Holding

If the trial court and executing court are the same, the executing court may entertain a Section 28 application for extension of time and the vendor may seek rescission, but discretion must be exercised against the decree‑holder where readiness and willingness are lacking.

Summary

The appellant, a vendor, sold two plots of land to the respondents in 1980. The respondents sued for specific performance; the trial court decreed performance, directing the respondents to deposit the balance price by March 31, 1983, and the vendor to execute sale deeds. After the decree became final, the respondents filed execution applications five years later, which were dismissed because they had not deposited the balance amount. The respondents then filed applications under Section 28 of the Specific Relief Act seeking an extension of time to pay, which the High Court remitted to the executing court. The Supreme Court held that when the trial court and executing court are the same, the executing court may entertain a Section 28 application for time‑extension and the vendor may also seek rescission, but equity and the requirement of readiness and willingness under Section 16 preclude granting such extension where the decree‑holder has not complied. Consequently, the appeals were allowed, the High Court order set aside, and the execution court's dismissal upheld.

Issues considered

When can the executing court entertain an application under Section 28 of the Specific Relief Act for extension of time?
Whether the vendor may seek rescission of the contract as a defence in execution proceedings.
Whether the decree‑holder’s failure to show readiness and willingness bars the grant of an extension of time.
Effect of the limitation period for filing a suit for specific performance on the discretion to extend time for compliance with a decree.

Legislation cited

Limitation Act, 1963s. 54
Specific Relief Act, 1963s. 16, s. 28

Subjects

Specific performanceExtension of timeSection 28Specific Relief ActRescissionExecution of decreeEquityLimitation periodReadiness and willingness

Judgment

~.

V.S. PALANICHAMY CHEITIAR FIRM A
~
v.
~

,..,. C. ALAGAPPAN AND ANR.

FEBRUARY 3, 1999
B
(S. SAGHIR AHMED AND D.P. WADHWA, JJ.]

,
,... Specific Relief Act-Sections 16, 28-Application for extension of time
Suit for specific perfonnance-Decree holder failing to deposit purchase
money within the time limit fixed by court-Execution dismissed for want of
deposit of balance amount-Application for extension filed after five years of c
decree-Be/ore the High Court in revision-Remanded to execution
Court-Whether maintainable-Held, executing Court cmt entertain the ap-
plication for extension-Further held, vendor can seek recission as a defence.

Specific Relief Act-Section 28-Suit for specific relief decreed-Decree D
holder Jailing to deposit balance consideration-No explanation for the
delar-ffeld, discretion be not exercised in favour of decree holder-No

-· exte11Sion of time be granted.

Limitation Act-Article 54-Suit for specific perfonnance filed within
limitation-Suit decreed-Balance consideration not deposited-Held, merely E
because a suit is filed within. limitation it does not absolve the decree holder
from showing his readiness and willingness for perfonning the contract.

The Respondents, decree holders in a suit for specific performance
filed execution application after five years of obtaining the decree and after F
3 years of dismissal of Appeal. The execution applications were dismissed
on the ground that the Respondent had not deposited the balance amount
in specified time in one case and did not deposit and amount in the other.
While the Revision Petitions were pending in High Court the Respondents
preferred separate applications under Section 28 of Specific Relief Act
seeking extension of time to deposit the amount. The appellant opposed G
the same contending that the application is not maintainable in the High
Court and no such application was filed in the Trial Court. The High
...,_.,,.,. Court remanded the matter directing the executing Court to dispose of the
applications and also held that the Trial Court has got power to extend
the time. H
349
350 SUPREME COURT REPORTS (1999] 1 S.C.R.
A On appeal before this Court, the Respondent contended that this
Court should not interfere in the order of the High Court inasmuch as
matter has only been remanded to the executing c'ourt to dispose of the
applications for extension of time to deposit the balance amount of con-
sideration in terms of the decree in accordance with law.

