Anand Narayan Shuklav.Jagat Dhari

Legal Analysis: Anand Narayan Shukla vs. Jagat Dhari

Citation: 2026 INSC 463
Court: Supreme Court of India
Bench: Justice Manoj Misra and Justice Manmohan (Division Bench)
Date of Decision: 8th May 2026
Nature of Judgment: Civil Appeal under Article 136 against High Court order dismissing revision petition upholding dismissal of execution of a specific performance decree.

Synopsis of the Judgment

The appellant (decree‑holder) obtained a decree for specific performance of an agreement for sale of immovable property. The decree directed the decree‑holder to pay the balance sale consideration within one month, failing which the decree did not specify any automatic rescission. The decree‑holder did not deposit the amount within the stipulated period. However, during the pendency of execution proceedings, under orders of the Execution Court, the amount was deposited. The judgment‑debtor filed an application under Section 28 of the Specific Relief Act, 1963 seeking rescission of the contract. The Execution Court dismissed the execution application, holding that the decree was conditional and the deposit was made beyond the stipulated period. The High Court affirmed. The Supreme Court set aside both orders, holding that: (i) there is no automatic rescission unless the decree expressly so provides; (ii) the court retains power under Section 28 to extend time or rescind the contract; (iii) the discretion must be exercised on equitable principles considering the conduct of the parties, not mechanically. The matter was remanded for fresh consideration.

1. Basic Information of the Judgment

• Case Title: Anand Narayan Shukla vs. Jagat Dhari

• Civil Appeal No.: 7355 of 2026 (arising out of SLP(C) No. 14206 of 2025)

• Bench: Justice Manoj Misra and Justice Manmohan (Division Bench)

• Date of Decision: May 2026 (exact date not specified in the extract)

• Citation: 2026 INSC 463

• Appeal From: Judgment and order dated 05.03.2025 of the High Court of Madhya Pradesh at Jabalpur in Misc. Petition No. 4682 of 2023

2. Legal Framework

Laws and Provisions Involved

• Specific Relief Act, 1963: Section 28 (power to rescind contract or extend time after decree)

• Code of Civil Procedure, 1908: Order XX Rule 12A (decree to specify time for payment), Section 2(2) (definition of decree – dismissal for default not a decree), Section 37 (decree to be executed by court which passed it)

• Limitation Act, 1963 (reference for analogy): Section 5 (condonation of delay)

Key Precedents Cited and Discussed

1. Sardar Mohar Singh v. Mangila (1997) – Court does not become functus officio after decree; has power to extend time even after application for rescission is filed.

2. K. Kalpana Saraswathi v. P.S.S. Somasundaram Chettiar – Specific performance is an equitable relief; court can extend time on equitable terms; even oral request can be treated as application for extension.

3. Bhupinder Kumar v. Angrej Singh – Decree for specific performance is in nature of a preliminary decree; suit is deemed pending even after decree; court retains jurisdiction under Section 28.

4. Ramankutty Guptan v. Avara – Application under Section 28 is maintainable in the court of first instance even if decree is passed by appellate court; execution court (if same court) can entertain it.

5. V.S. Palanichamy Chettiar Firm v. C. Alagappan – Vendor judgment‑debtor can seek rescission or take plea in execution proceedings.

6. Ishwar (Since Deceased) thr. Lrs v. Bhim Singh – Application under Section 28 must be decided as an application in the original suit.

7. Ram Lal v. Jarnail Singh – Non‑payment within time fixed does not amount to automatic abandonment; real test is whether decree‑holder’s conduct amounts to positive refusal; appellate court should specify time for deposit; delay can be compensated by interest.

What the Judgment is About

The judgment deals with the scope of Section 28 of the Specific Relief Act, 1963 and the power of the court to extend time for deposit of balance sale consideration even after the period stipulated in the decree has expired. It clarifies that there is no automatic rescission of the contract merely because the decree‑holder failed to deposit the amount within the time fixed by the decree, unless the decree itself expressly provides for automatic rescission. The court retains discretionary power to either rescind the contract or extend the time, guided by equitable principles and the conduct of the parties.

