Summary
The Supreme Court held that when a decree for specific performance is affirmed in appeal, the trial court's decree merges in the appellate decree, which alone is executable; where the appellate court fixes no time for depositing the balance price, the time fixed by the trial court does not automatically govern, and the decree holder must deposit within a reasonable time. Restoring the executing court's order permitting deposit, it awarded the judgment debtors 9% simple interest for the delay.
Issues
- Whether a decree for specific performance became inexecutable because the decree holder did not deposit the balance sale consideration within the two months fixed by the trial court, or promptly after the first appeal against the decree was dismissed.
- Whether, after the trial court's decree merged in the appellate decree that fixed no time for deposit, the executing court could permit the decree holder to deposit the balance consideration.
- What duty an appellate court has under Order XX Rule 12A CPC when disposing of an appeal against a decree for specific performance.
Provisions considered
- Section 28, Specific Relief Act, 1963Read as keeping the court seized of a specific performance decree until the sale deed is executed, empowering it to extend time for payment or, on the vendor's application, to rescind the contract. The power can be exercised at the appellate stage; rescission requires wilful default amounting to positive refusal to perform, and the absence of a rescission application does not by itself extend time. (¶¶ 25, 26, 29, 45, 46, 47, 48, 49)
- Order XX Rule 12A, Code of Civil Procedure, 1908Requires a decree for specific performance of a contract for sale or lease of immovable property to specify the period for payment of the purchase money. The Court held that this duty also binds an appellate court disposing of an appeal against such a decree, since the appellate decree is the one executed. (¶¶ 30, 34, 35, 50)
- Article 136 of the Schedule, Limitation Act, 1963The twelve-year period for executing a decree was held not to entitle a decree holder to deposit the balance consideration at will; where no time is fixed, deposit must be made within a reasonable time. (¶¶ 10, 51, 52)
Held
- Prem Jeevan holds only that the absence of an application for rescission under Section 28 does not automatically extend the time for deposit; it concerned non-compliance with the time fixed in a trial court decree that was not appealed, and does not govern a case where the decree has merged in an appellate decree. (¶¶ 26, 27)
- Under the doctrine of merger, once an appeal against the trial court's decree is decided, whether by affirmance, modification or reversal, the trial court's decree merges in the appellate decree, which alone is executable. (¶¶ 36, 37, 38, 41, 43)
- A decree for specific performance is in the nature of a preliminary decree; the contract survives the decree and the court is not functus officio until the sale deed is executed. In extending time it does not insist, as under Section 5 of the Limitation Act, on explanation of each day's delay. Non-payment within the time fixed by the trial court is not abandonment; rescission requires wilful negligence amounting to positive refusal to perform. (¶¶ 44, 45, 46, 47, 49)
- An appellate court disposing of an appeal against a decree for specific performance must, under Order XX Rule 12A, specify the time for depositing the balance consideration; the time fixed by the trial court cannot be assumed to apply to the appellate decree. If the decree holder seeks to deposit after the specified time, the court has discretion to grant or refuse further time, considering the decree holder's bona fides, the cause and length of the delay, and equities arising in the judgment debtor's favour meanwhile. (¶¶ 48, 49, 50)
- The twelve-year period for executing a decree does not let the decree holder deposit the balance consideration at will; where the appellate court fixed no time, deposit must be made within a reasonable time. On the facts, as the balance had been deposited in 2019 under the executing court's order, the High Court should not have interfered, procedure being the handmaid of justice. (¶¶ 51, 52, 53, 54)
- To balance the delay in seeking execution and in depositing, the judgment debtors were held entitled to simple interest at 9% per annum on the balance consideration from the date of the appellate judgment until the date of deposit. (¶ 55)
Result
Appeal allowed; High Court's order set aside and executing court's order affirmed; the deposited balance consideration with accrued interest to be paid to the defendants within four weeks; executing court to compute 9% simple interest from the appellate judgment to 20.05.2019, which the appellant must deposit within two weeks.