B Allowing the Appeals, the Court
~

HELD : 1. When the Trial Court and the executing Court are same, -.
executing Court can enter iain the application for extension of time though
the application is to be treated as one filed in the main Suit. On the same
C analogy, the vendor judgment- holder can also seek rescission of the
contract of sale or take up the plea in defence to bar the execution of
decree. (353-E-FJ

Sardar Mohar Singh through Power of Attorney Holder, Manjit Singh v.
Mangilal Alias Mangtya, (1997) 2 M.L.J. 88 SC= (1997) 9 SCC 217, cited.
D
K. Kalpana Saraswathi v. P.S.S. Somasundaram Chettiar, AIR (1980)
SC 512; KS. Vidyanadam & Ors. v. Vairavan, [1997) 3 SCC 1; Chand Rani
v. Kamal Rani, [1993) 2 SCC 519; N.P. Thirugnanam (Dead) by LRs. v. Dr..
R. Jagan Mohan Rao & Ors., (1995) 5 SCC 115 and Ramankutty Guptan v.
E Avara, [1994) 2 sec 642, referred to.

2. Merely because a suit is filed within the prescribed period oflimita-
tion it does not absolve the vendee-plaintilT from showing as to whether he
was ready and willing to perform his part of agreement and if there was
non-performance was that on account of any obstacle put by the vendor or
F otherwise. Provisions to grant specific performance of an agreement are
quite stringent. Equitable considerations come into play. Court has to see all
the attendant circumstances including if the vendee has conducted himself
in a reasonable manner under the contract of sale. (359-D-E]

3. It is not the case of the Respondent-decree holder that on account
G of any fault on the part of the vendor-judgment- debtor, the amount could
not be deposited as per the decree. That being the position, if now time is
granted, that would be going beyond the period of limitation prescribed
for filing of the suit for specific performance of the agreement though this
provision may not be strictly applicable. It is nevertheless an important
H circumstance to be considered by the Court. That apart no explanation
V.S. PALANICHAMY CHETIIARFIRM v. C. ALAGAPPAN( D.P. WADHWA,J.J 351

-
_,.,
.j whatsoever is coming from the decree-holder· respondents as to why they
did not pay the balance amount of consideration as per the decree except
what the High Court itself thought fit to comment which is certainly not
borne out from the record. Equity demands that discretion be not exer·
A

cised in favour of the decree holder-respondents and no extension of time
be granted to them to comply with the decree. [359·G·H; 360-A]
B
,
>-
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 502-503
of 1999.

From the Judgment and Order dated 24.12.97 of the Madras High
Court in C.R.P. No. 2097 of 1995.
- c
R. Sundara Varadan and T.V. Ratnam for the Appellant.

K.K. Mani for the Respondents.

The Judgment of the Court was delivered by
D
- ... D.P. WADHWA, J. Leave granted.

These are judgment-debtor's two appeals against common judgment
dated December 24, 1997 of the Madras High Court, passed in revision of
the order of the executing court dismissing execution applications filed by
the respondent decree-holders. The decrees are for specific performance E
of two agreements of sale of certain immovable properties.

The appellant, as owner of the property being two plots of land, each
measuring 60' x 40', entered into two separate but similar agreements of
sale dated February 16, 1980 with the respondent decree-holders. Since the
F

-· judgment-debtor failed to perform his part of the agreements, decree-
holders filed suits for specific performance of the contract of sale in the
court of the District Munsif, Pudukottai. The suits were decreed in favour
of the respondents with a direction to them to deposit the balance amount
of consideration and with further direction to the appellant to execute the
sale-deeds. The suits were decreed on January 31, 1983 and the balance G
consideration amount was to be deposited on or before March 31, 1983.
Against the judgment and order decreeing the suits the appellant filed
appeals in the High Court which were dismissed on February 28, 1985.
High Court while dismissing the appeals of the jdgment-debtor did not
grant any extension of time to the respondents for deposit of the balance
amount of consideration. H
/

352 SUPREME COURT REPORTS [1999] 1 S.C.R.

A The respondent decree- holders filed applications for execution of
the decrees of specific performance of contract after five years of the
decrees by the trial court and three years after dismissal of the appeals by .
-
the High Court. One of the contentions raised by the appellaH< judgment-
debtor was that the respondent decree-holders had failed to deposit the
B balance amount of consideration in terms of the decrees. In one case the
balance consideration amount was deposited much after the period granted
in the decree and in the other case no amount of the balance consideration
was at all deposited.

