The Supreme Court held that a decree for specific performance becomes inexecutable where the decree-holder fails to deposit the balance sale consideration within the stipulated time and does not seek extension within that period.

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Facts

The dispute arose out of an agreement to sell agricultural land situated in Haryana. The defendant agreed to sell the land to the plaintiff for ₹5,00,000 per acre and received ₹80,000 as earnest money. The sale deed was to be executed on or before 15.03.2006.

Upon failure to execute the sale deed, the plaintiff instituted a suit for specific performance. On 31.10.2012, the trial court decreed the suit and directed the defendant to execute the sale deed “after receiving the balance sale consideration within the period of three months” from the date of judgment.

The defendant’s appeals before the first appellate court and the High Court failed. Meanwhile, the plaintiff initiated execution proceedings but had not deposited the balance sale consideration within the stipulated three months. The Executing Court and High Court nevertheless permitted later deposit and rejected the defendant’s objections that the decree had become inexecutable.

The defendant appealed before the Supreme Court.

Issues Framed

Whether failure to deposit the balance sale consideration within the period stipulated in a decree for specific performance renders the decree inexecutable.

Whether subsequent deposit of the amount without timely extension of time cures the default.

Court’s Reasoning

(a) The Court held that the decree imposed “reciprocal obligations” on both parties. Although the decree primarily directed the defendant to execute the sale deed within three months, it necessarily implied an obligation upon the plaintiff to deposit the balance sale consideration within that period. (Paras 18–20).

(b) Referring to O. XX r. 12A CPC, the Court observed that every decree for specific performance must specify the period within which the sale consideration is to be paid. The decree was therefore a “conditional decree.” (Paras 19, 25).

(c) The Court found that the plaintiff neither deposited the amount within three months nor sought extension of time within the stipulated period under ss. 148/151 CPC or s. 28 Specific Relief Act, 1963. The temporary interim order in appeal restraining alienation did not prevent deposit of the balance consideration. (Paras 26–27).

(d) Relying on P.R. Yelumalai v. N.M. Ravi, the Court held that a conditional decree for specific performance is “self-operative,” and non-compliance with its conditions results in automatic dismissal of the suit. Mere later deposit with court permission does not amount to deemed extension of time or condonation of delay. (Paras 28–30).

(e) The Court further held that filing an application under s. 28 Specific Relief Act for rescission is not mandatory. Even without such an application, the court may treat the contract as rescinded due to non-compliance with decree conditions. (Paras 31–35).

(f) Emphasising the equitable nature of specific performance under ss. 16(c) and 20 Specific Relief Act, the Court observed that continuous readiness and willingness must persist even after decree. The plaintiff’s conduct in failing to deposit the amount disentitled him to equitable relief. (Paras 42–46).

Held

The Supreme Court allowed the appeal, set aside the orders of the Executing Court and High Court, and held the decree inexecutable. The contract stood rescinded under s. 28 Specific Relief Act. The defendant was directed to refund ₹80,000 earnest money with 8% simple interest from 19.10.2005. (Paras 52–53).

Ratio

Failure of the decree-holder in a suit for specific performance to deposit the balance sale consideration within the time stipulated in the decree, coupled with failure to seek extension within that period, renders the decree inexecutable and permits rescission of the contract under s. 28 Specific Relief Act.

Case Details

Citation: 2026 INSC 451
Decided on: 6 May 2026
Case Title: Habban Shah v. Sheruddin
Court: Supreme Court of India
Bench: Justice Pankaj Mithal and Justice S.V.N. Bhatti