2026 Supreme(SC) 509

SUPREME COURT OF INDIA
Manoj Misra, Manmohan, JJ.
Anand Narayan Shukla – Appellants
Versus
Jagat Dhari – Respondent
Civil Appeal No. 7355 of 2026 (@ SLP (C) No. 14206 of 2025)
Decided On : 08-05-2026

IMPORTANT POINTS
(1) Rescission of contract – While granting relief of extension, it was open for Court to balance equities by putting decree holder to such terms as may adequately compensate judgment debtor for delay.
(2) Doctrine of Merger – Doctrine of merger does not make distinction between order of reversal, modification or order of confirmation passed by appellate authority/ court – Doctrine of merger would only apply in a case when a higher forum entertains appeal or revision and passes order on merit and not when appeal or revision is dismissed on the ground of delay in filing the same.

Headnote:

(A) Specific Relief Act, 1963 – Section 20 – Agreement to sell – Decree for Specific Performance – Execution Court permitted appellant to deposit balance consideration even after expiry of period fixed by trial court decree – Order of Execution Court, permitting deposit did not determine rights of parties qua rescission of contract – Rather, deposit was permitted just to test bona fides of decree holder in pursuing execution – Though such deposit becomes a relevant factor for determining whether decree holder had been throughout ready and willing to perform his obligation under the contract/decree, it would not extinguish right of judgment-debtor to seek rescission of contract – By permitting decree holder to make deposit to show his bona fides, Court did not foreclose right of judgment debtor to seek rescission of contract under Section 28 of 1963 Act. (Para 23)

(B) Specific Relief Act, 1963 – Section 28 – Rescission of contract – Neither Execution Court nor High Court took into consideration that though decree fixed a time frame for deposit of balance consideration, it did not provide for consequences of failing to adhere to time schedule – In such circumstances, there could be no automatic rescission of decree for specific performance – Court while exercising its power under Section 28 of 1963 Act was required to consider whether decree was liable to be rescinded or decree holder was entitled to get extension of time up to date of deposit in Court – Though, while granting relief of extension, it was open for Court to balance equities by putting decree holder to such terms as may adequately compensate judgment debtor for delay – Neither Execution Court nor High Court has considered the matter in proper perspective and in accord with settled principles governing exercise of power under Section 28 of 1963 Act – Orders of High Court and of Execution Court set aside and Execution Application restored. (Paras 40 and 41)

(C) Civil Procedure Code, 1908 – Section 2(2) – Doctrine of Merger – Doctrine of Merger is based on principle of propriety in hierarchy of justice-delivery system – Said doctrine postulates that there cannot be more than one operative decree governing same subject matter at a given point of time – Once superior Court has disposed of lis before it either way - whether decree or order under appeal is set aside or modified or simply confirmed, it is decree or order of superior Court, tribunal or authority which is final – Doctrine of merger does not make distinction between order of reversal, modification or order of confirmation passed by appellate authority/ court – However, doctrine of merger would only apply in a case when a higher forum entertains appeal or revision and passes order on merit and not when appeal or revision is dismissed on the ground of delay in filing the same – Dismissal of appeal for non-prosecution would not merge trial court decree in order of appellate court – In present case, appeal of judgment-debtor was dismissed for non-prosecution – As such, there would be no merger of trial court decree in appellate court order. (Paras 21 and 22)

Facts of the case:

Following issues arise for consideration in this appeal:

(A) Whether decree of specific performance passed by trial court merged in order of appellate court even though appellate court dismissed appeal for non-prosecution?

(B) Whether respondent’s application under Section 28 of 1963 Act was maintainable after Court had granted permission to make deposit of balance amount and, pursuant thereto, amount was also deposited?

(C) Whether rescission of contract and consequential dismissal of execution application vitiated by a pedantic approach of court(s) below as they failed to consider facts and circumstances of case as also whether decree could be saved by compensating judgment-debtor for the delay in deposit of the balance sale consideration?

Findings of Court:

Execution Court dismissed execution application by simply observing that decree was conditional, amount was to be paid within one month, but no amount was deposited till 26.11.2020, even though application was submitted on 03.04.2017, therefore decree cannot be executed.

Result : Appeal allowed.