The executing court by order dated September 2, 1984 dismissed the
C execution applications of the respondent decree- holders holding that they
did not pay the amount of balance consideration within the time stipulated
under the decrees.

Against this order two revisions were filed in the High Court by the
D respondent decree-holders. It was not disputed that there was delay in
complying with the terms of the decrees which were conditional. In the
course of proceedings before the High Court respondent decree-holders
filed separate applications seeking extension of time granted under the
decrees by the trial court to deposit the amount. When the appellant
judgment- debtor objected to the filing of the application on the ground
E that these could not be maintained in the High Court and no such applica-
tion was filed in the trial court, the High Court remitted the matter to the
executing court with a direction to treat the applications as interlocutory
applications in the execution proceedings and to dispose them of in ac-
cordance with law. At the same time High Court also said that in view of
F the decision of this Court in Sardar Mohar Singh through Power of Attorney
Holder, Manjit Singh v. Mangi.lal alias Mangtya, (1997) 2 M.LJ. 88 SC =
[1997] 9 SCC 217, "the Lower Court has got power to extend the time".

Aggrieved the appellant judgment-debtor filed these appeals.
'
G Under Section 16 of the Specific Relief Act, 1963 (for short 'the Act')
there are certain grounds which bar the relief of specific performance of
the contract. This Section, insofar it is relevant, is as under :-

"16. Personal bars to relief- Specific performance of a contract
H cannot be enforced in favour of a person -
V.S. PAIANICHAMY CHEITIAR FIRM v. C. ALAGAPPAN [ D.P. WADHWA, J.] 353

(a)········· A
(b) ........ .

(c) who fails to aver and prove that ·he has performed or has always
been ready and willing to perform the essential terms of the
contract which are to be performed by him, other than terms the B
performance of which has been prevented or waived by the defen-
dant.

Explanation- For the purposes of clause (c),-

(i) where a contract involves the payment of money, it is not C
essential for the plaintiff to actually tender to the defendant
or to deposit in .court any money except when so directed by
the court;

(ii) the plaintiff must aver performance of, or readiness and
willingness to perform, the contract according to its true D
construction."

Under Section 28 of the Act after a decree for specific performance
of contract for the sale of immovable property has been made and the
purchaser decree-holder does not, within the period allowed by the decree E
or such further period as the court may allow, pay the purchase money
which the court has ordered him to pay, the vendor judgment-debtor may
apply in the same suit in which decree is made, to have the contract
rescinded. Section 28 of the Act is as under :-

"28. Rescission in certain circumstances of contracts for the sale or F
lease of immovable property, the specific perfonnance of which has
been decreed. - - (1) Where in any suit a decree for specific
performance of a contract for the sale or lease of immovable
property has been made and purchaser or lessee does not, within
the period allowed by the decree or such further period as the G
,.'·--·
,,,.,
court may allow, pay the purchase money or other sum which the
court has ordered him to pay, the vendor or lessor may apply in
the same suit in which the decree is made, to have the contract
rescinded and on such application the court may, by order, rescind
the contract either so far as regards the party in default or al- H
354 SUPREME COURT REPORTS [1999] 1 S.C.R.
>),-
A together, as the justice of the case may require.

(2) Where a contract is rescinded under sub-section (1), the
court -

(a) shall direct the purchaser or lessee, if he has obtained pos-
B session of the property under the contract, to restore such
possession to the vendor or lessor, and •
......

(b) may direct payment to the vendor or lessor of all the rents
and profits which have accrued in respect of the property
from the date on which possession was so obtained by the
c purchaser or lessee until restoration of possession to the
vendor or lessor, and, if the justice of the case so requires,
the refund of any sum paid by the vendee or lessee as earnest
money or deposit in connection with the contract.

