Case Note & Summary
The petitioner, T.L. Rajagopal, was the defendant/judgment-debtor in a suit for specific performance of an agreement of sale dated 16.08.1997 filed by the respondent, S.N. Shivakumar (plaintiff/decree-holder). The suit was decreed ex parte on 26.03.2003, directing the defendant to receive the balance sale consideration of Rs.2,85,000/- from the plaintiff and execute a registered sale deed, failing which the plaintiff could take steps to get the sale deed executed through court. The decree stipulated that the plaintiff should deposit the balance consideration within one month from the date of the decree. The plaintiff did not deposit the amount within that time. After about 8 years, on 27.07.2011, the defendant filed an application under Section 28(1) of the Specific Relief Act, 1963, seeking rescission of the contract on the ground that the plaintiff had failed to deposit the balance consideration within the stipulated time. The Executing Court dismissed the application, noting that the plaintiff had deposited the amount on 26.07.2011, one day before the application was filed. The defendant challenged this order in the High Court. The High Court allowed the writ petition, holding that the right of the judgment-debtor to apply for rescission under Section 28(1) accrues immediately upon the failure of the decree-holder to deposit the amount within the time fixed by the decree. The subsequent deposit by the decree-holder after the expiry of the stipulated time does not extinguish that right. The court rescinded the contract and directed the plaintiff to refund the advance amount of Rs.1,75,000/- with interest at 6% per annum from the date of the decree until payment, and also to pay costs of the execution proceedings.
Headnote
A) Specific Relief Act - Rescission of Contract - Section 28(1) - Execution of Decree - The judgment-debtor/defendant filed an application under Section 28(1) of the Specific Relief Act, 1963, seeking rescission of the contract after the decree-holder/plaintiff failed to deposit the balance sale consideration within the time stipulated in the decree for specific performance. The Executing Court dismissed the application on the ground that the decree-holder had deposited the amount after the stipulated time but before the application was filed. The High Court held that the right of the judgment-debtor to apply for rescission accrues upon the failure of the decree-holder to deposit the amount within the time fixed by the decree, and the subsequent deposit by the decree-holder after the expiry of the stipulated time does not extinguish that right. The court allowed the application and rescinded the contract, directing refund of the advance amount with interest. (Paras 1-10)
B) Specific Relief Act - Time for Deposit of Balance Consideration - Section 28(1) - The decree for specific performance directed the plaintiff to deposit the balance sale consideration of Rs.2,85,000/- within one month from the date of the decree. The plaintiff failed to deposit within that time and deposited it only after about 8 years. The High Court held that the time fixed in the decree is mandatory and the plaintiff's failure to deposit within that time gives the defendant a right to apply for rescission under Section 28(1). The court's discretion to extend time under Section 28(4) is not automatic and cannot be exercised to defeat the defendant's accrued right. (Paras 4-8)
C) Specific Relief Act - Rescission - Refund of Advance - Section 28(1) - Upon rescission of the contract, the court directed the decree-holder/plaintiff to refund the advance amount of Rs.1,75,000/- to the judgment-debtor/defendant with interest at 6% per annum from the date of the decree until payment. The court also directed the plaintiff to pay costs of the execution proceedings. (Para 10)
Issue of Consideration
Whether the judgment-debtor/defendant is entitled to seek rescission of the contract under Section 28(1) of the Specific Relief Act, 1963, when the decree-holder/plaintiff failed to deposit the balance sale consideration within the time stipulated in the decree for specific performance of an agreement of sale.
Final Decision
The High Court allowed the writ petition, quashed the order dated 27.07.2011 passed by the Executing Court in Ex.No.34/2003, and allowed I.A.No.7 filed by the petitioner under Section 28(1) of the Specific Relief Act, 1963. The court rescinded the contract of sale dated 16.08.1997 and directed the respondent/plaintiff to refund the advance amount of Rs.1,75,000/- to the petitioner/defendant with interest at 6% per annum from the date of the decree (26.03.2003) until the date of payment. The respondent was also directed to pay the costs of the execution proceedings.
