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2014 Supreme(Kar) 717
High Court of Karnataka
N. KUMAR, J.
T.L. Rajagopal
Versus
S.N. Shivakumar
Writ Petition No.29944 of 2011 (GM-CPC)
Decided on : 06-03-2014
For the Petitioner:G. Narahari for Kashyap N. Naik, Advocates.
For the Respondent:S.N. Bhat, Advocate.
Headnote:. INDIAN CONTRACT ACT, 1872 - Section 65: [N. Kumar, J] Recession of contract of sale - Agreement of sale - Any sum received by way of earnest money to be returned.
SPECIFIC RELIEF ACT, 1963 - Section 28(2)(b): [N. Kumar, J] Recession of contract of sale - Agreement of sale - Any sum received by way of earnest money to be returned.
SPECIFIC RELIEF ACT, 1963 - Section 28(1): [N. Kumar, J] Recission of Contract - Decree for specific performance - Decree not specifying outer limit within which plaintiff/decree-holder to deposit balance of sale consideration.
Held, Decree Holder has to deposit on expiry of the appeal time. He can also seek extension of time and Court may grant extension. In case of failure judgment-debtor can make an application under Section 28(1) either before the Court which passed the decree or in execution petition (which is nothing but continuation of suit) for recission of Contract of sale. Court in its discretion can order recission of Contract.
SPECIFIC RELIEF ACT, 1963 - Section 28(1): [N. Kumar, J] Recission of Contract - Suit for specific performance of agreement of sale decreed ex parte directing defendant to receive the balance sale consideration from the plaintiff and to execute sale deed failing which he was reserved the liberty of taking steps to get the sale deed executed and registered through the Court Commissioner by depositing the balance sale consideration amount after the appeal time is over - Defendant not obliging to execute sale deed - Plaintiff filed execution petition - Judgment-Debtor / defendant not only filed an application under Order 21, Rule 97 CPC but also got filed another application through daughter-in-law - Both applications were dismissed - Again Judgment-Debtor/Defendant filing application under Section 28 of Specific Relief Act for recission of Contract and dismissal of Execution Petition - Suit decreed ex parte on 26.3.2003 - Time to file appeal expired on 25.4.2003 - Decree was silent as to outer limit for plaintiff to deposit balance sale consideration - Question whether an application under Section 28 of the Act is maintainable on the original side or in the execution proceedings initiated by the decree holder to execute the decree? - Held, Section 28 of Specific Relief Act deals with recission of contracts for sale or lease of immovable property in certain circumstances when already specific performance has been decreed by the Court. To invoke Section 28, the person who has obtained a decree for specific performance ought to have failed to pay the money or other sum which the Court has ordered him to pay, within the period allowed by the decree or such further period as the Court may allow. In such an event the person who has suffered the decree has a right to apply to the Court in the same suit in which the decree was passed to have the contract rescinded. On such an application being made, 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. Once such an order for rescission of contract is made, the Court shall direct the purchaser or the lessee, if, he has obtained the possession of the property under the contract, to restore such possession to the vendor or lessor and also may direct payment to the vendor or lessor to pay the rents and profits which have accrued in respect of the property from the date on which the possession was obtained by the purchaser or lessee until restoration of possession to any vendor or lessor, and if the justice of the case so requires, the refund of any sum paid by the vendor or lessee or earnest money or deposit in connection with the contract.
As to whether an application under Section 28 of the Act is to be made before the Court which passed the decree or in Execution Petition, the Court after passing the decree does not become functus officio. It retains the jurisdiction to conclude the further steps to be taken in the suit. The Execution Petition for getting the sale deed registered through Court, though called ’Execution Proceedings’ is nothing but continuation of original suit. When the plaintiff/Decree-holder commits a default in making payment, Judgment-Debtor can approach the Court under Section 28 of the Act seeking recission of Contract. Court has the discretion to rescind the contract notwithstanding the fact that the decree has attained finality. Therefore, application filed by Judgment-Debtor under Section 28 of the Act in execution proceedings is perfectly maintainable.
In the instant case the Decree-Holder deposited the balance sale consideration only after the judgment-debtor filed the application under Section 28 which is nearly 8 years after passing of decree and 14 years from the date of agreement. In view of the multiplying of value of immovable property, defendant/judgment debtor will be put to great hardship and irreparable injury, if directed to execute the sale deed. Agreement of sale was rescinded. Defendant/Judgment-debtor was directed to refund the earnest money with interest at 18% p.a. within 3 months. In case of default the order rescinding the contract to stand vacated.
SPECIFIC RELIEF ACT, 1963 - Section 28(1): [N. Kumar, J] Recession of Contract - Decree for specific performance - Decree not specifying outer limit within which plaintiff/decree-holder to deposit balance of sale consideration - Held, He has to deposit on expiry of the appeal time. He can also seek extension of time and Court may grant extension. In case of failure, the judgment-debtor can make an application under Section 28(1) either before the Court which passed the decree or in execution petition (which is nothing but continuation of suit) for recession of Contract of sale. Court in its discretion can order recession of Contract.