(3) If the purchaser of lessee pays the purchase money or other
D
sum which he is ordered to pay nnder the decree within the period
referred to in sub-section (1), the court may, on application made
in the same suit, award the purchaser or lessee such further relief
as he may be entitled to, including in appropriate cases all or any
of the following reliefs, namely -
E
(a) the execution of a proper conveyance or lease by the vendor
or lessor;

(b) the delivery of possession, or partition and separate posses-
sion, of the property on the execution of snch conveyance or
F lease.

(4) No separate suit in respect of any relief which may be claimed
under this section shall lie at the instance of a vendor, purchaser,
. lessor or lessee, as the case may be.
G (5) The costs of any proceedings under this section shall be in the
discretion of the court." ·

In the present case no such application has been filed by the respon-
dent decree-holders before the trial court seeking extension of time to
H deposit the balance amount under the decrees. The applications which
V.S.PALANICHAMYCHETI1ARFIRMv. C.ALAGAPPAN(D.P. WADHWA,J.J 355

..,. have been filed in the High Court have been transmitted to the executing A

- court with a direction to the executing court to dispose them of by restoring
the execution applications which had been dismissed.

It was submitted by Mr. K.K. Mani, learned counsel for the respon-
dent decree- holders that this Court should not interfere in the order of
the High Court inasmuch as matter has only been remanded to the execut-
B

...,.>
ing court to dispose of the applications for extension of time to deposit the
balance amount of consideration in terms of the decree in accordance with
law. Reliance was placed on the decision of this Court in Sardar Mohan
Singh's case (1997] 9 SCC 217. There cannot be any dispute with the
proposition of law laid in that judgment which states :- c
"From the language of sub-section (1) of Section 28, it could
be seen that the court does not lose its jurisdiction after the grant
of the decree for specific performance nor it becomes functus
officio. The very fact that Section 28 itself gives power to grant
D
order of rescission of the decree would indicate that till the sale
..,.. deed is executed in execution of the decree, the trial court retains
its power and jurisdiction to deal with the decree of specific
performance. It would also be clear that the court has power to
enlarge the time in favour of the judgment- debtor to pay the
amount or to perform the conditions mentioned in the decree for E
specific performance, in spite of an application for rescission of
the decree having been filed by the judgment- debtor and rejected.
In other words, the court has the discretion to extend time for
compliance of the conditional decree as mentioned in the decree
for specific performance." F
Again, while considering the provisions of Section 28 of the Act as
applicable to the facts of the case before it this Court in K Kalpana
Saraswathi v. P.S.S. Somasundaram Chettiar, AIR (1980) SC 512 said :

"It is perfectly open to the court in control of a suit for specific G
performance to extend the time for deposit, and this court may do
~-.
so even now to enable the plaintiff to get the advantage of the
agreement to sell in her favour. The disentitling circumstances
relied upon by the defendant- respondent are off-set by the false
pleas raised in the course of the suit by him and rightly negatived. H
356 SUPREME COURT REPORTS f1999] 1 S.C.R.
A Nor are we convinced that the application for consideration and
extension of time cannot be read, as in substance it i~ as a petition
for more time to deposit. Even so, specific performance is an
equitable relief and he who seeks equity can be put on terms to
ensure that equity is done to the opposite party even while granting
B the relief. The final end of law is justice, and so the means to it
too should be informed by equity. That is why he who seeks equity
shall do equity." .....• _

In KS. Vidyanadam & Ors. v. Vairavan, [1997] 3 SCC 1 this Court
referred to the circumstances to be considered in exercising the discretion-
C ary power of the Court to decree specific performance of agreement for
the sale of immovable property. The Court was of the view that in spite of
the fact that suit was filed within the period of limitation as prescribed in
Article 54 of the Limitation Act, 1963, the Court can nevertheless see that
even where time is not the essence of the contract, the plaintiff must
D perform his part of the contract in reasonable time and by looking at all
the relevant circumstances including the express terms of contract and
nature of the property. The case before the Supreme Court was an appeal
by the defendants-vendors who had suffered decree of specific perfor-
mance of agreement for sale of their immovable property located in
Madurai in the State of Tamil Nadu. The Court noticed that in case of
E urban properties in India, it is well-known that their prices have been going
up sharply over the last few decades. The Court then held as under :

