. The Court noted that the respondents had shown a continuous intention to perform their part of the contract, while the appellants had primarily focused on delaying the process through appeals. The Court also considered that the decree did not specify the mode of payment, and the respondents had to seek the court’s permission to deposit the balance amount. The Court observed that the appellants had themselves applied to the Execution Court for rescinding the contract under Section 28(1) of the 1963 Act, and raised no such jurisdictional issue either before the Execution Court or the High Court.

Sentiment Analysis of Reasons

Fact:Law Ratio

Logical Reasoning

The Supreme Court held that the Execution Court, being the court of first instance, had the jurisdiction to deal with the application under Section 28 of the Specific Relief Act, 1963. The Court also clarified that such applications should be treated as part of the original suit and not as execution proceedings. However, the Court refused to interfere with the impugned order on the technicality that the application was not treated as part of the original suit, as substantial justice had been done. The Court emphasized that the power to rescind a contract under Section 28 is discretionary and should be exercised to do complete justice to the parties.

The Court observed, “The Court does not cease to have the power to extend the time even though the decree may have directed that payment of balance price is to be made by a certain date.” The Court further added, “While exercising discretion in this regard, the Court is required to take into account facts of the case so as to ascertain whether the default was intentional or not.” The Court also noted, “In these circumstances, the decree holder(s) had all throughout displayed their intention to pay the balance consideration and there appears no intentional or deliberate fault on their part so as to deprive them of the fruits of the decree.”

The Supreme Court dismissed the appeal, stating that interfering with the impugned order on a technicality would cause grave injustice to the decree holders.

Key Takeaways

• The execution court, if it is the same court where the original suit was filed, has the jurisdiction to entertain applications under Section 28 of the Specific Relief Act, 1963, even if the decree was passed by the appellate court.
• Applications under Section 28 of the Specific Relief Act, 1963, should be treated as part of the original suit and not as execution proceedings.
• The power to rescind a contract under Section 28 is discretionary and should be exercised to ensure substantial justice.
• Courts will consider the conduct of the parties and whether any delay was intentional or due to circumstances beyond their control.

Directions

No specific directions were given by the Supreme Court in this case.

Development of Law

The Supreme Court reiterated the position of law that the execution court, if it is the court of first instance, has jurisdiction to hear applications under Section 28 of the Specific Relief Act, 1963, even if the decree was passed by the appellate court. The Court also reinforced that such applications should be treated as part of the original suit. The ratio decidendi of the case is that the discretionary power under Section 28 should be exercised to ensure substantial justice and not to allow technicalities to defeat the ends of justice.

Conclusion

The Supreme Court’s judgment in Ishwar vs. Bhim Singh clarifies the jurisdictional aspects of Section 28 of the Specific Relief Act, 1963, and emphasizes the importance of substantial justice. The Court’s decision ensures that the execution court, which is also the court of first instance, can address issues related to rescission and extension of time in specific performance cases. This ruling provides clarity and guidance for future cases involving similar issues.