SPECIFIC RELIEF ACT, 1963 - Section 28(1): [N. Kumar, J] Recession of Contract - Suit for specific performance of agreement of sale decreed ex parte - Decree directing the defendant to receive the balance sale consideration from the plaintiff and to execute the registered sale deed failing which he was reserved the liberty of taking steps to get the sale deed executed and registered through the Court Commissioner by depositing the balance sale consideration amount after the appeal time is over - Defendant not obliging to execute sale deed - Plaintiff filed execution petition - Judgment-Debtor / defendant not only filed an application under Order 21, Rule 97 CPC but also got filed another application through daughter-in-law - Both applications were dismissed - Again Judgment-Debtor/Defendant filing application under Section 28 of Specific Relief Act for recession of Contract and dismissal of Execution Petition - Suit decreed ex parte on 26.3.2003 - Time to file appeal expired on 25.4.2003 - Decree silent as to outer limit for plaintiff to deposit balance sale consideration - Held, Section 28 of Specific Relief Act deals with recession of contracts for sale or lease of immovable property in certain circumstances when already specific performance has been decreed by the Court. To invoke Section 28, the person who has obtained a decree for specific performance ought to have failed to pay the money or other sum which the Court has ordered him to pay, within the period allowed by the decree or such further period as the Court may allow. In such an event the person who has suffered the decree has a right to apply to the Court in the same suit in which the decree was passed to have the contract rescinded. On such an application being made, 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. Once such an order for rescission of contract is made, the Court shall direct the purchaser or the lessee, if, he has obtained the possession of the property under the contract, to restore such possession to the vendor or lessor and also may direct payment to the vendor or lessor to pay the rents and profits which have accrued in respect of the property from the date on which the possession was obtained by the purchaser or lessee until restoration of possession to any vendor or lessor, and if the justice of the case so requires, the refund of any sum paid by the vendor or lessee or earnest money or deposit in connection with the contract.
As to whether an application under Section 28 of the Act is to be made before the Court which passed the decree or in Execution Petition, the Court after passing the decree does not become functus officio. It retains the jurisdiction to conclude the further steps to be taken in the suit.
The Execution Petition for getting the sale deed registered through Court, though called ’Execution Proceedings’ is nothing but continuation of original suit. When the plaintiff/Decree-holder commits a default in making payment, Judgment-Debtor can approach the Court under Section 28 of the Act seeking recession of Contract. Court has the discretion to rescind the contract notwithstanding the fact that the decree has attained finality. Therefore, application filed by Judgment-Debtor under Section 28 of the Act in execution proceedings is perfectly maintainable. In the instant case the Decree-Holder deposited the balance sale consideration only after the judgment-debtor filed the application under Section 28 which is nearly 8 years after passing of decree and 14 years from the date of agreement. In view of the multiplying of value of immovable property, defendant/judgment debtor will be put to great hardship and irreparable injury, if directed to execute the sale deed. Agreement of sale was rescinded. Defendant/Judgment-debtor was directed to refund the earnest money with interest at 18% p.a. within 3 months. In case of default the order rescinding the contract to stand vacated.
1. This writ petition is preferred by the defendant/judgment debtor challenging the order passed by the Executing Court dismissing his application under Section 28(1) of the Specific Relief Act, 1963 (Hereinafter referred to as The Act' for short).
2. For the purpose of convenience, the parties are referred as per their original rank in the suit.
3. The plaintiff filed a suit for a decree of specific performance of the agreement of sale dated 16.08.1997 against the defendant alleging that the defendant had agreed to sell the schedule property in his favour for Rs.4,60,000/-. Under the said agreement a sum of Rs. 1,75,000/- was paid as advance by him. The balance sale consideration of Rs.2,85,000/- had to be paid at the time of registration of the sale deed. He was constrained to file the suit when the defendant failed to execute the sale deed in his favour as agreed. Though duly served with the suit summons, the defendant did not contest, the suit and therefore, the decree came to be passed on 26.03.2003 directing the defendant to receive the balance sale consideration from the plaintiff and to execute the registered sale deed failing which he was reserved the liberty of taking steps to get the sale deed executed and registered through the Court Commissioner by depositing the balance sale consideration amount after the appeal time is over.
4. After the decree, the plaintiff issued a notice to the defendant expressing his readiness to pay the balance sale consideration and called upon the defendant to receive the consideration and execute the sale deed. The defendant did not oblige. Therefore, the plaintiff filed Ex.No.34/2003 to execute the decree.
5. The record shows that the judgment debtor/ defendant, to stall the execution proceedings not only filed an application under order XXI Rule 97 of CPC but also got filed another application under the same provision through his daughter-in-law. However these applications came to be dismissed by the executing court. Thereafter, the defendant/Judgment Debtor filed I.A.7 U/s. 28 of the Act on 08.03.2011 for rescission of the contract and dismissal of the execution petition.
6. It is the defendant/Judgment debtor's case that the suit came to be decreed exparte on 26.03.2003 and the time to file an appeal against the exparte decree expired on 25.04.2003. The decree is silent as to the outer limit within which the plaintiff should deposit the balance sale consideration from 25.04.2003 and therefore the exparte decree passed in favour of the plaintiff/decree holder is a nullity being contrary to the provisions of Section 28 of the Act. Further the decree holder has not deposited the balance amount till date and therefore, the alleged contract of sale agreement needs to be rescinded and cancelled in the interest of justice and equity. The decree is not executable. The plaintiff/decree holder filed objections to I.A.7 and sought its dismissal contending that since the defendant/ Judgment Debtor failed to comply with the decree, he initiated the execution proceedings well in time and the question of depositing the amount would arise only at the time of the execution of the registered sale deed.
7. The executing Court, after considering the rival contentions and taking note of the decisions relied on by the parties, has dismissed the I.A. holding that no time limit is prescribed in the decree for depositing the balance sale consideration, by the plaintiff. After passing of the decree, the decree holder has filed the execution case only after issuing notice to the judgment debtor stating that he is ready with the balance sale consideration. The defendant did not reply to the notice nor came forward to comply with the decree. Nor has the judgment debtor filed any appeal against the exparte judgment and decree. On the other hand, he got an application filed through his son seeking stay of the further proceedings in the execution petition and another application through one Parvathi und