"In the case before us, it is not mere delay. It is a case of total
inaciion on the part of the plaintiff for 2 1/2 years in clear violation
F of the terms of agreement which required him to pay the balance,
purchase the stamp papers and then ask for execution of sale deed
within six months. Further, the delay is coupled with substantial
rise in prices - according to the defendants, three times - between
the date of agreement and the date of suit notice. The delay has
brought about a situation where it would be inequitable to give the
G
relief of specific performance to the plaintiff."

·--
The Court relied upon the decision of the Constitution Bench in Chand
Rani v. Kamal Rani [1993] 1 SCC 519.
-~-

--'
H In N.P. 111img11a11am (Dead) By LRS. v. Dr. R. Iagan Mohan Rao &
V-8. PALANICHAMY CHETI1AR FIRM v. C. ALAGAPPAN [ D.P. WADHWA, J.] 357
Ors., °11995] 5 sec 115 this Court observed with reference to Sections 16(c) A
and 20 of the Act that the continuous readiness and willingness on the part
of the plaintiff is a condition precedent to grant the relief of specific
performance and that this circumstance is material and relevant and is
required to be considered by the Court while granting or refusing to grant
the relief. If plaintiff fails to either aver or prove the same, he must fail.
B
To adjudge whether the plaintiff is ready and willing to perform his part
of the contract, the court must take into consideration the conduct of the
plaintiff prior and subsequent to the filing of the suit along with other
attending circumstances. The Court is not bound to grant the relief which
is discretionary merely because there was a valid agreement of Sf!le. It is
equitable remedy and is in the discretion of the Court which discretion,
c
however, has to be exercised according to the settled principles of law and
not arbitrarily.

. In Ramankutty Guptan v. Avara, [1994) 2 SCC 642 the appellant was
the judgment-debtor in a suit for specific performance agreement for sale D
of immovable property. The question before the Court was whether ap-
plication under Section 28 of the Act was maintainable on the execution
side in a decree passed in the same suit by the appellate court. Plaintiff-
respondent's suit for specific performance though dismissed by the trial
court was decreed by the appellate court which granted one month time E
to deposit the balance amount of consideration. The judgment-debtor filed
second appeal in the High Court against the decree which was dismissed.
The decree-holder deposited the amount after the time fixed by the appel-
late Court but before the second appeal was dismissed. Decree- holder
applied for execution of the decree. The judgment-debtor filed an applica- F

-· tion in these very proceedings under Section 28 of the Act for rescission
of the contract which had resulted in passing of the decree on the ground
that the balance consideration was not deposited within one month of the
decree by the trial Court. The Executing Court dismissed the application
on the ground that deposit had been made within the time while holding
that the application was not maintainable on the execution side. The High G
Court on revision also held that the application was not maintainable in
the executing court. This led the judgment-debtor to come to this Court.
This Court observed that when the decree specifies the time for perfor-
mance of the conditions of the decree, on its failure to deposit the money,
Section 28(1) itself gives power to the court to extend the time on such H
358 SUPREME COURT REPORTS [1999] 1 S.C.R.
A terms as the court may allow to pay the purchase money or other sum
which the court has ordered him to pay. The Court held, after nnt!cing the
conflict of decisions by the Bombay High Court and the Andhra Pradesh
High Court, that when the court which passed the decree and the executing
court is the same, application under Section 28 can be filed in the executing
B court. However, where decree is transferred for execution to a transferee
executing court then certainly the transferee court is not the original court
and the executing Court court is not the "same court" within the meaning
of Section 28 of the Act. But when an application has been made in the
court in which the original suit was filed and the execution is being
proceeded with, then certainly an application under Section 28 is main-
C tainable in the same court. Then dealing with the contention of the judg-
ment-debtor that deposit was not within the time allowed by the appellate
Court, the Court said :

