The Madras High Court upheld the trial court’s decree and the first appellate court’s order, holding that an ex-parte decree for specific performance may be rescinded under Section 28 of the Specific Relief Act, 1963 when the decree-holder fails to deposit the balance sale consideration within a reasonable period. The court dismissed the second appeal filed by the original plaintiffs, confirming the validity of the sale deed executed on 19 September 1988.
Background & Facts
The Dispute
The appellants (defendants 1-9) are nine women - Rajeswari, Amutha, Muthulakshmi, Santhi, Vasanthi, Ramesh, Baskar, Srinivasan and Samundeeswari - who claim ownership of an approximately 6,030 sq ft property situated at Old Door No. 28, New Door No. 36, Sabapathi Mudali Street, Perambur, Chennai. The respondents include the tenth and eleventh defendants, Rajamanickam (son of Subramani Gramani) and his wife Pushpa, who executed a registered sale deed on 19 September 1988 in favour of the appellants. The core controversy revolves around an earlier ex-parte decree dated 16 November 1983 for specific performance of three sale agreements dated 1 June 1980, 31 December 1980 and 9 June 1982, and whether that decree could be rescinded under Section 28 of the Specific Relief Act, 1963.
Key Facts
- 29 Nov 1973: S. Vinayagamurthy and S. Rajamanickam sold 1,073 sq ft of the ancestral property to Saroja.
- 26 June 1977: They sold another 1,080 sq ft to John Devaraj.
- 1 June 1980, 31 Dec 1980, 9 June 1982: Three sale agreements were executed between the first defendant (Thiruvenkatachari) and the vendors (Vinayagamurthy & Rajamanickam) covering the entire suit property.
- 16 Nov 1983: An ex-parte decree in O.S. No. 5500 of 1983 ordered the first defendant and her husband to deposit the balance sale consideration of Rs 35,724.40.
- 22 Dec 1987: The balance consideration was finally deposited, more than four years after the decree.
- 19 Sept 1988: Defendants 10 & 11 executed a registered sale deed conveying the remaining 4,049 sq ft to the appellants.
- 1991: Defendant 10 filed IA No. 445 under Section 28 SRA seeking rescission of the 1983 decree; the court allowed the application on 11 Sept 1991 and ordered interest of Rs 25,185 to be paid.
- 20 Nov 1996: Review of IA 445 was dismissed.
- 3 Aug 1992: Execution petition (E.P. No. 464 of 1988) was dismissed.
- 16 Dec 2002: The II Additional Judge, City Civil Court, confirmed the trial court’s decree dated 17 Sept 1997.
- 26 Nov 2004: The second appeal under Section 100 CPC was admitted.
- 01 Sept 2026: The Madras High Court delivered the judgment dismissing the second appeal.
Procedural History
- 17 Sept 1997: Trial Court (VII Assistant Judge, City Civil Court) decreed in favour of the appellants, granting declaration of title, voiding the 1983 ex-parte decree, and ordering possession.
- 16 Dec 2002: First Appellate Court (II Additional Judge, City Civil Court) affirmed the trial court’s decree.
- 26 Nov 2004: Second Appeal filed under Section 100 CPC.
- 01 Sept 2026: Judgment delivered by Justice R. Sakthivel dismissing the second appeal.
The Parties' Positions
- Appellants (Defendants 1-9): Argue that the ex-parte decree should not have been rescinded; contend that the balance consideration was eventually paid and that the rescission order is barred by limitation; seek set-aside of the 2002 and 1997 judgments.
- Respondents (Defendants 10 & 11 and others): Maintain that the ex-parte decree was validly rescinded under Section 28 SRA, rendering the decree unenforceable; assert that the 1988 sale deed is valid and that the appellants are entitled to title and possession.
Relief Sought
- Appellants: Set aside the judgments and decrees dated 17 Sept 1997 and 16 Dec 2002; restore the original decree; claim costs.
- Respondents: Dismiss the second appeal; confirm the rescission of the 1983 decree and the validity of the 1988 sale deed; no costs awarded.
The Legal Issue
What is the correct legal position when an ex-parte decree for specific performance of a sale agreement does not stipulate a time-limit for the deposit of the balance sale consideration, and the decree-holder deposits the amount after a substantial delay? Specifically, does Section 28 of the Specific Relief Act, 1963 empower the court to rescind such a decree, and can the vendors subsequently convey valid title?
