1. Suit for specific performance decreed — Execution proceedings initiated — Application for rescission of contract filed under Section 28(1), Specific Relief Act, before the Executing Court. (Para 2 , 3 )
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2023 Supreme(SC) 1305
SUPREME COURT OF INDIA
B.V. NAGARATHNA, UJJAL BHUYAN, JJ.
Sanjay Shivshankar Chitkote – APPELLANT
Versus
Bhanudas Dadarao Bokade (Died) Through L.Rs. – Respondent
CIVIL APPEAL NO. 8022 OF 2023 (@ SLP (C) No.24720 OF 2023)
Decided On : 08-12-2023
Important Points
Applications for rescission of specific performance decrees must be filed in the original suit, not in execution proceedings, as per Section 28 of the Specific Relief Act.
Subject
Civil Law - Specific Performance
Act Referred
Headnote
Specific Performance - Specific Relief Act - Section 28 - The court interpreted Section 28 of the Specific Relief Act, emphasizing that rescission applications must be filed in the original suit, not in execution proceedings, influencing the decision to set aside the High Court's order.
Fact of the Case:
A suit for specific performance was filed, and after a decree was issued, the appellant sought to deposit the balance sale consideration. The respondent filed for rescission under Section 28 of the Specific Relief Act during execution proceedings, which was rejected by the Executing Court.
Finding of the Court:
The court found that the Executing Court lacked jurisdiction to entertain the rescission application, which should have been filed in the original suit. The High Court's order allowing rescission was thus set aside.
Issues: Whether the application for rescission of a specific performance decree can be filed in execution proceedings or must be filed in the original suit.
Ratio Decidendi: The court held that applications under Section 28 of the Specific Relief Act must be made in the original suit, not in execution proceedings, as the latter does not have jurisdiction over such matters.
Result: The appeal is allowed, and the orders of the High Court and Executing Court are set aside.
Legal Category Hierarchy
Advocates appeared:
For the Petitioner: Ms. Meenakshi Arora, Sr. Adv. Mr. Shirish K. Deshpande, AOR Ms. Rucha Pravin Mandlik, Adv. Mr. Shivnarayan J. Tapdia, Adv. Ms. Harsimran Kaur Rai, Adv. Mr. Chandratanay Chaube, Adv. Mr. Nanakey Kalra, Adv. Mr. Mohit Gautam, Adv. Mr. Apoorv Sharma, Adv.
For the Respondent: Mr. Vinay Navare, Sr. Adv. Mr. Shashibhushan P. Adgaonkar, AOR Mr. Ravibhushan P Adgaonkar, Adv. Mr. Pradnya S Adgaonkar, Adv.
For the Petitioner: Ms. Meenakshi Arora, Sr. Adv. Mr. Shirish K. Deshpande, AOR Ms. Rucha Pravin Mandlik, Adv. Mr. Shivnarayan J. Tapdia, Adv. Ms. Harsimran Kaur Rai, Adv. Mr. Chandratanay Chaube, Adv. Mr. Nanakey Kalra, Adv. Mr. Mohit Gautam, Adv. Mr. Apoorv Sharma, Adv.
For the Respondent: Mr. Vinay Navare, Sr. Adv. Mr. Shashibhushan P. Adgaonkar, AOR Mr. Ravibhushan P Adgaonkar, Adv. Mr. Pradnya S Adgaonkar, Adv.
Table of Contents
2. Maintainability of an application for rescission of contract under Section 28(1), Specific Relief Act, within execution proceedings versus the original suit. (Para 3 , 4 , 9 )
3. Execution proceedings are distinct from the original suit; applications for rescission or extension of time under Section 28(1), Specific Relief Act, must be filed in the suit. (Para 8 , 9 )
4. An application for rescission of a contract under Section 28(1) of the Specific Relief Act must be filed in the original suit, not in execution proceedings. (Para 8 , 9 )
5. Orders of the Executing Court and High Court set aside — Applications transferred to the original suit for fresh consideration — Property alienation prohibited. (Para 10 , 11 , 13 )
6. Where should an application for rescission of a contract for specific performance be filed under Section 28(1) of the Specific Relief Act?
