Summary
The Supreme Court held that a trial court decree for specific performance does not merge in an appellate order dismissing the appeal for non-prosecution. Permitting a belated deposit does not take away the judgment-debtor's right to seek rescission under Section 28 of the Specific Relief Act. Since the decree fixed time but no consequence for default, there was no automatic rescission, and the execution was remitted for fresh consideration under Section 28.
Issues
- Whether the trial court decree for specific performance merged in the appellate court's order when the appeal was dismissed for non-prosecution.
- Whether the judgment-debtor's application under Section 28 of the Specific Relief Act, 1963 was maintainable after the Court had permitted, and the decree-holder had made, a belated deposit.
- Whether the rescission of the contract and dismissal of the execution, without considering the facts and the possibility of compensating the judgment-debtor for delay, was sustainable.
Provisions considered
- Section 2(2), Code of Civil Procedure, 1908The definition of decree excludes an order of dismissal for default; hence an appellate order dismissing an appeal for non-prosecution is not an adjudication on merits and the trial court decree does not merge in it. (¶¶ 21, 22)
- Section 28, Specific Relief Act, 1963The words 'may, by order, rescind' and 'such further period as the court may allow' give the court passing the decree a discretion either to rescind or to extend time; there is no automatic rescission, and under sub-section (4) both vendor and purchaser may apply in the same suit. (¶¶ 23, 24, 33, 40, 41)
- Order XX Rule 12A, Code of Civil Procedure, 1908A decree for specific performance ordering payment must specify the period; where an appellate court decrees the suit or dismisses the appeal on merits it must fix the time, failing which payment must be made within a reasonable period. (¶¶ 32, 33)
- Section 37, Code of Civil Procedure, 1908Where the decree is passed by the appellate court, a prayer for extension of time may be made before the court of first instance. (¶¶ 28, 33)
Held
- The doctrine of merger applies only when the superior court decides the appeal on merits; since an order of dismissal for default is not a decree, dismissal of the appeal for non-prosecution does not merge the trial court decree in the appellate order. (¶¶ 21, 22)
- The Execution Court's order permitting deposit, made to test the decree-holder's bona fides, did not decide rescission; the deposit is relevant to readiness and willingness but does not extinguish the judgment-debtor's right to seek rescission under Section 28. (¶ 23)
- A decree for specific performance is in the nature of a preliminary decree, and until the deed is executed the court that passed it may rescind the contract for non-payment or extend time. There is neither automatic rescission on default nor automatic extension by a late deposit, unless the decree itself provides that the suit shall stand dismissed or the decree rescinded on default. (¶¶ 24, 33)
- A prayer for extension may be made before or after the period expires, in any form, including orally or as a request to deposit, and must be treated and numbered as an application in the suit. (¶¶ 31, 33)
- Being equitable relief, the court must weigh the facts, the conduct of the parties and whether the judgment-debtor can be compensated by terms; each day's delay need not be explained, and rescission is warranted where the decree-holder's conduct shows no intention to perform or wilful negligence. (¶¶ 32, 33)
- The decree here fixed time for deposit but no consequence for default, so there was no automatic rescission. The courts below erred in dismissing the execution merely because the deposit was late, without considering under Section 28 whether to rescind or extend time, possibly on compensatory terms. (¶¶ 36, 37, 38, 40, 41)
Result
Appeal allowed; orders of the High Court and the Execution Court set aside; execution application and the applications for rescission or extension of time restored to the Court of first instance for fresh consideration as applications in the suit, in light of the judgment.