Application For Rescission Of Contract Or Extension Of Time U/S 28(1) SRA After Decree Must Be Decided As Application In Original Suit: Supreme Court
The Supreme Court observed that an application seeking rescission of a contract or extension of time under Section 28 (1) of the Specific Relief Act, after a decree has been passed, must be decided as an application in the original suit.
The Bench upheld the discretion exercised by the Execution Court in extending the time for the deposit of balance sale consideration under Section 28(1) of the Specific Relief Act, 1963 (the Act).
A Bench of Justice J.B. Pardiwala and Justice Manoj Misra observed, “The law is, therefore, settled that an application seeking rescission of contract, or extension of time, under Section 28 (1) of the 1963 Act, must be decided as an application in the original suit wherein the decree was passed even though the suit has been disposed of.”
AOR Subhasish Bhowmick represented the appellants, while Advocate Sanchar Anand appeared for the respondents.
A suit for specific performance was instituted by the respondents (decree-holders) against the appellants for the enforcement of an agreement to sell a property The trial court decreed the suit in part, directing the refund of the earnest money with interest but rejected the prayer for specific performance. Aggrieved, the respondents appealed, and the appellate court allowed the appeal, ordering the execution of the sale deed upon payment of the balance sale consideration within two months.
The respondents, after the dismissal of the appellants' second appeal by the Punjab and Haryana High Court, filed an execution application to enforce the appellate court's decree. However, the appellants challenged the same when the respondents could not deposit the balance consideration within the stipulated time, and sought rescission of the contract under Section 28 of the Act.
The Execution Court, while rejecting the appellants' application for rescission, permitted the respondents to deposit the balance consideration. The appellants' subsequent revision petition to the High Court was dismissed, leading to the appeal before the Supreme Court.
The Supreme Court rejected the objection regarding the jurisdiction of the Execution Court to deal with the application for an extension of time/rescission of the contract under Section 28 (1) of the Act.
"An application under Section 28 of the 1963 Act, either for recission of contract or for extension of time, can be entertained and decided by the Execution Court provided it is the Court which passed the decree in terms of Section 37 of the CPC. By virtue of Section 37 of the CPC, the Execution Court being the Court of first instance with reference to the suit in which the decree was passed had jurisdiction to deal with the application under Section 28 of the 1963 Act. We, therefore, reject the objection as regards jurisdiction of the Execution Court to deal with the application for extension of time / rescission of the contract under Section 28 (1) of the 1963 Act", the Court said.
The Court noted that the respondents had consistently shown their intention to pay the balance consideration for the execution of the sale deed, whereas the appellants appeared interested only in challenging the decree before higher Courts.
Therefore, the Court remarked, “In these circumstances, taking note of all the events, the Execution Court justifiably exercised its discretion in favour of the decreeholder(s) by allowing them to deposit the balance consideration.”
Consequently, the Court observed, “In our view, therefore, substantial justice has been done to the parties and if we interfere with the impugned order only on the technical ground that the application was not dealt with as one on the original side, grave injustice would be caused to the decree holder(s). More so, when the judgmentdebtor(s) themselves applied to the Execution Court for rescinding the contract under Section 28(1) of the 1963 Act, and raised no such jurisdictional issue either before the Execution Court or the High Court.”
Accordingly, the Supreme Court dismissed the appeal.
Cause Title: Ishwar (D) & Ors. v. Bhim Singh & Anr. (Neutral Citation: 2024 INSC 651)
Appearance:
Appellants: AOR Subhasish Bhowmick
Respondents: Advocate Sanchar Anand; AOR Devendra Singh