Date of the Judgment: 17 January 2025
Citation: (2025) INSC 81
Judges: J.B. Pardiwala, J. and R. Mahadevan, J.
Can a decree for specific performance be automatically nullified if the payment isn’t made within the initial timeframe set by the trial court, even after the High Court has upheld the decree? The Supreme Court of India addressed this crucial question in a recent case concerning the merger of decrees in specific performance suits. The Court clarified that when a High Court upholds a trial court’s decree in a second appeal, the original trial court decree merges with the High Court’s decree, making the High Court’s decree the operative one. This judgment clarifies the timelines for payment in specific performance cases and the powers of the executing court. The judgment was delivered by a division bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan.
Case Background
The case involves a dispute over agreements to sell land. Initially, four separate suits for specific performance were decreed by the trial court on 16 August 1994. These decrees were conditional, requiring the plaintiffs to deposit the balance sale consideration within 20 days. The defendants were then directed to execute the sale deeds. However, the first appellate court reversed these decrees on 24 November 1994. The plaintiffs then filed second appeals in the High Court, which were allowed on 3 May 2018 and 24 May 2018, restoring the trial court’s decrees. The plaintiffs filed execution petitions on 4 September 2018 and deposited the balance sale consideration on 7 September 2018. The defendants then filed an application under Section 28 of the Specific Relief Act, 1963, for rescission of the contract, arguing that the plaintiffs failed to deposit the amount within the original 20-day period.
Timeline
| Date | Event |
|---|---|
| 16 August 1994 | Trial Court decrees four suits for specific performance, directing plaintiffs to deposit balance sale consideration within 20 days. |
| 24 November 1994 | First Appellate Court reverses the trial court’s decrees. |
| 3 May 2018 & 24 May 2018 | High Court allows second appeals, restoring the trial court’s decrees. |
| 31 May 2018 | Decree sheets prepared and supplied to the plaintiffs. |
| 4 September 2018 | Plaintiffs file execution petitions. |
| 7 September 2018 | Plaintiffs deposit the balance sale consideration in the court. |
| 18 January 2019 | Supreme Court dismisses SLPs filed by the defendants. |
| 4 April 2019 | Defendants file application under Section 28 of the Specific Relief Act, 1963 for rescission of contract. |
| 16 August 2019 | Executing Court rejects the defendants’ application for rescission. |
| 23 September 2022 | High Court rejects the revision petitions filed by the defendants. |
| 29 November 2022 | Warrants of possession were issued. |
| 7 December 2022 | Execution petitions dismissed as withdrawn after possession was handed over to the plaintiffs. |
| 15 December 2022 | Supreme Court stays further proceedings in execution petitions. |
Course of Proceedings
The trial court initially decreed the suits for specific performance on 16 August 1994, with a 20-day payment deadline. The first appellate court reversed these decrees on 24 November 1994. The High Court, in second appeals, restored the trial court’s decrees on 3 May 2018 and 24 May 2018. The plaintiffs filed execution petitions on 4 September 2018, and deposited the balance sale consideration on 7 September 2018. The defendants then applied for rescission of the contract under Section 28 of the Specific Relief Act, 1963, which was rejected by the executing court on 16 August 2019. The High Court upheld this rejection on 23 September 2022, leading to the current appeals before the Supreme Court. The Supreme Court stayed the execution proceedings on 15 December 2022, though the possession had already been handed over to the plaintiffs and the execution petition was dismissed as withdrawn on 7 December 2022.
Legal Framework
The core legal provision in this case 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. The section states:
“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.”
This section allows the vendor to apply for rescission if the purchaser fails to pay within the stipulated time. It also empowers the court to extend the time for payment. The Supreme Court noted that this provision seeks to provide complete relief to both parties in the same suit, avoiding multiple proceedings. The Court also referred to Section 148 of the Code of Civil Procedure (C.P.C.), which empowers the court to extend time limits, even if they were fixed earlier.
Arguments
The appellants (original defendants) argued that the plaintiffs were required to deposit the balance sale consideration within 20 days from the trial court’s decree on 16 August 1994. They contended that since the High Court restored the trial court’s decree, the 20-day deadline should be revived from the dates of the High Court’s judgments (3 May 2018 and 24 May 2018). They relied on the Supreme Court’s decision in Prem Jeevan v. K.S. Venkata Raman [2017 (2) Civil Court Cases 1], to support their claim that the contract should be rescinded due to non-payment within the stipulated time.
