Specific Relief Act | Appellate Court Must Specify Time Period To Deposit Sale Consideration For Specific Performance: Supreme Court

The Supreme Court recently advised Appellate Courts to specify the time limit for depositing the balance sale consideration, as required under Order XX Rule 12A of the CPC, in cases of specific performance involving the sale or lease of immovable property.

Order XX Rule 12A of Code of Civil Procedure, 1908 (“CPC”) states that where a decree for the specific performance of a contract for the sale or lease of immovable property orders that the purchase-money or other sum be paid by the purchaser or lessee, the court shall specify the period within which the payment shall be made.

The Court ruled that due to operation of doctrine of merger, the decree passed by the trial court specifying the time limit to deposit the balance sale consideration gets merged with the Appellate Court's order, and if the Appellate Court fails to specify the time limit to deposit the balance sale consideration, it would be unjust to deny execution of the decree just because there was belated deposit of balance sale consideration.

“This litigation is an eye-opener for the appellate courts reminding that they owe a duty to comply with the provisions of Order XX Rule 12A of the CPC. Where an appeal is filed against the decree passed by the trial court and the appeal is disposed of, the appellate court should specify time to deposit the balance sale consideration. It is too much to say that since the trial court had granted two months time to the decree holder to deposit the balance sale consideration the same time period would apply even to the decree that may be drawn by the appellate court. What is executable is the decree passed by the appellate court. The appellate court owes a duty to specify the time period.”, the Court observed.

The bench comprising Justices JB Pardiwala and R Mahadevan heard the case where the trial court decreed the suit for specific performance of an agreement to sell in the appellant's favor and directed him to deposit the balance sale consideration within two months of the date of the decree.

The First Appellate Court (in 2015) affirmed the trial court's decree; however, it didn't specify the time limit within which the balance sale consideration has to be paid by the appellant.

As the doctrine of merger applies, the trial court's decision merges with the Appellate Court's ruling, rendering the trial court's order ineffective. Consequently, the Appellate Court's decision, which does not specify a time limit for depositing the balance sale consideration, took precedence.

Since the First Appellate Court didn't specify the time limit for depositing the balance sale consideration, the Appellant deposited the balance sale consideration in 2019, i.e., four years after the First Appellate Court's decision.

The Appellant challenged the High Court's decision, which deemed the decree in executable due to a four-year delay in depositing the balance sale consideration, by appealing to the Supreme Court.

Now, the question that appeared before the Supreme Court was whether the delay in depositing the balance sale consideration would be a ground to deny an execution of the First Appellate Court's decree.

Answering negatively, the Court observed that the delay occurred in depositing the balance sale consideration would not be a ground to deny execution of the decree, and it would be within the discretion of the trial court to grant further time to deposit the balance sale consideration under Section 28 of the Specific Relief Act, 1963 (SRA) even after a delay, provided there was no wilful negligence or abandonment of the contract.

“This discretion has to be exercised judiciously keeping in mind various factors like bona fide of the decree holder, the cause for failure to deposit the balance sale consideration in time, the length of delay and also the equities that might have been created during the interregnum period in favour of the judgment debtor.”, the Court observed.

The Court added that when no time limit was specified by the First Appellate Court to deposit the balance sale consideration, then the decree holder shall deposit the balance sale consideration within a reasonable time. However, it clarified that the reasonable time should not be one that the decree holder wishes to deposit the balance sale consideration as per his own sweet will.

“In the case on hand, undoubtedly, there was a delay on the part of the decree holder in filing the execution petition and thereby seeking permission to deposit the balance sale consideration. Just because a decree of specific performance can be executed within 12 years from the date of original decree or from the date the appellate court affirms such decree that, by itself, does not mean that a decree holder deposits the balance sale consideration at his own sweet will.”, the court observed.

“If the appellate court had failed to stipulate any particular time period then it is expected of the decree holder to deposit the same within a reasonable period of time.”, the court added.

Because the balance sale consideration of Rs. 4,87,000/- came to be deposited by the decree holder way back in 2019, the Court deemed it inappropriate for the High Court to interfere with the execution of the decree.

The Court held that the appellant's delay in depositing the balance sale consideration did not render the decree inexecutable, as there was no evidence of wilful negligence or abandonment of the contract. The Court directed the respondents to be paid 9% simple interest on the balance sale consideration for the period of delay.

In terms of the aforesaid, the Court allowed the appeal.

Case Title: RAM LAL VERSUS JARNAIL SINGH (NOW DECEASED) THROUGH ITS LRS & ORS.

Citation : 2025 LiveLaw (SC) 283

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