Failure to Deposit Balance Consideration Within Stipulated Time Renders Specific Performance Decree Inexecutable and Rescinds Contract.

The Appellant (defendant) entered into an agreement to sell agricultural land to the Respondent (plaintiff) on 19.10.2005 for Rs. 5,00,000/- per acre, receiving Rs. 80,000/- as earnest money

Upon non-execution, the Respondent filed a suit for specific performance, which was decreed on 31.10.2012. The decree directed the Appellant to execute the sale deed within three months upon receiving the balance consideration

Although a brief interim order existed in the first appeal, it lapsed on 25.01.2013

The Respondent failed to deposit the balance amount within the stipulated three months and did not seek an extension of time during that period

Execution proceedings were later filed, and the Executing Court permitted the deposit of the balance amount in 2015

The Appellant’s objections regarding the inexecutability of the decree were dismissed by the Executing Court and the High Court

1. Whether a decree of specific performance becomes inexecutable if the balance sale consideration is not deposited within the time stipulated by the court of first instance

2. Whether the Court can treat a contract as rescinded under Section 28 of the Specific Relief Act, 1963, even in the absence of a formal application by the judgment debtor

The Court applied Section 28 of the Specific Relief Act, 1963, which allows for the rescission of a contract after a decree for specific performance if the purchaser defaults in payment

It relied on Order XX Rule 12A of the CPC, which mandates that a decree must specify the period for payment

The Court followed P.R. Yelumalai v. N.M. Ravi, establishing that a conditional decree is self-operative and non-compliance leads to "deemed dismissal" of the suit

Furthermore, it applied Prem Jeevan v. K.S. Venkata Raman, holding that a formal application under Section 28 is not mandatory for the court to treat a contract as rescinded

It also considered Balbir Singh v. Baldev Singh regarding the court's retained jurisdiction over the decree until execution

The Court reasoned that a decree for specific performance is preliminary in nature, meaning the court retains jurisdiction to extend time or rescind the contract

However, the three-month period stipulated in the decree created a reciprocal obligation on the Respondent to deposit the balance

The Court found that the Respondent’s failure to deposit the amount or seek an extension within the original three months was fatal

The Court rejected the "deemed extension" theory, noting that merely permitting a late deposit in execution does not condone the prior default

Applying principles of equity, the Court held that since specific performance is a discretionary relief (Sections 16(c) and 20 of the Act), the Respondent’s conduct in failing to comply with the court-mandated timeline showed a lack of continuous readiness and willingness

The Court set aside the High Court and Executing Court orders, upholding the Appellant’s objections, declared the contract rescinded under Section 28 of the Act, and directed the Appellant to refund the earnest money of Rs. 80,000/- with 8% simple interest per annum from the date of receipt (19.10.2005) until the date of refund