Supreme Court: Appellate Courts Must Comply With Order XX Rule 12A CPC By Specifying Time For Depositing Balance Sale Consideration When Disposing Of Appeal Against Specific Performance Decree

The Court held that this case served as “an eye-opener for Appellate Courts,” holding that in every decree of specific performance of a contract, the Court has to specify the period within which the payment has to be made. The Court allowed the Appeal against the Judgment of the Punjab and Haryana High Court which set aside the Order by the Executing Court.

A Bench of Justice JB Pardiwala and Justice R Mahadevan held, “This litigation is an eye-opener for the appellate courts reminding that they owe a duty to comply with the provisions of Order XX Rule 12A of the CPC. Where an appeal is filed against the decree passed by the trial court and the appeal is disposed of, the appellate court should specify time to deposit the balance sale consideration. It is too much to say that since the trial court had granted two months time to the decree holder to deposit the balance sale consideration the same time period would apply even to the decree that may be drawn by the appellate court. What is executable is the decree passed by the appellate court. The appellate court owes a duty to specify the time period.”

The Advocate Disha Singh appeared for the Appellant, while AOR Aakriti Jain represented the Respondents.

Brief Facts

The Appellant had filed a suit for specific performance based on an agreement to sell executed between him and the Respondents. The Trial Court decreed the suit directing the Respondents to execute and register the sale deed upon the Appellant depositing the balance sale consideration within two months. The Respondents’ appeal was dismissed by the First Appellate Court, after which, the decree attained finality as no further appeal was filed.

The Appellant filed an execution Petition seeking permission to deposit the balance sale consideration, which was granted by the Executing Court. The Appellant deposited the amount, however, the High Court, in a civil revision, set aside the Executing Court’s Order, holding that the delay rendered the decree inexecutable.

Court’s Observations

The Supreme Court held, “In the considered view of this Court, the Appellate Court, after deciding the appeal on merits, could have called upon the plaintiff to deposit the balance sale consideration by fixing a time limit. This would have at least given an opportunity to the plaintiff to fulfil his obligation. The non-payment of the balance sale consideration within the time period fixed by the Trial Court does not amount to abandonment of the contract and consequent rescinding of the same.”

The Court explained that the ratio of the decision in Prem Jeevan v. K.S. Venkata Raman (2017) should be understood as laying down a proposition of law that it is incorrect to say that unless the judgment debtor seeks rescission of the contract in terms of Section 28 of the Specific Relief Act, the decree remains executable in spite of expiry of the period for deposit, with the only obligation on the part of the decree holders to pay interest. In the said case the Court took the view that “merely because rescission of contract was not sought by the judgment debtor the same would not automatically result in extension of time.”

Therefore, in Prem Jeevan (supra) the Court directly considered the effect of non compliance of the time period prescribed in the original decree passed by the Trial Court for the purpose of deposit of the balance sale consideration.

“Rule 12A makes it obligatory for the court to specify in the decree for specific performance of contract for sale or lease of immovable property the date by which purchase money or other sum should be paid by the vendee or lessee. The trial court has jurisdiction to fix time-limit for depositing the money by the decreeholder under Section 28 of the Specific Relief Act, 1963. The decree is preliminary in nature and the court retains control over it,” the Bench remarked.

Consequently, the Court held, “In view of the aforesaid, the appeal succeeds and hereby allowed. The impugned order passed by the High Court is set aside and that of the executing court is affirmed.”

Accordingly, the Supreme Court allowed the Appeal.

Cause Title: Ram Lal v. Jarnail Singh (D) Through LRs & Ors. (Neutral Citation: 2025 INSC 301)

Appearance:

Appellant: Advocates Disha Singh, S.K. Pabbi, Shivendu Gaur, and Nidhi Sharma; AOR Ajay Kumar Singh

Respondents: AOR Aakriti Jain

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