The Supreme Court has held that where a decree for specific performance directs the execution of the sale deed upon receipt of the balance sale consideration within a specified period, the failure of the decree holder to deposit the said amount within the stipulated time renders the decree inexecutable. Consequently, the underlying contract stands rescinded in terms of Section 28 of the Specific Relief Act, 1963. Delivering the judgment on May 6, 2026, Justice Pankaj Mithal, speaking for the bench comprising himself and Justice S.V.N. Bhatti, allowed the appeal filed by the seller and set aside the orders passed by the Executing Court as well as the Punjab and Haryana High Court which had permitted belated deposit of the balance consideration.
The dispute arose out of an agreement to sell agricultural land admeasuring 12 kanals and 19 marlas situated in village Shikarpur, Tehsil Tauru, District Mewat, Haryana, executed on 19.10.2005. The seller, Habban Shah, agreed to sell the land to the buyer, Sheruddin, at the rate of Rs.5,00,000 per acre and received Rs.80,000 as advance. The sale deed was to be executed on or before 15.03.2006 upon payment of the balance consideration. Upon the sellerās failure to execute the deed, the buyer instituted a suit for specific performance which was decreed on 31.10.2012 by the court of first instance. The decree specifically directed the seller to execute the sale deed in favour of the buyer after receiving the balance sale consideration within a period of three months from the date of the judgment, failing which the buyer would be entitled to get the sale deed executed through the process of the court.
Although the decree was challenged in appeal, the interim order passed therein was limited to restraining alienation of the property and lapsed on 25.01.2013. The first appeal was dismissed on 11.11.2014 and the second appeal on 12.01.2017. Importantly, the buyer did not deposit the balance sale consideration within the three-month period stipulated in the decree, nor did he move any application seeking extension of time within that period. Subsequent execution petitions were filed, and the balance amount was deposited only in 2015 after permission was granted by the Executing Court. The seller raised objections contending that the decree had become inexecutable due to non-compliance with the condition regarding deposit of the balance amount within the stipulated time.
The Supreme Court meticulously examined the operative portion of the decree and observed that it imposed reciprocal obligations on both parties. By necessary implication, the buyer was required to deposit the balance consideration within three months to enable the seller to execute the sale deed. The Court held that such a decree is in the nature of a preliminary decree over which the court retains control and does not become functus officio. Relying on established precedents, including P.R. Yelumalai v. N.M. Ravi, the bench ruled that non-compliance with the condition leads to the suit being treated as automatically dismissed, rendering the decree inexecutable. The Court clarified that moving a separate application under Section 28 of the Specific Relief Act by the judgment debtor for rescission is not mandatory; the court is empowered to treat the contract as rescinded upon non-compliance.
The judgment underscored the equitable and discretionary nature of the relief of specific performance. The buyer, despite obtaining a decree on the basis of his readiness and willingness, failed to demonstrate continuous readiness and willingness by complying with the decreeās condition within the stipulated time. The Court refused to condone the delay, noting that neither automatic extension of time nor condonation of delay could be inferred from subsequent permission to deposit. It further observed that the conduct of the buyer disentitled him from the benefit of the decree, especially considering the long passage of time since the agreement in 2005 and the potential escalation in land prices.
In the final operative directions, the Supreme Court declared the decree dated 31.10.2012 inexecutable and held that the contract as a whole stands rescinded. The seller was directed to refund the earnest money of Rs.80,000 along with simple interest at 8% per annum from 19.10.2005 till the date of refund. In the event of default in making the refund, the seller was permitted to sell half an acre of the land to satisfy the amount. The appeal was accordingly allowed and pending applications were disposed of.
Case Details:
Title: Habban Shah Versus Sheruddin
Citation: 2026 INSC 451
Case No.: Civil Appeal No. __ of 2026 (Arising out of SLP (C) No. 14479 of 2025)
Coram: Justices Pankaj Mithal and S.V.N. Bhatti
Date of Judgment: May 6, 2026
Click HERE for full Judgment.
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