Habban Shahv.Sheruddin

Legal Analysis: Habban Shah vs. Sheruddin

Citation: 2026 INSC 451
Court: Supreme Court of India
Bench: Justice Pankaj Mithal and Justice S.V.N. Bhatti
Date of Decision: May 6, 2026
Nature of Judgment: Civil Appeal under Article 136 against High Court order dismissing revision and allowing execution of specific performance decree.

Synopsis of the Judgment

The plaintiff obtained a decree for specific performance of an agreement to sell agricultural land. The decree directed the defendant to execute the sale deed after receiving the balance sale consideration within three months (by 31.01.2013). The plaintiff did not deposit the balance amount within the stipulated time, nor sought extension. He filed execution only in 2015, after the first appeal (filed by defendant) was dismissed. The Executing Court and High Court allowed the execution, holding that the delay was condoned by subsequent permission to deposit. The Supreme Court reversed, holding that non‑deposit of balance consideration within the time fixed by the decree automatically renders the decree inexecutable and the suit stands dismissed. The Court relied on P.R. Yelumalai v. N.M. Ravi and distinguished Dr. Amit Arya. The contract was rescinded under Section 28 of the Specific Relief Act, and the defendant was directed to refund the earnest money of ₹80,000 with 8% interest p.a. from 2005.

1. Basic Information of the Judgment

Field Details Case Title Habban Shah vs. Sheruddin Civil Appeal No. Arising out of SLP(C) No. 14479 of 2025 Bench Justice Pankaj Mithal and Justice S.V.N. Bhatti Date of Decision May 6, 2026 Citation 2026 INSC 451 Appeal From Order dated 24.03.2025 of Punjab & Haryana High Court in Civil Revision No. 7232/2015

2. Legal Framework

Laws/Provisions:

• Specific Relief Act, 1963: Sections 16(c) (readiness and willingness), 20 (discretionary relief), 28 (rescission of contract after decree)

• Code of Civil Procedure, 1908: Order XX Rule 12A (decree to specify time for payment), Section 148/151 (extension of time)

• Limitation Act, 1963: Article 136 (12 years for execution of decree)

• Indian Contract Act, 1872: Section 55 (time as essence)

Precedents Cited:

• Balbir Singh v. Baldev Singh (Dead) (2025) – Court retains jurisdiction under Section 28 to extend time or rescind contract; language of Section 28(1) gives discretionary power.

• P.R. Yelumalai v. N.M. Ravi (2023) – Conditional decree is self‑operative; non‑compliance leads to automatic dismissal of suit; deposit beyond time without extension does not revive decree.

• Prem Jeevan v. K.S. Venkata Raman (2017) – Application under Section 28 for rescission is not mandatory; court is not powerless to treat contract as rescinded for non‑compliance.

• N.P. Thirugnanam (Dead) v. Dr. R. Jagan Mohan Rao (1995) – Readiness and willingness must continue post‑decree; conduct after decree is relevant.

• Dr. Amit Arya v. Kamlesh Kumari (2025) – Extension of time can be granted; but non‑extension should not be hyper‑technical; real test is whether conduct amounts to positive refusal.

• Ram Lal v. Jarnail Singh (2019) – Non‑payment within fixed time does not automatically amount to abandonment.

• Surinder Pal Soni v. Sohan Lal (2024) – Doctrine of merger (not applied here as facts unclear).

3. Relevant Facts

• Agreement (19.10.2005): Habban (defendant) agreed to sell agricultural land (12 kanals 19 marlas) to Sheruddin (plaintiff) for ₹5,00,000 per acre. Advance of ₹80,000 paid. Sale deed to be executed by 15.03.2006.

• Suit for specific performance: Filed after default. Decree passed on 31.10.2012 by trial court.

• Decree terms (operative part): Defendant to execute sale deed after receiving balance sale consideration within three months from judgment (i.e., by 31.01.2013); failing which plaintiff could get it executed through court.

• First appeal by defendant (17.12.2012): Interim stay of alienation granted till 25.01.2013. Stay lapsed on 25.01.2013. Appeal dismissed on 11.11.2014.

• Second appeal by defendant (2014-2017): Dismissed on 12.01.2017; no interim order.

• Execution proceedings: First execution filed on 04.03.2013 dismissed for want of prosecution on 01.08.2014. Second execution filed on 08.01.2015. Defendant objected that decree had become inexecutable because balance consideration not deposited within three months.

• Executing Court (07.09.2015): Dismissed objections, held that plaintiff was always ready and willing; permitted deposit of balance amount on 09.10.2015 (₹6,92,410). Execution allowed.

• High Court (24.03.2025): Dismissed revision, affirmed Executing Court.

• Supreme Court: Appeal allowed; decree held inexecutable; contract rescinded.

4. Issues

1. Whether the decree for specific performance becomes inexecutable if the decree holder fails to deposit the balance sale consideration within the time stipulated in the decree and does not seek extension of time within that period?

