The Supreme Court has clarified that a decree for specific performance becomes inexecutable if the balance sale consideration is not deposited within the time expressly stipulated in the decree, even if the decree holder later tenders payment with court permission. The ruling underscores that equitable relief demands strict compliance with time-bound conditions, and delay cannot be condoned absent a prior application for extension.
Background & Facts
The Dispute
The dispute arose from an agreement to sell agricultural land in village Shikarpur, Tehsil Tauru, District Mewat, Haryana. The defendant-appellant, Habban Shah, entered into an agreement to sell 12 kanals and 19 marlas of land to the plaintiff-respondent, Sheruddin, on 19.10.2005 for Rs. 5,00,000 per acre. An advance payment of Rs. 80,000 was received by the seller. The agreement stipulated that the sale deed would be executed on or before 15.03.2006, with the balance consideration payable at the time of registration.
Key Facts
- The agreement to sell was dated 19.10.2005
- Advance payment of Rs. 80,000 was received by the defendant on the same date
- The sale deed was not executed by the stipulated date of 15.03.2006
- The plaintiff filed a suit for specific performance on 17.04.2007
- The trial court decreed the suit on 31.10.2012, directing the defendant to execute the sale deed upon receipt of the balance consideration within three months
- The decree explicitly stated: "the defendant is directed to execute the sale deed... after receiving the balance sale consideration within the period of three months from the date of this judgment"
- The plaintiff did not deposit the balance amount within the three-month window
- The defendant filed a first appeal on 12.11.2012, which resulted in an interim stay on alienation of the property dated 17.12.2012, lapsed on 25.01.2013
- The first appeal was dismissed on 11.11.2014
- The plaintiff filed a first execution application on 04.03.2013, dismissed for want of prosecution on 01.08.2014
- The plaintiff filed a second execution application on 08.01.2015
- The defendant filed objections on 14.07.2015, arguing the decree was inexecutable due to non-compliance with the time condition
- The executing court dismissed objections on 07.09.2015, holding the plaintiff was ready and willing
- The plaintiff applied to deposit the balance amount on 05.03.2013 and again on 08.01.2015
- The executing court permitted deposit on 09.10.2015, and Rs. 6,92,410 was deposited on 10.10.2015
- The High Court dismissed the defendant’s civil revision on 24.03.2025, upholding the execution
Procedural History
- 19.10.2005: Agreement to sell executed; Rs. 80,000 advance paid
- 15.03.2006: Deadline for execution of sale deed passed without compliance
- 17.04.2007: Suit for specific performance filed
- 31.10.2012: Trial Court decreed suit; ordered execution within three months of judgment
- 12.11.2012: Defendant filed first appeal
- 17.12.2012: Interim stay order issued restraining alienation of property
- 25.01.2013: Interim stay lapsed
- 11.11.2014: First appeal dismissed
- 04.03.2013: First execution application filed
- 01.08.2014: First execution dismissed for want of prosecution
- 05.03.2013: Plaintiff applied for permission to deposit balance amount (no order passed)
- 08.01.2015: Second execution application filed
- 14.07.2015: Defendant filed execution objections
- 07.09.2015: Executing Court dismissed objections
- 09.10.2015: Executing Court permitted deposit of Rs. 6,92,410
- 10.10.2015: Balance amount deposited
- 12.01.2017: Second appeal dismissed by High Court
- 24.03.2025: High Court dismissed Civil Revision No. 7232 of 2015
- 06.05.2026: Supreme Court judgment delivered
Relief Sought
The plaintiff sought enforcement of the decree for specific performance. The defendant sought dismissal of the execution petition on grounds of non-compliance with the decree’s time condition and sought rescission of the contract. In the Supreme Court, the defendant alternatively sought refund of Rs. 80,000 with interest.
The Legal Issue
The central question was whether a decree for specific performance becomes inexecutable if the balance sale consideration is not deposited within the time stipulated in the decree, and whether subsequent deposit with court permission, without prior application for extension, amounts to condonation of delay or deemed extension of time.