3. Relevant Facts

• Agreement (14.11.2011): The respondent (judgment‑debtor) agreed to sell 3.75 acres of land at ₹16,00,000 per acre. Advance of ₹2,50,000 was paid.

• Suit for specific performance was decreed by the Trial Court on 03.03.2017. The decree directed the appellant (decree‑holder) to pay the balance consideration of ₹57,50,000 to the judgment‑debtor or deposit it in court within one month. The decree did not specify any consequence for non‑payment within that period.

• Notice (01.04.2017): The appellant called upon the judgment‑debtor to execute the sale deed, but the amount was neither paid nor deposited within the stipulated period.

• First appeal (No. 311 of 2017) was filed by the judgment‑debtor against the decree. It was dismissed for non‑prosecution on 06.11.2023.

• Execution Case (No. 27/2017) was filed by the appellant on 18.07.2017.

• In the execution proceedings, the Execution Court passed several orders between 2017 and 2020, initially directing payment to the judgment‑debtor, then (on 23.04.2019) directing deposit in court. However, due to non‑service of notice on the judgment‑debtor and the Covid‑19 lockdown, the deposit was finally made on 26.11.2020 under orders of the Execution Court.

• Application under Section 28 was filed by the judgment‑debtor on 14.03.2023, seeking rescission of the contract on the ground of delayed deposit.

• Execution Court (12.07.2023) dismissed the execution application, holding that the decree was conditional and the amount was not deposited within one month as stipulated.

• The appellant filed a revision petition under Article 227 before the High Court, which was dismissed on 05.03.2025.

• The Supreme Court allowed the appeal and remanded the matter.

4. Issues

(a) Whether the decree of specific performance passed by the trial court merged with the order of the appellate court even though the appellate court dismissed the first appeal for non‑prosecution?

The Court held that dismissal of an appeal for default (non‑prosecution) does not constitute a decree on merits and therefore there is no merger of the trial court decree in the appellate court order. An order of dismissal in default is not a “decree” as defined in Section 2(2) CPC. Hence, the decree under execution remained that of the trial court (paras 22-23).

(b) Whether the judgment‑debtor’s application under Section 28 of the 1963 Act was maintainable after the Court had permitted the decree‑holder to deposit the balance amount and such deposit was made?

The Court held that the Execution Court’s order permitting deposit was only to test the bona fides of the decree‑holder and did not determine the rights of the parties regarding rescission. Therefore, the right of the judgment‑debtor to seek rescission under Section 28 was not foreclosed. The application was maintainable (para 23).

(c) Whether the rescission of the contract and dismissal of the execution application was vitiated by a pedantic approach, ignoring the facts and circumstances, and whether the decree could be saved by compensating the judgment‑debtor for the delay?

The Court held that both the Execution Court and the High Court failed to apply the settled principles governing the exercise of discretion under Section 28. They did not consider the conduct of the parties, the fact that the decree did not provide for automatic rescission, the pendency of the first appeal, the procedural delays, and the possibility of compensating the judgment‑debtor by additional interest. The orders were set aside and the matter remanded (paras 24-41).

5. Ratio Decidendi

The Court laid down comprehensive principles governing exercise of power under Section 28 of the Specific Relief Act, 1963 (para 33):

Principle (i): A decree for specific performance is in the nature of a preliminary decree. The court does not become functus officio after passing the decree; it retains jurisdiction to rescind the contract or extend time for deposit until the sale deed is executed.

Principle (ii): There is no automatic rescission of the contract/decree for non‑deposit within the stipulated period unless the decree itself expressly provides for such automatic consequence. Similarly, there is no automatic extension of time merely by making a deposit after the period expires.

Principle (iii): Prayer to extend time may be made before or after expiry of the stipulated period. No prescribed form is necessary; even an oral request may suffice, provided the court is the one which passed the decree.

Principle (iv): The court must be guided by equitable principles. It must consider the conduct of the parties, whether the decree‑holder’s delay was willful or amounted to a positive refusal to perform, and whether the judgment‑debtor can be adequately compensated by putting the decree‑holder to additional terms (e.g., interest on the delayed amount).

