Supreme Court Upholds Specific Performance: Key Insights from Ishwar v. Bhim Singh Case

The Supreme Court of India, in the case of Ishwar (Since Deceased) & Ors. v. Bhim Singh & Anr. (2024 INSC 651), dealt with the complex issues surrounding the execution of a specific performance decree, particularly focusing on the jurisdiction of the Execution Court to handle applications under Section 28 of the Specific Relief Act, 1963. This judgment delves into the interpretation of legal provisions and the equitable principles guiding the enforcement of contracts, especially when procedural complexities arise during execution.

Facts

The legal dispute arose from a suit for specific performance filed by Bhim Singh and others (referred to as the respondents) against Ishwar (since deceased) and others (referred to as the appellants). The respondents sought the enforcement of an agreement to sell a piece of property. The agreement, dated 18.05.2005, stipulated a total sale consideration of Rs. 18 lakhs, out of which the respondents had already paid Rs. 9.77 lakhs as an advance. Despite multiple notices requesting the execution of the sale deed, the appellants failed to fulfill their contractual obligations, leading to the institution of the suit.

The case was first heard by the Court of Additional Civil Judge (Senior Division), Kaithal, which partially decreed the suit on 28.02.2011. The trial court ordered the appellants to refund the earnest money along with interest, but it rejected the respondents’ prayer for specific performance. Dissatisfied with this outcome, the respondents appealed to the Additional District Judge (ADJ) in Kaithal. On 12.01.2012, the appellate court allowed the appeal, decreeing specific performance of the agreement. The court directed the appellants to execute the sale deed in favor of the respondents upon payment of the balance consideration within two months. The decree also permitted the respondents to get the sale deed executed through the court if the appellants failed to comply within the stipulated period.

Procedural History

Following the appellate court’s decree, the respondents, as decree holders, filed an execution application on 20.03.2012 before the trial court, which was also the court of first instance. They sought the court’s assistance in executing the sale deed and depositing the balance consideration. While this application was pending, the appellants challenged the appellate decree by filing a second appeal before the High Court of Punjab and Haryana. This appeal was dismissed on 07.11.2013, effectively affirming the appellate court's decree.

Despite the High Court’s dismissal, the execution process was not straightforward. The respondents filed an application before the Execution Court on 24.03.2014, seeking permission to deposit the balance sale consideration in the court. The appellants opposed this by submitting an application under Section 28 of the Specific Relief Act, 1963, requesting the rescission of the contract. They argued that the respondents had failed to deposit the balance amount within the two-month period as directed by the appellate court, and therefore, the contract should be rescinded.

The Execution Court rejected the appellants’ application for rescission on 03.11.2016 and simultaneously granted the respondents permission to deposit the balance consideration. Aggrieved by this order, the appellants filed a civil revision petition before the High Court, which was dismissed, leading to the present appeal before the Supreme Court.

Issues

The Supreme Court was called upon to decide two principal issues:

1. Jurisdiction of the Execution Court: Whether the Execution Court had the jurisdiction to entertain applications under Section 28 of the Specific Relief Act, specifically for rescission of the contract and extension of time to deposit the balance consideration.

2. Original vs. Execution Side: Whether these applications should be decided on the original side (as part of the suit) or on the execution side, and if an error in handling these applications as part of execution proceedings could warrant interference by the Supreme Court.

Supreme Court's Analysis

1. Jurisdiction of the Execution Court:

The Supreme Court began its analysis by interpreting Section 28(1) of the Specific Relief Act, 1963, which grants courts the authority to extend the time for the performance of decrees or to rescind contracts if the conditions of the decree are not met. The Court noted that the language of Section 28(1) suggests that the power to extend time or rescind the contract resides in the court that passed the decree. This provision has often raised questions about whether the Execution Court, particularly when it is the court of first instance, retains jurisdiction in such matters when the decree has been issued by an appellate court.

The Supreme Court clarified that when a decree for specific performance is passed by an appellate court, the decree is considered to have been passed by the court of first instance for purposes of execution. This principle is rooted in the understanding that an appeal is a continuation of the original suit, and therefore, the trial court remains vested with jurisdiction over the execution of the decree. Citing the precedents set in Ramankutty Guptan v. Avara (1994) and V.S. Palanichamy Chettiar Firm v. C. Alagappan (1999), the Court affirmed that the Execution Court, being the court of first instance, had the jurisdiction to entertain the application under Section 28, even if the decree was passed by the appellate court.

The Court further explained that the expression “in the same suit” within Section 28(1) should be interpreted expansively. This interpretation ensures that the court of first instance, which handled the original suit, retains the power to entertain applications related to the decree’s execution, including those seeking rescission of the contract or extension of time.

2. Original vs. Execution Side:

The second issue centered on whether applications under Section 28 should be treated as applications in the original suit (i.e., on the original side) or as part of the execution proceedings. The Supreme Court observed that this question is not new and has been addressed in earlier judgments. Specifically, the Court referred to Ramankutty Guptan, where it was held that such applications should be considered as interlocutory applications in the original suit. This means they should be numbered and dealt with as applications in the suit, even if the suit has been disposed of.

However, in the present case, the Execution Court dealt with the applications as part of the execution proceedings. The appellants argued that this procedural error warranted interference by the Supreme Court. The Supreme Court acknowledged the technicality but emphasized that procedural mistakes should not overshadow the substance of justice. The Court held that while the Execution Court should ideally have transferred the application to the original side, this oversight did not justify overturning the order, particularly when substantial justice had been served.

Discretionary Power of the Court

The Supreme Court highlighted its discretionary jurisdiction under Article 136 of the Constitution, which allows it to advance the cause of justice. The Court is not bound to intervene simply because there is a technical legal error; instead, it must consider whether substantial justice has been done. In this case, the Court noted that the respondents had consistently demonstrated their intention to comply with the decree by attempting to deposit the balance consideration at every stage. On the other hand, the appellants seemed more focused on delaying the execution through legal challenges.

The Court also referenced Chanda v. Rattni (2007), where it was established that the power to rescind a contract under Section 28 of the Specific Relief Act is discretionary and should be exercised to achieve complete justice. The Court must assess whether any delay or default was intentional or whether there were bona fide reasons behind it. In the present case, the delay in depositing the balance consideration was largely due to the appellants’ attempts to challenge the decree, and there was no deliberate default on the part of the respondents.

Conclusion

Ultimately, the Supreme Court dismissed the appeal, upholding the Execution Court’s order to extend the time for depositing the balance consideration and rejecting the application for rescission of the contract. The Court emphasized that substantial justice had been achieved, and interfering with the order on purely procedural grounds would cause grave injustice to the respondents, who were entitled to the fruits of the decree.