"The question then is whether it is a fit case for our interference.
D It is seen that the decree for specific performance became final.
While the second appeal was pending, the balance consideration
was deposited and no steps have been taken to bring it to the notice
of the High Court that the respondent had committed default in
compliance of the appellate decree depositing within the given
time the balance consideration. Moreover, the respondent has
E
been in possession of the land for a long time. The execution is on
midway. Under these circumstances; the command of Article 136
of the Constitution is to draw the curtain and allow the application
to lie in quietus where it was laid and dismiss the appeal."

F
In view of the decision of this Court in Ramankutty Guptan's case
(supra) when the trial court and the executing court are same, executing
court can entertain the application for extension of time though the ap-
plication is to be treated as one filed in the main suit. On the same analogy,
the vendor judgment-holder can also seek rescission of the contract of sale
G or take up this plea in defence to bar the execution of decree. One of the
grounds on which the trial court dismissed the execution application was
that the decree holder did not pay the balance of consideration as per the
sale agreement and also did not pay within the time stipulated by the court
in the decree. High Court could have certainly gone into this question when
H applications for extension of time was filed before it. However, on the
V.S. PALANICHAMY CHEITIAR FIRM v. C. ALAGAPPAN [ D.P. WADHWA, J.) 359

··~ objection by the judgment- debtor, it chose to send back the matter to the A
--(
executing court for decision on these applications, which was perhaps, in
' the circumstances, was not correct procedure to adopt. But then, at the
same time, the High Court put shackles on the discretion of the executing
court by observing that vendor might have felt that after the appeal filed
by the vendor judgment-holder against the decree for specific performance
was disposed of they can even then deposit the amount at the time of
B
) seeking the execution of the sale deed.
~

The agreement of sale was entered into as far back on February 16,
1980, about 19 years ago. No explanation is forthcoming as to why the
balance amount of consideration could not be deposited within time c
granted by the court and why no application was made under Section 28
of the Act seeking extension of time of this period. Under Article 54 of the
Limitation Act, S years period is prescribed for filing the suit for specific
performance of contract of sale from the date of the agreement or when
the cause of action arises. Merely because a suit is filed within the D
prescribed period of limitation does not absolve the vendee- plaintiff from
~ showing as to whether he was ready and willing to perform his part of
agreement and if there was non-performance was that on account of any
obstacle put by the vendor or otherwise. Provisions to grant specific
performance of an agreement are quite stringent. Equitable considerations
come into play. Court has to see all the attendant circumstances including E
if the vendee has conducted himself in a reasonable manner under the
contract of sale. That being the position of law for filing the suit for specific
µerformance, can the court as a matter of course allow extension of time
for making payment of balance amount of consideration in terms of a
decree after 5 years of passing of the decree by the trial court and 3 years F
of its confirmation by the appellate court? It is not the case of the
respondent- decree holder that on account of any fault on the part of the
vendor- judgment-debtor, the amount could not be deposited as per the
decree. That being the position, if now time is granted, that would be going
beyond the period of limitation prescribed for filing of the suit for specific
performance of the agreement though this provision may not be strictly G
applicable. It is nevertheless an important circumstance to be considered

-·-"r
by the Court. That apart, no explanation whatsoever is coming from the
decree-holder-respondents as to why they did not pay the balance amount
of consideration as per the decree except what the High Court itself
thought fit to comment which is certainly not borne out from the record. H
360 SUPREME COURT REPORTS (1999] 1 S.C.R.
A Equity demands that discretion be not exercised in favour of the decree
holder-respondents and no extension of time be granted to them to comply
with the decree.

These appeals are, therefore, allowed with costs. Judgment of the
High Court is set aside and that of the executiog court confirmed.
B
VM. Appeals allowed.
i
"-'<

•