2. Whether the subsequent permission to deposit the amount (after the stipulated period) and the actual deposit can cure the default and revive the decree?

3. Whether an application under Section 28 of the Specific Relief Act for rescission of contract is mandatory for the judgment debtor to claim that the decree has become inexecutable?

5. Ratio Decidendi

A. Conditional decree – self‑operative (Paras 25-30, citing P.R. Yelumalai):
A decree of specific performance that fixes a time for payment of the balance consideration imposes a reciprocal obligation. Non‑compliance within the stipulated time, without any application for extension within that very period, results in the automatic dismissal of the suit. The decree does not remain executable; it “vanishes in the eyes of law.” Mere subsequent deposit with court permission does not revive the decree.

B. Extension of time cannot be granted after the period has expired without a pending application (Paras 27-28):
The plaintiff neither deposited the amount within three months (by 31.01.2013) nor moved any application for extension within that period. The interim stay order (till 25.01.2013) did not prohibit deposit; it only restrained alienation. Therefore, there was no impediment. The application for deposit filed on 05.03.2013 (after stay lapsed) was not an application for extension and no order was passed on it. The second application filed much later (in 2015) cannot retrospectively extend time.

C. Rescission under Section 28 – application not mandatory (Paras 31-34, citing Prem Jeevan):
It is not necessary for the judgment debtor to file an application under Section 28(1) for rescission of the contract. The court retains jurisdiction under Section 28 even without such application. The decree becomes inexecutable by operation of law upon failure to comply with the condition; the court can treat the contract as rescinded even in execution proceedings.

D. Readiness and willingness must continue post‑decree (Paras 43-46, citing N.P. Thirugnanam):
The plaintiff was ready and willing at the time of filing the suit and decree, but his failure to deposit the balance consideration within the time fixed by the decree shows that he was not continuously ready and willing. Specific performance is an equitable remedy; he who seeks equity must do equity. The conduct of the plaintiff disentitles him.

E. Distinction from Dr. Amit Arya (Paras 40-41):
In Dr. Amit Arya, the decree holder had moved an application for extension of time within the stipulated period. Here, the plaintiff did not. Therefore, the ratio of that case (caution against hyper‑technical approach) does not apply.

F. Limitation and maintainability of execution (Paras 21-24):
Execution filed in 2015 is within 12 years (Article 136). First execution dismissed for want of prosecution (not on merits) does not bar a fresh execution. Hence, the objections on limitation and maintainability are overruled – but these were not the core issue.

6. New Legal Principles Established / Reiterated

• Specific performance decree – time fixed for payment is mandatory. Failure to deposit within that time, without seeking extension within the same period, leads to automatic dismissal of the suit. The decree becomes a nullity and cannot be executed.

• The court’s power under Section 28 to grant extension of time must be exercised before the stipulated time expires (or on a timely application). A belated deposit or belated order does not revive the decree.

• An application under Section 28 for rescission is not mandatory. The judgment debtor can raise the defence of non‑compliance in execution proceedings, and the court can treat the contract as rescinded.

• Readiness and willingness is a continuing obligation – from the date of agreement until the execution of the sale deed. Post‑decree conduct is relevant.

7. Court’s Analysis and Examination of Concepts

• The Court examined the operative part of the decree and held that it created a reciprocal obligation: defendant to execute sale deed within three months “after receiving the balance sale consideration.” By necessary implication, the plaintiff was required to deposit the balance amount within three months.

• The interim stay order (17.12.2012 to 25.01.2013) did not prohibit deposit. Even during that period, the plaintiff could have deposited the amount. He did not. After 25.01.2013, there was no stay at all.

• The plaintiff’s application dated 05.03.2013 was not styled as an application for extension and no order was passed. The court cannot presume that delay was condoned.

• The Court held that the decision in P.R. Yelumalai squarely applies: “conditional decree is self‑operative, therefore non‑compliance of any condition leads to automatic dismissal of the suit.” The decree ceases to exist.

• The Court refused to follow Dr. Amit Arya on facts because there was no timely application for extension. In that case, the decree holder had applied within time.

• The Court also noted the long passage of time (agreement in 2005, decree in 2012, execution in 2015, appeal in 2026) and the likely increase in land prices – equity required that the defendant should not be compelled to sell at a stale price after the plaintiff’s own default.

8. Critical Analysis

Strengths: The judgment provides clarity on a recurring problem in specific performance cases – decree holders who delay payment and then seek to execute the decree after land prices have risen. It upholds the principle that time fixed by the decree is not always directory; it can be mandatory, especially when the decree itself does not grant any further extension. It also corrects the misconception that an application under Section 28 is mandatory for the defendant to claim rescission.

Potential concerns: The judgment may be seen as harsh on a plaintiff who was ready and willing but may have been confused by the pendency of appeals. However, the Court noted that the first appeal’s interim stay did not prohibit deposit, and the plaintiff could have deposited the amount in court. The decision emphasises that parties must strictly comply with the decree’s timeline unless they obtain an order of extension within time.

