Specific Performance Decree Not To Be Rescinded Merely Because Plaintiff Deposited Balance Sale Consideration After Appeal [Read Judgment]

The Supreme Court has found fault with the judgment of a Punjab and Haryana High Court which had held that a decree for specific performance to be inexecutable as the  balance sale consideration was deposited by the plaintiff after the appeal, beyond the period fixed by the trial court.

The SC bench of Justices D Y Chandrachud and Indira Banerjee held that the trial court's decree had merged with the appeal court's decree. Hence, there was no delay on the part of plaintiff in depositing the balance sale consideration.

In the case, the plaintiff deposited the balance sale consideration soon after the appeal against the trial court decree was dismissed by the High Court.  The defendant objected to the execution on the ground that the deposit by plaintiff was belated as the trial court had directed the execution of sale deed within two months.

The plaintiff pointed out that the appeal against trial court judgment was pending in the High Court for three years, and it was dismissed only in 2015. The execution court rejected the objections of the defendant. Against this, the defendant filed revision in the High Court.

The High Court allowed the revision. According to the High Court, the time frame for the deposit of the balance sale consideration was implicit in the decision of the trial court which had ordered the execution of the sale deed within two months from the date of the judgment upon deposit of the remaining sale consideration. The High Court held that the judgment and decree had not been stayed during the pendency of the first appeals and the mere filing of an appeal did not amount to a stay under Order 41 Rule 5 of the Code of Civil Procedure.

So, the decree was held to be inexecutable in terms of Section 28 of the Specific Relief Act, held the High Court. Allowing the revision, it modified the decree to make it one for return of sale consideration to the plaintiff.

Aggrieved, the plaintiff approach the Supreme Court. Allowing the appeal, the SC observed :

"In the present case, once the Appellate Court confirmed the judgment and decree of the Trial Court, there was evidently a merger of the judgment of the Trial Court with the decision of the Appellate Court. Once the Appellate Court renders its judgment, it is the decree of the Appellate Court which becomes executable. Hence, the entitlement of the decree holder to execute the decree of the Appellate Court cannot be defeated". 

The defendant said that there was no stay of execution by the appellate court and therefore the plaintiff ought to have deposited the amount within the time fixed by the trial court. Rejecting this argument, the top court said that doctrine of merger will apply even if there was no stay by the appellate court of the execution.

Explaining the doctrine of merger, the Court said :

"The logic underlying the doctrine of merger is that there cannot be more than one decree or operative orders governing the same subject-matter at a given point of time. When a decree or order passed by an inferior court, tribunal or authority was subjected to a remedy available under the law before a superior forum then, though the decree or order under challenge continues to be effective and binding, nevertheless its finality is put in jeopardy. Once the superior court has disposed of the lis before it either way — whether the decree or order under appeal is set aside or modified or simply confirmed, it is the decree or order of the superior court, tribunal or authority which is the final, binding and operative decree or order wherein merges the decree or order passed by the court, tribunal or the authority below. However, the doctrine is not of universal or unlimited application. The nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or which could have been laid shall have to be kept in view."

The SC added that the HC could not have modified the decree in a civil revision petition arising out of execution proceedings.

"The High Court impermissibly substituted the decree for specific performance with an order for refund of the sale consideration, beyond the earnest money of Rs. 2,00,000/- to the decree holder. The reasons which weighed with the High Court in doing so as well as its ultimate directions are unsustainable. In a Civil Revision arising out of an execution  proceeding, the High Court has modified the decree. Such a course was not open in law".

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