Supreme Court Upholds Trial Court's Discretion to Extend Time for Payment in Specific Performance Decree - 2025-03-17

Supreme Court Affirms Court's Power to Extend Payment Deadlines in Property Sale Decrees

New Delhi, India - In a recent judgment, the Supreme Court of India has reinforced the discretionary power of trial courts to extend the time period for purchasers to deposit the balance sale consideration in specific performance decrees, even in cases arising from compromise agreements. The ruling came in an appeal against a Bombay High Court order that had overturned a trial court's decision to grant such an extension.

The bench, presided over by Justice S. Abdul Nazeer , set aside the High Court's order, thereby restoring the Trial Court's decision which had allowed the purchaser to deposit the remaining amount and upheld the sale deed.

Case Background: Compromise , Delay, and Dispute

The case originated from a suit for specific performance filed by the appellant for the purchase of agricultural land in Maharashtra. A compromise decree was reached in 2010, stipulating that the purchaser was to pay the balance consideration of Rs. 1,47,500 within one month. While the purchaser deposited the amount with a slight delay of five days and a sale deed was executed, the respondent-Trust later sought to cancel the sale deed, arguing that the payment deadline had been missed.

The Trial Court initially dismissed the Trust's application for cancellation, but the Bombay High Court Nagpur Bench reversed this, setting aside the Trial Court's order which had granted an extension of time for payment and consequently cancelling the sale deed. The Supreme Court was then approached to resolve the dispute.

Legal Framework: Section 28 of the Specific Relief Act

The Supreme Court's judgment heavily relied on Section 28 of the Specific Relief Act, 1963. This section empowers courts to rescind a contract for sale if the purchaser fails to pay the purchase money within the stipulated period or any further period allowed by the court. However, the Supreme Court emphasized that this section also grants courts the discretionary power to extend the payment timeline.

Referring to Subsection (1) of Section 28, the judgment highlighted that it allows the court to grant "such further period as the court may allow" for payment. The court underscored that Section 28 is designed to provide complete relief within the specific performance suit itself, eliminating the need for separate proceedings.

Reliance on Precedent: Smt. Periyakkal Case

The Supreme Court further cited the precedent set in Smt. Periyakkal and ors. Vs. Smt. Dakshyani (1983) 2 SCC 127. In this case, the court had observed that even in compromise decrees, courts possess the jurisdiction to extend time to prevent manifest injustice, particularly against forfeiture clauses. The Supreme Court in the present case reiterated the principle from Periyakkal , stating:

"The parties, however, entered into a compromise and invited the court to make an order in terms of the compromise, which the court did. The time for deposit stipulated by the parties became the time allowed by the court and this gave the court the jurisdiction to extend time in appropriate cases. Of course, time would not be extended ordinarily, nor for the mere asking. It would be granted in rare cases to prevent manifest injustice."

Supreme Court's Reasoning and Decision

The Supreme Court observed that the Trial Court had exercised its discretion judiciously in granting the extension, noting that the delay in payment was only five days and the purchaser had promptly sought permission to deposit the balance amount. The court found that the High Court was not justified in overturning the Trial Court's order.

"We are of the view that, the Trial Court in its discretion has granted extension of time for depositing the balance of sale consideration assigning cogent reasons. In our view, the High Court was not justified in setting aside the said order and cancelling the sale deed."

Ultimately, the Supreme Court allowed the appeal, setting aside the High Court's order and restoring the Trial Court's decision. This judgment reaffirms the trial court's crucial role in ensuring justice in specific performance matters and clarifies the scope of judicial discretion under Section 28 of the Specific Relief Act, particularly in the context of compromise decrees. The ruling underscores that courts can and should exercise their power to extend time for payment to prevent injustice and uphold the spirit of agreements, even when deadlines are slightly missed.