Does a Suit for Specific Performance End with the Passing of a Decree? Supreme Court Clarifies Judicial Control and Discretion Under Section 28 of the Specific Relief Act

In a recent decision, the Supreme Court of India addressed significant issues regarding the nature and scope of judicial control in suits for specific performance. The judgment, delivered on January 17, 2025, examined the discretion granted to courts under Section 28 of the Specific Relief Act, which empowers the court to annul a decree for specific performance or extend the time for compliance under certain circumstances. This ruling emphasizes that a suit for specific performance does not terminate with the passing of the decree; the court retains its authority to supervise the decree’s execution and modify its terms if necessary.

Retention of Court's Control Post-Decree

The Bench of Justices JB Pardiwala and R Mahadevan clarified that the court’s jurisdiction over a suit for specific performance extends beyond the mere passing of the decree. The court highlighted that the decree for specific performance is often a preliminary decree, and the court retains substantial discretion under Section 28 of the Specific Relief Act even after the decree has been passed. This provision allows the court to rescind the contract or extend the time for payment of the purchase price in the event that the plaintiff fails to meet the stipulated timeline.

The Court observed that the mere passage of a decree does not mark the conclusion of judicial oversight. The court remains vested with the power to annul or modify the decree and to extend deadlines, subject to the circumstances of the case.

Judicial Discretion Under Section 28: A Balancing Act

Section 28 of the Specific Relief Act serves as a crucial safeguard, empowering the court to balance the interests of both parties in a specific performance suit. The Bench remarked that the power conferred by this provision is discretionary, meaning that it is not an automatic right but one that must be exercised judiciously by the court. Notably, the court does not lose jurisdiction once a decree is granted. As emphasized by the Court, the trial court may extend the time frame specified in the decree for payment, ensuring that justice is served even in cases where the defendant might delay compliance.

While the Court acknowledged that the right to annul the decree exists, it was underscored that such a power should be used sparingly. In the present case, the trial court had initially directed the plaintiff to deposit the balance sale consideration within 20 days. Despite this, the Supreme Court affirmed the principle that, even in the face of non-compliance, the trial court retains its discretion to extend the time and cannot be deemed to have lost jurisdiction over the matter.

Doctrine of Merger: The Role of Appellate Courts

A critical aspect of this judgment involved the Doctrine of Merger, which posits that once an appeal is decided, the judgment of the lower court merges into the appellate court’s decision. In this context, the Supreme Court explained that when an appeal is filed, the trial court’s order ceases to exist independently; instead, it becomes part of the appellate court's judgment. Therefore, any directions related to the deposit of the sale consideration, which were specified by the trial court, were not to be automatically enforced post-appeal unless the appellate court expressly reiterated them.

This aspect of the ruling highlights the importance of understanding how the appellate process impacts the enforceability of lower court orders. The Court referred to key precedents, including Tejaji Farasram v. Commissioner of Income Tax, Bombay (1954) and Amritlal Bhogilal & Co. v. Commissioner of Income Tax (1958), which elucidate the principle that an appellate court’s judgment supersedes the trial court’s orders, especially when the appellate court has not issued any specific directions regarding the contested issues.

Practical Implications and Legal Reflections

The Supreme Court’s judgment reinforces the principle that the power of the trial court is not exhausted upon passing a decree for specific performance. Rather, the court’s role continues in overseeing the fulfillment of the decree, particularly in cases where timeframes for compliance may need to be adjusted. This ruling aligns with broader principles of equitable relief, ensuring that parties are not unduly penalized for unforeseen delays while also safeguarding the rights of the party seeking performance.

The judgment is particularly relevant in light of the growing importance of specific performance in India’s real estate and contract law, where parties often seek judicial enforcement of agreements to sell properties. The ability to extend deadlines or annul a decree in specific circumstances provides flexibility, which ensures fairness and avoids mechanical application of strict timelines, thus preserving the integrity of the judicial process.

Moreover, the Court’s rejection of the appellant’s argument—claiming that the trial court’s direction regarding the deposit of the balance sale consideration should apply post-appeal—affirms the necessity of clear judicial direction from appellate courts. This is crucial to avoid ambiguity in execution proceedings and to prevent parties from taking advantage of procedural gaps.

Conclusion: The Court’s Continued Role in Specific Performance Cases

In conclusion, the Supreme Court’s ruling underscores the flexible and dynamic nature of specific performance suits under Indian law. Courts retain control over the execution of decrees even after they are passed, with the discretion to extend time or annul the decree under Section 28, where justified. This ruling not only affirms the discretionary powers of courts but also reiterates the importance of judicial oversight in ensuring that contracts are enforced fairly and equitably. The judgment provides much-needed clarity on the continued relevance of the trial court's jurisdiction, enhancing the rule of law and offering guidance on the evolving dynamics of contract enforcement in India.

This case also reflects the court's proactive approach in ensuring that specific performance remains a viable and equitable remedy, balancing the interests of both parties while maintaining the integrity of contractual obligations.