Specific Relief Act | Execution Court Can Entertain Application Under S.28 Provided It's The Court Which Passed The Decree In Terms Of S.37 CPC : Supreme Court

Although the application under Section 28 of the Specific Relief Act, 1963 ("SRA") seeking rescission of a contract or extension of a time limit for deposit of a balance amount must be decided in the original suit where the decree was passed and not in the Execution Proceedings, the Supreme Court in a recent decision justified the Executive Court's decision to extend the time limit for payment of the balance amount consideration being payable by the decree-holder.

The Court observed that since the decree-holder expressed the willingness to pay the balance amount and there was neither the time limit nor the mode of payment of the balance consideration mentioned in the decree, therefore, the executing court has rightly exercised its discretion to extend the time limit for payment of due amount payable by the decree-holder.

“In these circumstances, taking note of all the events, the Execution Court justifiably exercised its discretion in favour of the decree-holder(s) by allowing them to deposit the balance consideration. In our view, therefore, substantial justice has been done to the parties and if we interfere with the impugned order only on the technical ground that the application was not dealt with as one on the original side, grave injustice would be caused to the decree-holder(s).”, the bench comprising Justice JB Pardiwala and Justice Manoj Misra observed.

It was a case where a suit for the specific performance of a contract was filed against the Appellant and the Court of First Instance (trial court) directed the Appellant to execute a sale deed in favor of the respondent/decree holder upon payment of the balance consideration within two months from the date of the decree. Upon holding so, liberty was granted to the decree-holder to get the decree executable through the Court if the Appellant doesn't execute a sale deed. 

Consequently, the respondent/decree holder instead of paying the balance consideration to the Appellant, filed an application seeking time to deposit the balance consideration in the Executing Court. Aggrieved by the decree holder's application, the Appellant moved an application for rescission of contract under Section 28 of the Specific Relief Act. However, the Executing Court dismissed the rescission application and permitted the decree­holder(s) to deposit the balance consideration. 

It was after the High Court dismissed the Civil Revision preferred by the Appellant against the Executing Court's decision that the present appeal was filed before the Supreme Court.

The following questions came for the Court's consideration: -

"(i) Whether the Execution Court had jurisdiction to deal with the application(s) for (a) rescission of contract and (b) extension of time to deposit the balance sale consideration?

(ii) If the Execution Court had the jurisdiction, whether those applications ought to have been decided as one in the suit (i.e., original side)? If yes, then, whether, in the facts of the case, on that ground alone, the impugned order warrants interference in exercise of jurisdiction under Article 136 of the Constitution of India?"

Answering the first issue, the Court upon interpreting Section 28 of SRA observed that in the normal course, the application seeking rescission of contract or extension of time to deposit the balance sale consideration lies in the original suit, however, the Executing Court is not precluded to decide the application when it acted as a Court of First Instance while passing the decree. 

“Thus, an application under Section 28 of the 1963 Act, either for rescission of contract or for extension of time, can be entertained and decided by the Execution Cour provided it is the Court which passed the decree in terms of Section 37 of the CPC.”, the Court said.

On the second issue, the Court said that the Executing Court's decision to permit the decree-holder to deposit the balance sale consideration before the Court by extending the time could not be interfered with while exercising the jurisdiction under Article 136 of the Constitution.

The Court said that “for the purpose of doing complete justice to the parties, the Court may not interfere with the order even if it suffers from some legal error.”

In this regard, the Judgment authored by Justice Manoj Misra referred to the case of Chanda v. Rattni (2007) where the Court said that “if there is a bona fide reason for the delay/ default, such as where there appears no fault on the part of the decree-holder, the Court may refuse to rescind the contract and may extend the time for deposit of the defaulted amount.”

After noting that no fault was attributed on behalf of the decree-holder as they had throughout shown their intention to pay the balance consideration for the execution of the sale deed whereas the appellants appeared interested only in challenging the decree before higher Courts, the Court said that no error was committed by the executing court by exercising its discretion in favour of the decree¬holder(s) by allowing them to deposit the balance consideration.

“In our view, therefore, substantial justice has been done to the parties and if we interfere with the impugned order only on the technical ground that the application was not dealt with as one on the original side, grave injustice would be caused to the decree holder(s). More so, when the judgment-debtor(s) themselves applied to the Execution Court for rescinding the contract under Section 28(1) of the 1963 Act, and raised no such jurisdictional issue either before the Execution Court or the High Court. Therefore, in our view, no interference with the impugned order is called for in exercise of our discretionary jurisdiction under Article 136 of the Constitution.”, the Court concluded.

For the reasons above, the appeal was dismissed.

Appearance:

For Petitioner(s) Mr. B. S Bedi, Adv. Ms. Simar Bedi, Adv. Mr. Dinesh Verma, Adv. Mr. Subhasish Bhowmick, AOR

For Respondent(s) Mr. Sanchar Anand, Adv. Mr. Devendra Singh, AOR Mr. Anant K Vatsya, Adv. Dr. Ravinder Kumar Anand, Adv. Mr. Aman Kumar Thakur, Adv. Mr. Arjun Rana, Adv. Mrs. Rita Vasisth, Adv.

Case Title: ISHWAR (SINCE DECEASED) THR. LRS & ORS. Versus BHIM SINGH & ANR., CIVIL APPEAL NO. 10193 OF 2024

Citation : 2024 LiveLaw (SC) 651

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