Table of Contents
Case Title
Habban Shah v. Sheruddin
Introduction
The Supreme Court clarified two crucial aspects of law under Section 28 of the Specific Relief Act, 1963.
First, it examined whether a decree for specific performance becomes inexecutable when the decree-holder fails to comply with the time condition for depositing the balance sale consideration.
Second, it considered whether a separate application under Section 28 is mandatory to rescind the contract after such default.
The Court held that non-compliance with the time stipulated in the decree renders the decree inexecutable, and a separate application for rescission is not mandatory, as courts can rescind the contract in the same proceedings.
Factual Background
The appellant agreed to sell agricultural land to the respondent and received advance consideration.
When the sale deed was not executed, the respondent filed a suit for specific performance. The trial court decreed the suit and directed execution of the sale deed within three months, subject to payment of the balance consideration.
However:
- The respondent did not deposit the amount within the stipulated time
- No application for extension of time was filed within that period
Later:
- The respondent filed execution proceedings
- He deposited the amount after delay with court permission
The appellant objected, arguing that the decree had become inexecutable due to non-compliance.
Core Legal Issues
- Whether failure to deposit the balance consideration within the time fixed by the decree renders the decree inexecutable
- Whether a separate application under Section 28 is mandatory to rescind the contract
Supreme Court’s Analysis
1. Nature of Specific Performance Decree
The Court held that a decree for specific performance is conditional and in the nature of a preliminary decree.
It creates reciprocal obligations:
- Buyer must pay the balance consideration
- Seller must execute the sale deed
Therefore, compliance with conditions is essential for enforcement.
2. Effect of Non-Compliance with Time Condition
The Court emphasised that:
- The decree prescribed a specific time limit (3 months)
- The respondent neither deposited the amount within time nor sought extension
The Court held:
- There is no automatic extension of time
- Subsequent deposit with court permission does not cure default
- Conditional decrees are self-operative
Thus, non-compliance leads to automatic dismissal of the relief, and the decree becomes inexecutable.
3. No Mandatory Requirement of Separate Application Under Section 28
The Court clarified the scope of Section 28:
- Section 28 gives the court continuing jurisdiction after decree
- Filing an application to rescind is not mandatory
- It is only an optional remedy
Importantly:
- Courts can rescind the contract even without a separate application
- Non-compliance itself enables the court to deny enforcement
4. Equity and Conduct of the Decree Holder
The Court stressed that specific performance is an equitable and discretionary relief.
Therefore:
- The plaintiff must show continuous readiness and willingness
- Delay and inaction defeat equity
In this case:
- The respondent failed to act within time
- No justification for delay was shown
Thus, equity did not favour the respondent.
Also Read:
Section 156(3) vs Section 200 CrPC – Supreme Court Explains Key Differences. https://legalpaathcoaching.com/section-156-3-vs-200-crpc/
Key Principles Laid Down
- A decree for specific performance is conditional and preliminary
- Time fixed in the decree is binding
- Failure to comply within time makes the decree inexecutable
- No automatic condonation or extension of time
- Subsequent deposit does not revive the decree
- Separate application under Section 28 is not mandatory
- Courts can rescind the contract in the same proceedings
- Specific performance remains an equitable remedy
Final Decision
The Supreme Court:
- Set aside the High Court and executing court orders
- Held the decree inexecutable due to non-compliance
- Treated the contract as rescinded
To balance equity:
- Ordered refund of ₹80,000 (advance)
- Granted 8% interest from the date of payment
Conclusion
This judgment settles two important principles:
- Strict compliance with time in specific performance decrees is mandatory
- Courts can rescind contracts under Section 28 without a separate application
The ruling reinforces that equity supports only diligent litigants, and procedural defaults cannot be cured casually at the execution stage.