Principle (v): Where the appellate court passes a decree for specific performance (or confirms the trial court decree on merits), it must fix a time limit for deposit under Order XX Rule 12A CPC. If no time is fixed, the deposit must be made within a reasonable period, which depends on the facts of the case.

Principle (vi): Dismissal of an appeal for non‑prosecution does not result in merger of the trial court decree in the appellate court order because such dismissal is not a “decree” on merits.

Principle (vii): An application under Section 28 should be treated as an application in the original suit, even if filed in execution proceedings, as long as the execution court is the court of first instance.

6. New Legal Principles Established / Reiterated

• No automatic rescission: The Court reiterated that failure to deposit within the time fixed by the decree does not automatically rescind the contract; the court must exercise its discretion under Section 28.

• Conduct, not rigid timelines, is the touchstone: The test is whether the decree‑holder’s conduct amounts to a positive refusal or willful negligence in performing his part of the contract.

• Extension of time can be granted even without a formal application: An oral request or a prayer for permission to deposit may be treated as an application for extension of time.

• Dismissal of appeal for default does not merge the decree: The trial court decree remains independent; the appellate court’s order of dismissal for non‑prosecution is not a “decree” and does not extinguish the trial court decree for the purpose of execution.

• Compensation for delay is a viable alternative: Instead of rescinding the contract, the court can extend time and compensate the judgment‑debtor by awarding interest on the delayed amount.

7. Court’s Analysis and Examination of Concepts

The Court meticulously examined the procedural history of the execution case. It noted that the Execution Court, over multiple dates, did not consistently demand deposit. The first direction for deposit into court was on 23.04.2019 – about two years after the decree. The judgment‑debtor was not served for a long period. The Covid‑19 lockdown further delayed proceedings. The deposit was made on 26.11.2020 under specific orders of the Court.

The Court found that the Execution Court’s order dismissing the execution was mechanical. It merely noted that the decree was conditional and the deposit was late, without considering:

• Whether the decree‑holder was ready and willing throughout.

• Whether the judgment‑debtor’s appeal (though dismissed for default) caused uncertainty.

• Whether the delay was willful or bona fide.

• Whether the judgment‑debtor could be compensated by interest.

The High Court affirmance was similarly brief and did not apply the principles laid down in Ram Lal v. Jarnail Singh and other precedents.

The Court clarified that the power under Section 28 is discretionary and equitable. The lower courts failed to exercise that discretion properly. Hence, the matter was remanded with directions to decide afresh, considering the conduct of the parties and the possibility of compensating the judgment‑debtor by additional interest or costs.

8. Critical Analysis

Strengths: The judgment provides a clear, principled framework for courts dealing with delayed deposits in specific performance decrees. It corrects the erroneous belief that any delay, however small or caused by circumstances, leads to automatic dismissal of the execution. By emphasising the equitable nature of specific performance and the discretion vested in courts under Section 28, the judgment ensures that justice is not sacrificed on the altar of technical deadlines. The distinction between automatic rescission (only if the decree expressly so provides) and discretionary rescission is a crucial clarification.

Potential concerns: The judgment does not specify the exact terms on which the lower court should compensate the judgment‑debtor – it leaves it to the discretion of the executing court. This may lead to inconsistent orders. However, that is inherent in equitable discretion. The Court also did not decide whether the deposit made on 26.11.2020 was within a “reasonable period” from the date of the decree (over three years). That issue has been left open for the executing court to determine based on all facts.

Practical impact: This judgment will be cited in all cases where a decree‑holder in a specific performance suit has made a delayed deposit. It will protect bona fide decree‑holders who faced procedural delays, non‑cooperation of the judgment‑debtor, or pendency of appeals. It will also serve as a warning to decree‑holders who are willfully negligent – they may still face rescission. The guidelines provide a ready checklist for courts while deciding applications under Section 28.

9. Final Outcome

• Civil Appeal allowed.

• The impugned order of the High Court dated 05.03.2025 and the order of the Execution Court dated 12.07.2023 were set aside.

• The Execution Case (No. 27A/2017) and all pending applications (including the judgment‑debtor’s application under Section 28 and the decree‑holder’s prayer for extension of time) were restored to the file of the Execution Court / Court of first instance.