Such an application must be filed in the same suit in which the decree was made (the original side) and not in the execution proceedings. (Para 8 , 9 )
7. Does a court become functus officio after passing a decree for specific performance?
No, the court does not become functus officio because the contract is not extinguished upon passing the decree; it is in the nature of a preliminary decree and the suit remains pending. (Para 8 )
8. Can an Executing Court extend the time granted by the decreeing court for payment of purchase money?
No, the Executing Court cannot extend the time granted by the Court which passed the decree, although an application made on the execution side may be transferred to the original side. (Para 8 )
9. What is the nature of the court's power to rescind a contract under Section 28(1) of the Specific Relief Act?
The power is discretionary and should not be exercised on flimsy grounds, but only in clear cases of default so as to nullify the decree of specific performance. (Para 8 )
ORDER :
Leave granted.
2. A suit for specific performance of an agreement to sell dated 16.03.2010 was filed in Special Civil Suit No. 217/2010 before the Court of Civil Judge (Senior Division), Latur. The said suit was decreed by judgment and degree dated 16.04.2016. Nevertheless, the said decree was assailed by the plaintiff/appellant who had succeeded in the suit in First Appeal No.3691/2016, which was disposed of by the High Court. Thereafter the execution proceedings were initiated by the appellant herein before the concerned Executing Court. During the pendency of the said proceedings, applications were filed from time to time seeking permission to deposit the balance sale consideration in the very execution proceedings. Four such applications were allowed by the Executing Court. These applications were allowed on 02.02.2021, 08.03.2021, 25.03.2021 and 02.04.2021.
3. In respect of the application filed thereafter by order dated 28.06.2021, notice was issued to the respondent-defendant to file objections on the same. During the pendency of the consideration of the fifth application, seeking permission to deposit the balance consideration amount on 08.07.2021, the respondent-defendant/seller of the suit scheduled property filed an application under Section 28(1) of the Specific Relief Act, 1963 (hereinafter referred to as the “Act” for the sake of convenience) in the execution proceeding. By order dated 30.09.2021, the Executing Court rejected the application filed on 08.07.2021 under Section 28 of the Act and therefore, the plea of rescission of contract was rejected. The payments sought to be tendered vide application Exhibit Nos.15, 16, 18, 21 and 27 were accepted without prejudice to the rights of the judgment debtor(s). The appellant-decree holder was directed to deposit the balance consideration amount, if any, forthwith and the decree holder and judgment debtor(s) were directed to comply with the respective directions as per Order XX Rule 21 of the Code of Civil Procedure, 1908 (‘CPC’, for short).
4. Being aggrieved by the order of the Executing Court dated 30.09.2021, the respondent-judgment debtor herein preferred Writ Petition No.12776 of 2019 before the High Court. By the impugned order dated 15.09.2023, the said Writ Petition was allowed and the order dated 30.09.2021 passed by the Executing Court (3rd Joint Civil Judge, S.D., Latur) in Exhibit Nos.1, 15, 16, 18, 21, 23 and 27, in Special Darkhast No.12/2019 was quashed and set aside. The application(s) filed by the respondent (Exhibit 23) was allowed. The judgment debtor(s) was directed to return the earnest amount paid by the decree-holder within a period of twelve weeks from the date of the said order with simple interest of 6% from the date of payment of the amount till realisation. The balance consideration amount deposited by the decree-holder from time to time before the Executing Court was ordered to be refunded along with accrued interest.
5. Being aggrieved by the order dated 15.09.2023 passed by the High Court, the appellant has preferred this appeal.
6. We have heard learned senior counsel Ms. Meenakshi Arora for the appellant-decree holder and Mr. Vinay Navare, learned senior counsel appearing for the respondents-judgment debtor at length and perused the material on record.
7. The controversy between the parties is in a very narrow compass. The controversy is central to Section 28 of the Act. For immediate reference, Section 28 of the Act is extracted as under:
“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 ma