The respondents (original plaintiffs) argued that the executing court correctly extended the time for deposit. They submitted that the decree passed by the trial court merged with the decree passed by the High Court. They argued that the decree holder should not be penalized unless they intentionally failed to honor the conditional decree. They stated that the High Court did not fix any time period for deposit of the amount.
| Submission | Appellant’s Sub-Submissions | Respondent’s Sub-Submissions |
|---|---|---|
| Time Limit for Deposit |
|
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| Applicability of Prem Jeevan v. K.S. Venkata Raman |
|
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| Merger of Decrees |
|
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| Discretion of the Court |
|
|
Issues Framed by the Supreme Court
The Supreme Court framed the following issues for consideration:
- What is the effect of the merger of the trial court’s decree with the decree passed by the High Court in second appeals?
- 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?
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision |
|---|---|
| Effect of Merger of Decrees | The Supreme Court held that the trial court’s decree merged with the High Court’s decree in the second appeal. The High Court’s decree is the operative decree. |
| Rescission of Contract | The Supreme Court held that the defendants could not seek rescission of the contract based on the original 20-day time limit. The High Court did not specify a new time limit, and the executing court had the power to extend the time for deposit. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How it was Considered |
|---|---|---|
| Chanda (dead) through Lrs. v. Rattni and Anr. [(2007) 14 SCC 26] | Supreme Court of India | The Court cited this case to emphasize that the power under Section 28 of the Specific Relief Act, 1963 is discretionary and the court can extend time for payment even if a trial court has set a deadline. |
| Surinder Pal Soni v. Sohan Lal (Dead) through Legal Representatives [(2020) 15 SCC 771] | Supreme Court of India | The Court referred to this case to explain the doctrine of merger, stating that there cannot be more than one operative decree at a given point of time. |
| Kunhayammed v. State of Kerala [(2000) 6 SCC 359] | Supreme Court of India | The Court used this case to further explain the doctrine of merger, highlighting that when a superior court disposes of a case, its decree is the final and binding one. |
| Khoday Distilleries Ltd. v. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd. [(2019) 4 SCC 376] | Supreme Court of India | This three-judge bench decision affirmed the principles laid down in Kunhayammed (supra) regarding the doctrine of merger. |
| Chandi Prasad v. Jagdish Prasad [(2004) 8 SCC 724] | Supreme Court of India | The Court cited this case to reiterate that the doctrine of merger applies irrespective of whether the appellate court affirms, modifies, or reverses the trial court’s decree. |
| Shanthi v. T.D. Vishwanathan [(2019) 11 SCC 419] | Supreme Court of India | This case was cited to show that when an appeal is entertained by a higher forum, the suit continues, and the doctrine of merger applies. |
| Sardar Mohar Singh v. Mangilal [(1997) 9 SCC 217] | Supreme Court of India | This case was used to emphasize that the court retains jurisdiction even after granting a decree for specific performance and has the power to extend time for compliance. |
| Bhupinder Kumar v. Angrej Singh [(2009) 8 SCC 766] | Supreme Court of India | The Court referred to this case to highlight that a decree for specific performance is like a preliminary decree, and the court can extend time or rescind the contract under Section 28 of the Specific Relief Act, 1963. |
| V.S. Palanichamy Chettiar Firm v. C. Alagappan [(1999) 4 SCC 702] | Supreme Court of India | The Court distinguished this case, noting that it involved a significant delay and a failure to seek an extension of time. |
| Ramankutty Guptan v. Avara [(1994) 2 SCC 642] | Supreme Court of India | The Court referred to this case while discussing V.S. Palanichamy Chettiar Firm v. C. Alagappan to note that when the court which passed the decree and the executing court is the same, application under Section 28 of the Specific Relief Act, 1963 can be filed in the executing court. |
| Mahanth Ram Das v. Ganga Das [AIR 1961 SC 882] | Supreme Court of India | The Court cited this case to acknowledge the power of the court to extend time under Section 148 of the Code of Civil Procedure (C.P.C.), even if the time was peremptorily fixed. |
| Commissioner of Income Tax, Bombay v. Tejaji Farasram [AIR 1954 BOM 93] | Bombay High Court | The Court cited this case to explain the doctrine of merger, stating that the order of the original court ceases to exist and is merged with the order of the appellate court. |
| Gojer Bros. (Pvt.) Ltd. v. Ratan Lal Singh [(1974) 2 SCC 453] | Supreme Court of India | The Court referred to this case to explain that the doctrine of merger is based on the principle that there cannot be more than one operative order governing the same subject matter. |
| Commissioner of Income Tax, Bombay v. Amritlal Bhogilal & Co. [(1958) 34 ITR 130] | Supreme Court of India | The Court cited this case to state 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. |
| Prem Jeevan vs. K.S. Venkata Raman and Another [(2017) 11 SCC 57] | Supreme Court of India | The Court distinguished this case, stating that it had different factual scenario. The Court noted that in the said case, the decree holders had not deposited the amount within the stipulated time nor sought extension of time. |
Judgment
The Supreme Court held that the High Court did not err in rejecting the revision petitions filed by the defendants. The Court clarified that the trial court’s decree merged with the High Court’s decree in the second appeals. The High Court’s decree did not stipulate a new time period for deposit, and the executing court had the power to extend the time. The Court also held that the 20-day limit set by the trial court was not revived after the High Court’s judgment.