• The lower court was directed to consider the matter afresh in accordance with the law and the principles laid down in this judgment, treating the applications as applications in the original suit.

• No order as to costs.

• Pending applications disposed of.

10. Practical Application (Use in Court)

• For decree‑holders (plaintiffs) in specific performance suits: If you have failed to deposit the balance consideration within the time fixed by the decree, you can still seek extension of time under Section 28 of the Specific Relief Act. File an application (even in execution proceedings) explaining the delay and demonstrating your readiness and willingness. Cite this judgment to argue that automatic rescission does not apply and that the court should consider your bona fides. Offer to pay interest on the delayed amount to compensate the judgment‑debtor.

• For judgment‑debtors (defendants) in specific performance suits: If the decree‑holder has deposited the amount late, file an application under Section 28 seeking rescission. However, be prepared to address the decree‑holder’s explanation for delay. The court may not rescind if the delay was not willful and if the decree‑holder offers adequate compensation (interest). Check the decree – if it does not specify automatic rescission, you cannot rely on automatic dismissal.

• For trial/executing courts: When an application is filed under Section 28 (whether for rescission or for extension of time), do not dismiss or grant it mechanically. Examine: (i) whether the decree provided for automatic rescission; (ii) the conduct of the decree‑holder (was the delay willful?); (iii) the conduct of the judgment‑debtor (did he cause delay?); (iv) the length of delay; (v) whether compensation by way of interest will do justice. If the decree‑holder shows readiness and willingness, and if equities can be balanced by awarding interest, grant extension rather than rescission.

11. Court Lines

“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 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.” (Para 25, quoting Sardar Mohar Singh)

“The non‑payment of the balance consideration within the time period fixed by the Trial Court does not amount to abandonment of the contract and consequent rescinding of the same. The real test must be to see if the conduct of the plaintiff will amount to a positive refusal to complete his part of the contract. There must be an element of willful negligence on the part of the plaintiff before a court proceeds to invoke Section 28 of the Act and rescind the contract.” (Para 32, quoting Ram Lal v. Jarnail Singh)

“Under these circumstances, the executing court as well as the High Court had exercised discretion and extended the time to comply the conditional decree. Accordingly, we do not find any valid and justifiable reason to interfere with the order passed by the High Court confirming the order of the executing court when in particular, the High Court has further enhanced a sum of rupees 16,000 to compensate the petitioner for loss of enjoyment of the money...” (Para 25)

“The power and jurisdiction granted under Section 28(1) of the Act, enables the court to extend the period for payment of the purchase money if it has not been paid within the period allowed by the decree. It also enables the judgment debtor to seek for rescinding the contract for non‑compliance of the directions given in the decree and while considering this application, the court is given the discretion to rescind the contract or in an appropriate case to even extend the time for paying the purchase money.” (Para 31)

12. Legal Strategy Insight

• For the decree‑holder (plaintiff): If you have delayed deposit, do not wait for the judgment‑debtor to file a rescission application. Immediately file an application under Section 28 seeking extension of time (even if the period has expired). In the application, set out the reasons for delay (e.g., pendency of appeal, non‑cooperation of judgment‑debtor, procedural delays in court, Covid‑19). Offer to pay interest on the delayed amount at a reasonable rate. Cite Ram Lal v. Jarnail Singh and this judgment to argue that automatic rescission does not apply and that the court should extend time on equitable terms.

• For the judgment‑debtor (defendant): If the decree‑holder has delayed deposit, and the decree does not provide for automatic rescission, you must file an application under Section 28 seeking rescission. In that application, highlight any willful conduct or unexplained long delay. If the decree‑holder offers interest, you may still argue for rescission if the delay is inordinate and the property value has increased substantially. Use this judgment to emphasise that the court’s discretion must be exercised equitably – you should not be made to suffer a stale transaction at an old price.

• For courts (both trial and executing): Follow the seven principles summarised in paragraph 33. In particular, examine whether the decree itself provides for automatic rescission – if not, do not dismiss the execution merely because of delayed deposit. Consider the possibility of awarding interest to the judgment‑debtor as a condition for extending time. Treat applications under Section 28 as applications in the original suit, not as miscellaneous execution applications, to ensure proper numbering and appealable orders.