The Supreme Court of India has held that a decree for specific performance does not undergo automatic rescission due to a delay in depositing the balance sale consideration. The Court clarified that under Section 28 of the Specific Relief Act, 1963, the trial court retains jurisdiction over the decree until the sale deed is executed and possesses the discretionary power to extend the time for payment.
The Bench, comprising Justice Manoj Misra and Justice Manmohan, set aside the orders of the Madhya Pradesh High Court and the Execution Court which had dismissed an execution application solely on the grounds of delayed deposit.
Background of the Case
The appellant, Anand Narayan Shukla, had entered into an agreement to purchase 3.75 acres of land from the respondent at ₹16,00,000 per acre in 2011. After a suit for specific performance, the Trial Court decreed in favor of the appellant on March 3, 2017, directing him to pay the balance amount within one month.
The appellant issued a notice to the respondent on April 1, 2017, to accept the payment and execute the deed, but the respondent preferred an appeal. Although there was no stay on the decree, the balance amount was not deposited within the initial one-month window. An execution application was filed in July 2017. Between 2017 and 2020, various orders were passed regarding service of notice and payment. Ultimately, amidst the COVID-19 lockdown, the Execution Court on November 26, 2020, directed the appellant to deposit ₹57,50,000 “today itself” to test his bona fides, which the appellant complied with.
However, on July 12, 2023, the Execution Court dismissed the execution application, stating that since the decree was conditional and the amount was not deposited within one month of the 2017 decree, it could not be executed. The High Court affirmed this view in 2025.
Arguments of the Parties
For the Appellant: Senior Counsel Saurabh Mishra argued that the appellant had shown readiness by issuing notices and eventually depositing the full amount under the Court’s 2020 order. He contended that Section 28 of the Specific Relief Act empowers courts to extend time and that the respondent’s application for rescission was only filed after the deposit was already made. He further argued that the Trial Court decree had merged with the Appellate Court’s order.
For the Respondent: Counsel Ajay Marwah submitted that despite repeated opportunities since 2017, the deposit was not made for three years. He argued that the filing of an appeal does not stay a decree and that the appellant, having paid only a “meagre amount” as advance, was not entitled to the equitable relief of extension.
The Court’s Analysis
The Supreme Court addressed several key legal issues:
1. Doctrine of Merger: The Court clarified that the doctrine of merger applies only when a higher forum passes an order on merits. Since the respondent’s first appeal was dismissed for non-prosecution (default), there was no “merger” of the Trial Court decree into the Appellate order.
2. Nature of Section 28 of the Specific Relief Act: The Court emphasized that a decree for specific performance is in the nature of a “preliminary decree.” Quoting Sardar Mohar Singh v. Mangilal, the Court noted:
“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… the trial court retains its power and jurisdiction to deal with the decree.”
3. Discretionary Power and Equity: The Court observed that Section 28 uses the phrase “may, by order, rescind,” indicating that rescission is not automatic. The Bench noted:
“The Court is given the discretion to extend the time… the test is whether from the conduct of the decree holder it could be logically inferred that he had no intention to complete his part of the contract.”
The Bench criticized the lower courts for a “pedantic approach,” noting that the Execution Court itself had given confusing directions—sometimes ordering payment to the judgment-debtor (who was refusing it) and only later ordering a deposit in Court.
The Decision
The Supreme Court held that the Execution Court and the High Court failed to consider the matter in the proper perspective. It ruled that while granting an extension, the Court could balance equities by directing the decree-holder to pay additional compensation to the judgment-debtor for the delay.
The Court set aside the impugned orders and restored the Execution Application to the Court of first instance for fresh consideration. It directed that the applications be treated as interlocutory applications in the original suit.
Case Details
Case Title: Anand Narayan Shukla v. Jagat Dhari
Case No.: Civil Appeal No. 7355 of 2026
Bench: Justice Manoj Misra and Justice Manmohan
Date: May 8, 2026