Law Points
- Section 28 of the Specific Relief Act
- 1963
- Rescission of contract
- Execution of decree for specific performance
- Time limit for deposit of balance consideration
- Discretion of court to extend time
- Right of judgment-debtor to seek rescission
Case Details
2014 LawText (KAR) (03) 33
Writ Petition No.29944/2011 (GM – CPC)
G. Narahari for Kashyap N. Naik (for petitioner), S.N. Bhat (for respondent)
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Nature of Litigation
Civil writ petition challenging the order of the Executing Court dismissing an application under Section 28(1) of the Specific Relief Act, 1963, for rescission of a contract for sale of property.
Remedy Sought
The petitioner (defendant/judgment-debtor) sought to quash the order dated 27.07.2011 passed by the Civil Judge (Sr. Dn.) and JMFC, Tiptur, in Ex.No.34/2003 dismissing I.A.No.7, and consequently to allow I.A.No.7 filed under Section 28 of the Specific Relief Act, 1963, for rescission of the contract.
Filing Reason
The petitioner filed the application under Section 28(1) of the Specific Relief Act, 1963, seeking rescission of the contract because the decree-holder/plaintiff failed to deposit the balance sale consideration of Rs.2,85,000/- within the time stipulated in the decree for specific performance (one month from 26.03.2003). The Executing Court dismissed the application on the ground that the decree-holder had deposited the amount on 26.07.2011, one day before the application was filed.
Previous Decisions
The suit for specific performance was decreed ex parte on 26.03.2003. The decree directed the defendant to receive the balance sale consideration and execute the sale deed, failing which the plaintiff could take steps to get the sale deed executed. The plaintiff did not deposit the balance consideration within the stipulated one month. The defendant filed I.A.No.7 under Section 28(1) on 27.07.2011, which was dismissed by the Executing Court on the same day.
Issues
Whether the judgment-debtor/defendant is entitled to seek rescission of the contract under Section 28(1) of the Specific Relief Act, 1963, when the decree-holder/plaintiff failed to deposit the balance sale consideration within the time stipulated in the decree for specific performance.
Whether the subsequent deposit of the balance consideration by the decree-holder after the expiry of the stipulated time but before the filing of the application for rescission extinguishes the right of the judgment-debtor to apply for rescission.
Submissions/Arguments
The petitioner (defendant) argued that the plaintiff failed to deposit the balance sale consideration within the time fixed by the decree (one month from 26.03.2003), and therefore, the defendant became entitled to apply for rescission of the contract under Section 28(1) of the Specific Relief Act, 1963. The subsequent deposit by the plaintiff after about 8 years does not cure the default or extinguish the defendant's right.
The respondent (plaintiff) argued that the amount was deposited before the application for rescission was filed, and therefore, the application was not maintainable. The Executing Court accepted this argument and dismissed the application.
Ratio Decidendi
Under Section 28(1) of the Specific Relief Act, 1963, where a decree for specific performance is passed and the decree-holder fails to deposit the balance consideration within the time fixed by the decree, the judgment-debtor acquires a right to apply for rescission of the contract. This right accrues immediately upon the failure to deposit within the stipulated time, and a subsequent deposit by the decree-holder after the expiry of that time does not extinguish the judgment-debtor's right to seek rescission. The court has discretion under Section 28(4) to extend time, but that discretion cannot be exercised to defeat an already accrued right of the judgment-debtor.
Judgment Excerpts
The right to apply for rescission under Section 28(1) accrues to the judgment-debtor the moment the decree-holder fails to deposit the amount within the time fixed by the decree.
The subsequent deposit by the decree-holder after the expiry of the stipulated time does not extinguish the right of the judgment-debtor to apply for rescission.
The time fixed in the decree is mandatory and the plaintiff's failure to deposit within that time gives the defendant a right to apply for rescission under Section 28(1).
Procedural History
The plaintiff filed a suit for specific performance of an agreement of sale dated 16.08.1997. The suit was decreed ex parte on 26.03.2003, directing the defendant to receive the balance consideration and execute the sale deed within one month. The plaintiff did not deposit the balance consideration within that time. On 27.07.2011, the defendant filed I.A.No.7 under Section 28(1) of the Specific Relief Act, 1963, seeking rescission of the contract. The Executing Court dismissed the application on the same day, noting that the plaintiff had deposited the amount on 26.07.2011. The defendant then filed the present writ petition under Articles 226 and 227 of the Constitution of India challenging the order.
Acts & Sections
- Specific Relief Act, 1963: 28, 28(1), 28(4)
- Constitution of India: 226, 227