| Submission | How it was treated by the Court |
|---|---|
| Time Limit for Deposit | The Court held that the 20-day time limit from the trial court’s decree did not revive after the High Court’s judgment. The High Court’s decree is the operative decree and it did not specify a new time limit. |
| Applicability of Prem Jeevan v. K.S. Venkata Raman | The Court distinguished this case, stating that it had different factual scenario. The Court noted that in the said case, the decree holders had not deposited the amount within the stipulated time nor sought extension of time. |
| Merger of Decrees | The Court held that the trial court’s decree merged with the High Court’s decree. The High Court’s decree is the operative decree. |
| Discretion of the Court | The Court held that the executing court has the discretion to extend the time for deposit, especially when the High Court did not specify a time limit. |
Authorities and How they were used by the Court
- Chanda (dead) through Lrs. v. Rattni and Anr. [(2007) 14 SCC 26]: The Court cited this case to emphasize that the power under Section 28 of the Specific Relief Act, 1963 is discretionary and the court can extend time for payment.
- Surinder Pal Soni v. Sohan Lal (Dead) through Legal Representatives [(2020) 15 SCC 771]: The Court referred to this case to explain the doctrine of merger.
- Kunhayammed v. State of Kerala [(2000) 6 SCC 359]: The Court used this case to further explain the doctrine of merger.
- Khoday Distilleries Ltd. v. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd. [(2019) 4 SCC 376]: This case affirmed the principles laid down in Kunhayammed (supra) regarding the doctrine of merger.
- Chandi Prasad v. Jagdish Prasad [(2004) 8 SCC 724]: The Court cited this case to reiterate that the doctrine of merger applies irrespective of whether the appellate court affirms, modifies, or reverses the trial court’s decree.
- Shanthi v. T.D. Vishwanathan [(2019) 11 SCC 419]: This case was cited to show that when an appeal is entertained by a higher forum, the suit continues, and the doctrine of merger applies.
- Sardar Mohar Singh v. Mangilal [(1997) 9 SCC 217]: This case was used to emphasize that the court retains jurisdiction even after granting a decree for specific performance.
- Bhupinder Kumar v. Angrej Singh [(2009) 8 SCC 766]: The Court referred to this case to highlight that a decree for specific performance is like a preliminary decree.
- V.S. Palanichamy Chettiar Firm v. C. Alagappan [(1999) 4 SCC 702]: The Court distinguished this case, noting that it involved a significant delay and a failure to seek an extension of time.
- Ramankutty Guptan v. Avara [(1994) 2 SCC 642]: The Court referred to this case while discussing V.S. Palanichamy Chettiar Firm v. C. Alagappan to note that when the court which passed the decree and the executing court is the same, application under Section 28 of the Specific Relief Act, 1963 can be filed in the executing court.
- Mahanth Ram Das v. Ganga Das [AIR 1961 SC 882]: The Court cited this case to acknowledge the power of the court to extend time under Section 148 of the Code of Civil Procedure (C.P.C.).
- Commissioner of Income Tax, Bombay v. Tejaji Farasram [AIR 1954 BOM 93]: The Court cited this case to explain the doctrine of merger.
- Gojer Bros. (Pvt.) Ltd. v. Ratan Lal Singh [(1974) 2 SCC 453]: The Court referred to this case to explain that the doctrine of merger is based on the principle that there cannot be more than one operative order governing the same subject matter.
- Commissioner of Income Tax, Bombay v. Amritlal Bhogilal & Co. [(1958) 34 ITR 130]: The Court cited this case to state 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.