Arguments Presented
For the Appellant
Shri Manoj Swarup, Senior Counsel, argued that the decree was conditional and self-operative. Non-deposit of the balance amount within three months triggered automatic dismissal of the suit under the principles laid down in P.R. Yelumalai v. N.M. Ravi and Balbir Singh v. Baldev Singh. He emphasized that the plaintiff never applied for extension under Section 148 or 151 CPC or Section 28 of the Specific Relief Act within the stipulated period. The interim stay order did not prohibit deposit; it only restrained alienation. The delay was unexplained and showed lack of readiness and willingness. The plaintiff’s conduct disentitled him from equitable relief under Section 16(c) and Section 20 of the Act.
For the Respondent
Shri Divyesh Pratap Singh contended that the plaintiff was always ready and willing, as recorded by the trial court. The delay was caused by the defendant’s appeal and interim stay, which created uncertainty. The plaintiff made two applications to deposit the amount, and the court ultimately permitted the deposit. The deposit was accepted, and the decree should not be rendered inexecutable on technical grounds. He relied on Dr. Amit Arya v. Kamlesh Kumari and Ram Lal v. Jarnail Singh to argue that non-payment alone does not amount to abandonment; the real test is positive refusal. He also argued that the defendant had not invoked Section 28 to rescind the contract, so the decree should remain enforceable.
The Court's Analysis
The Court undertook a detailed examination of the nature of a decree for specific performance, emphasizing its conditional and equitable character. It held that such a decree is not a final decree but a preliminary one, imposing reciprocal obligations on both parties. The time stipulated for depositing the balance consideration is an essence of the agreement, not a mere formality.
"The conditional decree is self-operative, therefore, non-compliance of any condition leads to automatic dismissal of the suit."
The Court rejected the argument that depositing the amount after the stipulated period, even with court permission, amounts to condonation of delay or deemed extension. It reaffirmed the holding in P.R. Yelumalai v. N.M. Ravi that failure to comply with a condition in a decree for specific performance results in the automatic dismissal of the suit, rendering the decree inexecutable.
The Court distinguished Dr. Amit Arya v. Kamlesh Kumari, noting that while the court may exercise discretion to extend time, non-grant of extension does not automatically revive the decree. The plaintiff’s conduct - failing to deposit within three months, failing to apply for extension during the pendency of the appeal, and waiting until after the appeal was dismissed - demonstrated a lack of continuous readiness and willingness.
The Court also clarified that while Section 28 of the Specific Relief Act allows a party to seek rescission, it is not mandatory to file such an application. The court retains inherent power to treat the contract as rescinded upon non-compliance, as held in Prem Jeevan v. K.S. Venkata Raman.
The Court further held that the interim stay order dated 17.12.2012 did not prohibit deposit of funds; it only restrained alienation. The plaintiff had ample opportunity to deposit the amount after the stay lapsed on 25.01.2013, yet did not do so. The delay of over two years was unexplained and unjustified.
The Court emphasized that specific performance is an equitable remedy, and the maxim "he who seeks equity must do equity" applies strictly. The plaintiff’s inaction over nearly a decade, while land values rose, rendered it inequitable to enforce the decree.
The Verdict
The appeal was allowed. The Supreme Court set aside the High Court’s order dated 24.03.2025 and the Executing Court’s order dated 07.09.2015. The decree for specific performance dated 31.10.2012 was declared inexecutable. The contract was rescinded under Section 28 of the Specific Relief Act, 1963. The defendant was directed to refund the earnest money of Rs. 80,000 with simple interest at 8% per annum from 19.10.2005 until actual refund. If the defendant failed to refund within three months, he could sell half an acre of the suit land to the plaintiff or a third party and use the proceeds to make the refund.
What This Means For Similar Cases
Time Is of the Essence in Specific Performance Decrees
- Practitioners must advise clients that time stipulations in specific performance decrees are binding and non-negotiable unless extended before expiry
- Failure to deposit within the stipulated period, even with later court permission, does not revive the decree
- Applications for extension under Section 148 or 151 CPC must be filed before the deadline, not after
Equity Demands Continuous Readiness and Willingness
- A finding of readiness and willingness at the trial stage does not immunize a decree holder from subsequent inaction
- Conduct after the decree is decisive; delay without explanation disentitles the claimant
- Courts will not enforce equitable relief where the claimant has not acted equitably
No Automatic Revival Through Post-Hoc Deposit
- Acceptance of late deposit by the court does not constitute condonation of delay
- The decree ceases to exist upon non-compliance; it cannot be resurrected by subsequent payment
- Parties must act promptly and seek formal extensions before the deadline expires