Specific Performance and Delay in Payment: Supreme Court's Landmark Judgment on Property Sale Disputes

The case of Surinder Pal Soni v. Sohan Lal (D) Through LRs revolves around the execution of a decree for specific performance in a property sale agreement. The Supreme Court had to decide whether the execution of the sale deed could be denied due to a delay in depositing the balance sale consideration by the decree-holder.

Background of the Case

The appellant, Surinder Pal Soni, entered into an agreement to sell with the respondent, Sohan Lal, on 08.12.2003 for a land measuring 12 kanals and 9 marlas in Panchkula, Haryana. The agreed sale consideration was Rs. 8,35,000. An earnest amount of Rs. 5,85,000 was paid in 2004, and the balance was to be paid at the time of execution of the sale deed.

The appellant filed a suit for specific performance in 2006 after the seller failed to execute the sale deed. The Civil Judge (Senior Division), Panchkula decreed the suit on 20.03.2012, directing the respondent’s legal heirs to execute the sale deed within two months upon payment of the balance sale consideration.

Both parties filed appeals. While the appeal was pending, the decree-holder (appellant) deposited the balance sale consideration of Rs. 1,15,864 on 19.02.2015. The Additional District Judge dismissed both appeals on 17.01.2015, upholding the trial court’s decree.

The respondent challenged the execution of the decree before the High Court, arguing that the appellant failed to deposit the balance amount within two months as directed. The High Court accepted the objection and ordered a refund of the earnest money instead of enforcing the sale deed.

The appellant challenged the High Court’s decision before the Supreme Court.

Petitioner’s Arguments

The appellant, Surinder Pal Soni, contended that:

The High Court erred in refusing execution since the decree had merged with the appellate judgment.
Delay in depositing the balance amount was due to the pending appeal and should not defeat his right to specific performance.
The trial court did not explicitly fix a time for deposit, and hence, a reasonable interpretation should be adopted.
The balance amount was deposited within a reasonable period after the appeal was decided.

Respondent’s Arguments

The respondents, legal heirs of Sohan Lal, countered that:

The appellant was bound to deposit the balance within two months of the trial court’s decree.
The deposit made in 2015 was three years late and should not be entertained.
The decree-holder failed to seek an extension of time under Section 28 of the Specific Relief Act.
The High Court correctly substituted the decree with a refund order due to the lapse in time.

Supreme Court’s Observations

The Supreme Court considered the doctrine of merger and the provisions of Section 28 of the Specific Relief Act. The key findings were:

The decree of the trial court merged with the appellate decree, and execution should be based on the latter.
The appellate court did not modify the decree or impose a fresh time limit for payment.
The decree-holder acted in good faith by depositing the balance amount soon after the appeal was decided.
Section 28 of the Specific Relief Act allows courts to grant time extensions for performance even after a decree is passed.
The High Court exceeded its revisional jurisdiction by substituting the decree for specific performance with an order for refund.

The Supreme Court noted:

“A decree for specific performance does not become unenforceable merely because of a delay in deposit, particularly when the appellate court has upheld the decree without imposing a new time frame.”

Final Judgment

The Supreme Court allowed the appeal and restored the executing court’s order, ruling that:

The appellant’s deposit of the balance sale consideration was valid.
The execution of the sale deed should proceed as per the trial court’s decree.
The High Court’s order for refund of earnest money was erroneous and set aside.

Impact of the Judgment

This ruling reinforces key principles of specific performance:

Delays in payment should be evaluated in the context of appeals and judicial delays.
The doctrine of merger applies to execution proceedings.
Courts have discretion under Section 28 of the Specific Relief Act to grant time extensions.
High Courts cannot modify a decree for specific performance into a decree for refund.

Conclusion

The Supreme Court’s decision protects the rights of decree-holders in property disputes. It ensures that judicial delays do not unfairly deprive a party of their contractual rights. This ruling upholds the enforceability of specific performance decrees and sets a precedent for cases where delays in deposit occur due to pending appeals.

Petitioner Name: Surinder Pal Soni.
Respondent Name: Sohan Lal (D) Through LRs.
Judgment By: Justice D.Y. Chandrachud, Justice Indira Banerjee.
Place Of Incident: Panchkula, Haryana.
Judgment Date: 23-07-2019.

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