The Supreme Court has ruled that a decree for specific performance of a contract becomes inexecutable if the decree-holder fails to deposit the balance sale consideration within the time stipulated in the decree and does not seek extension of time within the prescribed period.
The Bench of Justice Pankaj Mithal and Justice S. V. N. Bhatti has clarified that filing an application under Section 28 of the Specific Relief Act for rescission of contract is not mandatory. Relying upon Prem Jeevan v. K.S. Venkata Raman, the Court observed that the executing court can treat the contract as rescinded due to non-compliance of the decree conditions even in absence of a formal application seeking rescission.
The dispute arose from an agreement to sell agricultural land situated in Haryana. The seller had agreed to sell approximately 12 kanals and 19 marlas of land for ₹5 lakh per acre and received ₹80,000 as advance consideration. The sale deed was to be executed by March 15, 2006. However, after the seller failed to execute the sale deed, the purchaser instituted a suit for specific performance.
The trial court decreed the suit on October 31, 2012 and directed the defendant to execute the sale deed after receiving the balance sale consideration within three months. The decree further provided that if the sale deed was not executed, the plaintiff could get it executed through court process.
Although the decree was challenged in appeal, the Supreme Court noted that the interim order passed in the first appeal merely restrained alienation of the property and did not prohibit deposit of the balance sale consideration.
The purchaser failed to deposit the balance sale consideration within the three-month period prescribed under the decree. The Court noted that no application seeking extension of time was filed within the stipulated period under either Section 148 or Section 151 of the Code of Civil Procedure or under Section 28 of the Specific Relief Act, 1963.
The Supreme Court rejected the argument that subsequent permission granted by the executing court to deposit the amount amounted to deemed extension of time. Referring to its earlier decision in P.R. Yelumalai v. N.M. Ravi, the Court reiterated that a conditional decree for specific performance is self-operative and failure to comply with the condition within time leads to automatic dismissal of the suit.
The Court emphasised that a decree for specific performance is equitable and discretionary in nature. It observed that the decree-holder must demonstrate continuous readiness and willingness to perform contractual obligations not only during the trial but also after the decree till execution of the sale deed.
Highlighting the equitable principles governing specific performance, the Court observed that “he who seeks equity must do equity” and held that failure to deposit the balance consideration within the stipulated period disentitled the plaintiff from seeking enforcement of the decree.
The Bench ultimately held that the decree dated October 31, 2012 had become inexecutable because of non-compliance with the condition requiring deposit of the balance sale consideration within three months. The Court consequently rescinded the contract under Section 28 of the Specific Relief Act.
The Supreme Court set aside the Punjab and Haryana High Court’s order as well as the executing court’s decision dismissing the objections raised by the judgment debtor. The Court directed refund of the earnest money of ₹80,000 along with 8% simple interest from October 19, 2005 till repayment.
Case Details
Case Title: Habban Shah Versus Sheruddin
Citation: JURISHOUR-1120-SC-2026
Case No.: Special Leave Petition (C) No. 14479 of 2025
Date: 06/06/2026
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