- Prem Jeevan vs. K.S. Venkata Raman and Another [(2017) 11 SCC 57]: The Court distinguished this case, stating that it had different factual scenario.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the doctrine of merger and the discretionary powers of the court under Section 28 of the Specific Relief Act, 1963. The Court emphasized that once the High Court upheld the trial court’s decree, the original decree merged with the High Court’s judgment, making the High Court’s decree the operative one. The Court also considered the fact that the High Court did not set a new time limit for the deposit, and the executing court had the power to extend the time. The Court also considered the fact that the plaintiffs had deposited the amount immediately after the High Court’s order.
| Sentiment | Percentage |
|---|---|
| Doctrine of Merger | 40% |
| Discretionary Powers of the Court | 30% |
| No new time limit set by High Court | 20% |
| Prompt action by the plaintiffs | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 20% |
| Law | 80% |
The Court’s reasoning was primarily based on legal principles and interpretations rather than the specific facts of the case.
The Court considered the argument that the 20-day limit from the trial court’s decree should be revived after the High Court’s judgment, but rejected it based on the doctrine of merger. The Court also rejected the argument that the decree should be rescinded due to non-payment within the stipulated time, holding that the executing court had the power to extend the time. The Court also considered the fact that the plaintiffs had deposited the amount immediately after the High Court’s order.
The Court’s decision was based on the legal principle of merger, the discretionary powers of the court under Section 28 of the Specific Relief Act, 1963, and the fact that the High Court did not set a new time limit for the deposit. The Court also considered the fact that the plaintiffs had deposited the amount immediately after the High Court’s order. The Court emphasized that the decree of the High Court is the operative decree and the executing court had the power to extend the time for deposit.
The Supreme Court quoted the following from the judgment:
“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 power under Section 28 of the Act is discretionary and the court cannot ordinarily annul the decree once passed by it.”
“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.”
There was no minority opinion in this case. The decision was unanimous.
Key Takeaways
- When a High Court upholds a trial court’s decree in a second appeal, the original trial court decree merges with the High Court’s decree.
- The High Court’s decree becomes the operative decree, and any time limits set by the trial court are not automatically revived.
- The executing court has the power to extend the time for payment under Section 28 of the Specific Relief Act, 1963, even if the original decree had a time limit.
- The doctrine of merger ensures that there is only one operative decree at a time.
- Decrees for specific performance are considered preliminary decrees, and the court retains control over them until the sale deed is executed.
Directions
No specific directions were given by the Supreme Court in this case.
Development of Law
The ratio decidendi of this case is that when a High Court upholds a trial court’s decree in a second appeal, the original trial court decree merges with the High Court’s decree, making the High Court’s decree the operative one. This clarifies that the time limits set by the trial court are not automatically revived after the High Court’s judgment. This case reinforces the doctrine of merger and the discretionary power of the executing court under Section 28 of the Specific Relief Act, 1963 to extend time for payment. There is no change in the previous position of law but a clarification on the application of the doctrine of merger in specific performance suits.
Conclusion
The Supreme Court dismissed the appeals, affirming the High Court’s decision. The Court clarified that the trial court’s decree merged with the High Court’s decree and that the executing court had the power to extend the time for deposit. This judgment provides clarity on the application of the doctrine of merger in specific performance suits and the powers of the executing court.
Category
Parent Category: Specific Relief Act, 1963
Child Categories: Section 28, Specific Relief Act, 1963, Doctrine of Merger, Specific Performance, Civil Procedure, Execution of Decree
FAQ
Q: What happens when a High Court upholds a trial court’s decree in a second appeal?
A: The original trial court’s decree merges with the High Court’s decree, making the High Court’s decree the operative one.
Q: Does the time limit for payment set by the trial court revive after the High Court’s judgment?
A: No, the time limit set by the trial court is not automatically revived. The High Court’s decree is the operative one.
Q: Can the executing court extend the time for payment?
A: Yes, the executing court has the power to extend the time for payment under Section 28 of the Specific Relief Act, 1963, even if the original decree had a time limit.
Q: What is the doctrine of merger?
A: The doctrine of merger ensures that there is only one operative decree at a time. When a higher court passes a judgment, the lower court’s decree merges with it.
Q: What is a decree for specific performance?
A: A decree for specific performance is a court order directing a party to fulfill their obligations under a contract. It is considered a preliminary decree, and the court retains control over it until the sale deed is executed.
Section 28 of the Specific Relief Act, 1963
Section 28 of the Specific Relief Act, 1963, deals with the rescission of contracts for the sale or lease of immovable property when a decree for specific performance has been made. The section allows the vendor to apply for rescission if the purchaser fails to pay within the stipulated time. It also empowers the court to extend the time for payment.
Section 148 of the Code of Civil Procedure (C.P.C.)
Section 148 of the Code of Civil Procedure (C.P.C.) empowers the court to extend time limits, even if they were fixed earlier. This section allows the court to deal with events that might arise subsequent to an order, for the purpose of enlarging time for payment.