Practical impact: This judgment will be cited by defendants in specific performance cases where the plaintiff fails to deposit balance consideration within the time fixed by the decree. It will also impact execution proceedings – the court will examine whether the decree holder complied with the time condition. It reinforces that Section 28 is not the only route for rescission; the decree may become inexecutable by its own terms.

9. Final Outcome

• Civil Appeal allowed.

• Impugned order dated 24.03.2025 of Punjab & Haryana High Court in Civil Revision No. 7232/2015 set aside.

• Order of Executing Court dated 07.09.2015 dismissing objections also set aside.

• Objections upheld. The decree of specific performance dated 31.10.2012 is held to be inexecutable.

• The suit for specific performance stands automatically dismissed for non‑compliance with the condition of the decree.

• The contract is rescinded under Section 28 of the Specific Relief Act.

• The defendant (Habban Shah) shall refund the earnest money of ₹80,000 to the plaintiff with simple interest at 8% per annum from 19.10.2005 (date of receipt) till the date of refund, within two months.

• In default, the plaintiff may take out execution for recovery of the refund amount.

10. Practical Application (Use in Court)

For decree holders (plaintiffs) in specific performance suits: After obtaining a decree that fixes a time for payment of balance consideration, deposit the amount strictly within that time. If you need extension, file a timely application under Section 148 CPC or Section 28 of the Specific Relief Act before the stipulated period expires. Do not rely on pendency of appeals unless the appellate court has passed an express order staying the deposit obligation.

For judgment debtors (defendants): If the decree holder fails to deposit the balance consideration within the time fixed by the decree (and no extension was granted within that time), raise an objection in execution proceedings that the decree has become inexecutable. Cite P.R. Yelumalai and this judgment. You need not file a separate application under Section 28; the objection can be raised in execution.

For courts (trial, executing, appellate): When passing a decree for specific performance, specify a clear time period for payment (as per Order XX Rule 12A). If the decree holder defaults, treat the decree as self‑executing and dismiss the suit automatically. Do not permit belated deposit without a prior application for extension within the stipulated period. In equitable circumstances, you may grant extension – but only on a timely application, not after the period has lapsed.

For appellate courts hearing appeals against decrees: Your interim order (e.g., stay of alienation) will not automatically stay the decree holder’s obligation to deposit the balance consideration unless you expressly say so. The decree holder must apply for stay of that obligation.

11. Court Lines

“A simple reading of the aforesaid directions … would reveal that the court had directed the defendant‑appellant to execute the sale deed … after receiving the balance sale consideration within the period of three months. … There appears to be no specific direction to the plaintiff‑respondent that the balance sale consideration has to be deposited by him within three months. … It is only by necessary implication that the plaintiff‑respondent was required to deposit the amount within three months.” (Para 18)

“The decree passed in a suit for specific performance is in the nature of a preliminary decree. … The Court passing the same does not become functus officio … but retains control over the decree even after the passing of the decree till the sale deed is executed or the decree is rendered inexecutable.” (Para 39)

“The conditional decree is self‑operative, therefore, non‑compliance of any condition leads to automatic dismissal of the suit.” (Para 29, quoting P.R. Yelumalai)

“Moving of an application under Section 28 of the Act for rescinding the contract for non‑compliance of the condition is not mandatory rather optional and immaterial and that the court in a given circumstance is not powerless to treat the contract as having rescinded for non‑compliance of the condition.” (Para 34)

“Once it is accepted that the relief of specific performance is an equitable and a discretionary relief, therefore, he who seeks equity must ensure that equity is done to the opposite party.” (Para 45)

“The plaintiff‑respondent having failed to abide by such a condition indicates that he was not actually ready and willing to perform his obligation under the decree … The conduct of the plaintiff‑respondent disentitles him the relief which was earlier granted.” (Para 48)

12. Legal Strategy Insight

For decree holders (plaintiffs): After obtaining a specific performance decree with a fixed time for payment, immediately deposit the balance consideration in court, even if the defendant files an appeal. The appeal (unless specifically staying the payment obligation) does not excuse your default. File a timely application for extension if you anticipate delay – do not wait until after the period expires.

For judgment debtors (defendants): If the decree holder does not deposit within time, immediately file objections in the execution proceedings. Argue that the decree has become inexecutable and the suit stands dismissed. Do not rely on a separate Section 28 application; raise the defence in the execution itself. Also argue that the court’s subsequent permission to deposit (after the period) cannot revive the decree.

For trial courts (passing decree): In the decree, clearly state: “The plaintiff shall deposit the balance sale consideration of ₹X within Y days from today. If the plaintiff fails to deposit within that period, the suit shall stand dismissed without further reference to the court.” This removes ambiguity. If an extension is sought, pass a reasoned order before the period expires.

For appellate courts: When staying the operation of a specific performance decree, expressly clarify whether the obligation to deposit the balance consideration is also stayed. Otherwise, the decree holder remains obliged to deposit.