Specific Performance Decree Becomes Inexecutable If the Purchaser Fails to Deposit Balance Sale Consideration Within the Time Fixed by the Court

Case Name: Habban Shah v. Sheruddin

Citation: 2026 INSC 451

Date of Judgment/Order: 6 May 2026

Bench: Justice Pankaj Mithal and Justice S.V.N. Bhatti

Held: The Supreme Court held that a decree for specific performance, though executable, remains a conditional and equitable decree, and the purchaser must comply with the condition of depositing or paying the balance sale consideration within the time fixed by the court. If the purchaser fails to deposit the balance amount within the stipulated period and does not seek extension of time within that period, the decree becomes inexecutable and the contract may be treated as rescinded under Section 28 of the Specific Relief Act, 1963. The Court held that mere subsequent permission to deposit the amount, or actual late deposit, does not automatically amount to condonation of delay or deemed extension of time.

Summary: The dispute arose from an agreement to sell agricultural land measuring 12 kanals and 19 marlas in Village Shikarpur, Tehsil Tauru, District Mewat, Haryana, for INR 5,00,000 per acre, under which the plaintiff-respondent had paid INR 80,000 as advance. The suit for specific performance was decreed on 31 October 2012, directing execution of the sale deed after receipt of balance sale consideration within three months. The defendant-appellant challenged the decree in appeal, where a short interim restraint against alienation operated only till 25 January 2013, but no continuing stay prevented the plaintiff from depositing the balance amount. The plaintiff did not deposit the balance consideration within three months and did not obtain extension within that period. Later, in execution proceedings, the executing court permitted deposit of INR 6,92,410 and rejected the defendant’s objections, and the High Court affirmed that order. The Supreme Court held that the decree for specific performance is in the nature of a preliminary decree and the court retains control over it until execution or until it becomes inexecutable, but the decree-holder must show continuous readiness and willingness by complying with the deposit condition in time.

Decision: The Supreme Court allowed the appeal, set aside the Punjab and Haryana High Court’s order dated 24 March 2025 in Civil Revision No. 7232 of 2015 and the executing court’s order dated 7 September 2015 dismissing the objections. The Court held that the decree dated 31 October 2012 had become inexecutable due to non-compliance with the condition requiring deposit of balance sale consideration within three months, and the contract stood rescinded under Section 28 of the Specific Relief Act. The execution proceedings were directed to be closed. To balance equities, the defendant-appellant was directed to refund the earnest money of INR 80,000 with simple interest at 8% per annum from 19 October 2005 until refund; if unable to refund, he was permitted to sell half an acre of the land to the plaintiff-respondent or to a third party, if the plaintiff refused, and make payment within three months. Pending applications were disposed of.