Delay in Deposit of Balance Sale Consideration Does Not Invalidate Specific Performance Decree Without Consideration of Extension and Equities

Case Name: Anand Narayan Shukla v. Jagat Dhari

Citation: 2026 INSC 463

Date of Judgment/Order: 8 May 2026

Bench: Justice Manoj Misra and Justice Manmohan

Held: The Supreme Court held that the delay in the deposit of the balance sale consideration does not automatically lead to the rescission of the specific performance decree. The Court emphasized that the trial court retains the discretion to extend the period for deposit under Section 28 of the Specific Relief Act, 1963, and that failure to deposit within the time period stipulated in the decree does not result in the automatic rescission of the contract. The Court held that the executing court must consider the facts, the conduct of the parties, and the equities involved before deciding whether to extend the time for deposit or rescind the decree. The Court also observed that an equitable approach must be followed when considering extension, taking into account the delay caused by both parties.

Summary: The appellant, Anand Narayan Shukla, had filed a suit for specific performance of a contract to purchase land from the respondent, Jagat Dhari. The trial court passed a decree for specific performance, directing the appellant to deposit the balance amount of Rs. 57,50,000 within one month. Despite multiple attempts to deposit the amount, the appellant faced delays, including difficulties in serving the judgment debtor and a lockdown due to the COVID-19 pandemic. The Execution Court and the High Court dismissed the execution application, holding that the decree had become inexecutable due to the delay in deposit. The appellant argued that the Execution Court had allowed the deposit to be made after the deadline and that an extension should have been granted. The Supreme Court set aside the impugned orders of the Execution Court and High Court, holding that the decree for specific performance should be considered with flexibility and that the trial court retained discretion to extend the period for deposit.

Decision: The Supreme Court allowed the appeal, set aside the orders of the Execution Court and High Court, and directed that the execution application be restored for fresh consideration. The Court ordered the matter to be reconsidered with the discretion to extend the time for deposit under Section 28 of the Specific Relief Act, in accordance with the facts, circumstances, and equities of the case. The Court emphasized that both the decree holder and the judgment debtor must be heard in a fair and equitable manner, and the application for extension of time should be treated as part of the original suit. The appeal was allowed, and the case was remanded to the Execution Court for fresh adjudication.