Anand Narayan Shukla v. Jagat Dhari
Supreme Court of India, 8 May 2026, 2 judges, 2026 INSC 463
Section 28 of the Specific Relief Act gives the court a discretion to rescind or extend time; a decree silent on the consequence of late deposit is not rescinded automatically, so the courts below erred in dismissing execution mechanically.
Facts
Under an agreement of 14.11.2011 the respondent agreed to sell 3.75 acres to the appellant, who paid Rs. 2,50,000 as advance. The Trial Court decreed specific performance on 03.03.2017, directing the appellant to pay the balance to the respondent or deposit it in Court within a month. The appellant sent a notice asking the respondent to accept Rs. 57,50,000 and execute the deed, but neither paid nor deposited in time. The respondent's first appeal was later dismissed for non-prosecution. The appellant sought execution in July 2017; the Execution Court for long directed payment to the judgment-debtor, first directed deposit in 2019, and after service problems and the Covid lockdown the amount was deposited on 26.11.2020. In 2023 the respondent applied to rescind the contract under Section 28. The Execution Court dismissed the execution because the deposit was late, and the High Court dismissed the revision under Article 227.
Questions before the Court
- Did the trial court decree merge in the appellate order when the appeal was dismissed for non-prosecution?
- Was the application under Section 28 maintainable after the Execution Court had permitted, and received, the deposit of the balance?
- Were the rescission of the contract and dismissal of the execution vitiated by failure to consider the facts and whether the judgment-debtor could be compensated for the delay?
What the Court held
- Merger needs an adjudication on merits. A dismissal for default is excluded from 'decree' in Section 2(2) CPC, so dismissal of the first appeal for non-prosecution did not merge the trial court decree in the appellate order.
- The order permitting deposit on 26.11.2020 only tested the decree-holder's bona fides and did not decide rescission. The deposit is relevant to readiness and willingness, but it did not take away the judgment-debtor's right to seek rescission under Section 28.
- The words 'may, by order, rescind' and 'such further period as the court may allow' make Section 28 discretionary. The court that passed the decree retains control until the deed is executed. There is no automatic rescission on default and no automatic extension by late deposit, unless the decree itself provides that it stands rescinded on default.
- Extension may be sought before or after the period expires, in any form, even orally, and is treated as an application in the suit. Equity guides the court: it weighs the parties' conduct and whether terms can compensate the judgment-debtor. It may rescind where the decree holder's conduct shows no intention to perform and wilful negligence.
- The decree fixed a time but not the consequence of default, and the courts below did not weigh extension on terms. Both orders were set aside and the Execution Application, with the applications for rescission and extension, was restored to the Execution Court for fresh consideration, the applications to be treated as applications in the suit.
Why it matters
The judgment collects the earlier decisions on Section 28 of the Specific Relief Act and states seven governing principles: a specific performance decree is preliminary in nature, there is no automatic rescission or extension, extension may be sought in any form before or after expiry, equity and the parties' conduct guide the discretion, and an appellate court disposing of an appeal on merits must fix time under Order XX Rule 12A. It also holds that an appeal dismissed for non-prosecution does not attract merger.
In the Court's words
Copied from the official judgment; each passage links to its page.
“By use of the expression “may, by order, rescind” in sub-section (1), the legislative intent is clear that it is a discretionary power and, therefore, there is no automatic rescission in the event of default. As a sequitur, the Court that passed the decree is vested with the power to extend the period stipulated in the decree for deposit.”
“Neither the Execution Court nor the High Court took into consideration that though the decree fixed a time frame for deposit of the balance consideration, it did not provide for the consequences of failing to adhere to the time schedule. In such circumstances, in our view, there could be no automatic rescission of the decree for specific performance.”
“Rather, the deposit was permitted just to test the bona fides of the decree holder in pursuing the execution. Though such deposit becomes a relevant factor for determining whether the decree holder had been throughout ready and willing to perform his obligation under the contract/ decree, it would not extinguish the right of the judgment-debtor to seek rescission of the contract.”
“As a sequitur, for there to be a merger of the trial court decree in the appellate court decree, there must be an adjudication on merits, though it is immaterial whether the decree or order under appeal is set aside or modified or simply confirmed. In our view, dismissal of the appeal for non-prosecution would not merge the trial court decree in the order of the appellate court.”
Provisions interpreted
Case and bench
- Parties
- Anand Narayan Shukla v. Jagat Dhari
- Case
- Civil Appeal No. 7355 of 2026 (arising out of SLP (C) No. 14206 of 2025)
- Decided
- 8 May 2026
- Bench
- Manoj Misra, Manmohan
- Opinions
- Judgment of the Court delivered by Manoj Misra, J.