Arguments Presented
For the Appellant
- The balance consideration was eventually paid; therefore, the decree should remain operative.
- The rescission order under IA 445 1991 is barred by Article 137 of the Limitation Act, 1963.
- The first appellate and trial courts erred in treating the delayed deposit as unreasonable.
- Reliance on Kerala State Electricity Board v. T.P. Kunhaliumma and G.S. Chakravarthi Asokar v. Therasitta Santhi for limitation arguments.
For the Respondent
- The ex-parte decree was expressly rescinded by the court in IA 445 1991, rendering it unenforceable.
- Under Section 28 SRA, the court retains jurisdiction to rescind a specific-performance decree when the decree-holder fails to perform within a reasonable time.
- The four-year delay in depositing Rs 35,724.40 is not reasonable, justifying rescission.
- Cited Supreme Court precedents (Hungerford Investment Trust Ltd. v. Haridas Mundhra, Mahommadalli Sahib v. Abdul Khadir Saheb, Anand Narayan Shukla v. Jagat Dhari) establishing the preliminary nature of specific-performance decrees and the court’s power to extend time or rescind.
The Court's Analysis
The Court first examined the nature of a decree for specific performance. It reiterated that such a decree is preliminary and does not extinguish the underlying contract; the court that passes the decree retains control and may either extend the time for performance or rescind the decree under Section 28 of the Specific Relief Act, 1963.
"The decree for specific performance is in the nature of a preliminary decree and therefore, till the deed is executed pursuant to the decree, the Court that passed the decree is vested with the jurisdiction to either rescind the contract/the decree for non-payment/non-deposit within the stipulated period or extend the period for making such payment/deposit."
The Court noted that the 1983 ex-parte decree did not specify any time-limit for the deposit of the balance consideration, invoking Order XX Rule 12A CPC, which mandates that a specific-performance decree must fix a period for payment. In the absence of such a period, the decree-holder must act within a reasonable time. Citing Narasimhan v. Balammal (1988) and the recent Anand Narayan Shukla v. Jagat Dhari (2026), the Court held that a delay of more than four years cannot be deemed reasonable.
The Court further observed that the decree-holder (first defendant and husband) deposited the balance only on 22 December 1987, after a lapse of over four years, and that the court had already entertained an application for rescission (IA 445 1991) which was allowed. The rescission rendered the decree unenforceable, and the subsequent sale deed of 19 September 1988, executed by the vendors (defendants 10 & 11), was therefore valid.
Finally, the Court rejected the appellants’ limitation argument, stating that the question of limitation had already been decided in the proceedings under Section 28, and the order of rescission had attained finality. Consequently, the second appeal was dismissed, and the judgments of the trial and first appellate courts were confirmed.
The Verdict
The Madras High Court dismissed the second appeal, upheld the trial court’s decree dated 17 September 1997 and the first appellate court’s order dated 16 December 2002, and confirmed that the ex-parte decree of 16 November 1983 was rescinded. No costs were awarded, and all connected civil miscellaneous petitions were ordered closed.
What This Means For Similar Cases
Courts Retain Jurisdiction After Specific-Performance Decrees
- A decree for specific performance is preliminary; the court may extend time or rescind under Section 28 SRA even after the decree is passed.
- Parties must be prepared to perform their obligations continuously until the deed is executed.
Reasonable Time Is Fact-Specific, Not Arbitrary
- In the absence of a statutory time-limit, courts assess reasonableness based on the facts; a delay of four years was held unreasonable in this case.
- Practitioners should advise clients to deposit consideration promptly and seek a time-extension before the period lapses.
Limitation Arguments Must Be Raised Promptly
- Once an application under Section 28 is decided, the limitation question cannot be reopened in subsequent proceedings.
- Counsel should raise any limitation defence within the specific-relief proceeding, not in collateral appeals.
Draft Sale Agreements with Explicit Time-Frames
- To avoid uncertainty, sale agreements and specific-performance decrees should specify a clear deadline for payment, complying with Order XX Rule 12A CPC.
- Including a clause for automatic rescission on non-payment can provide contractual certainty.
