The law relating to specific performance in India has consistently evolved around the principle that equity must prevail over technicality. In a significant recent judgment, the Supreme Court has once again clarified the scope of Section 28 of the Specific Relief Act, 1963, particularly in relation to rescission of contracts and extension of time for depositing consideration amounts pursuant to a decree for specific performance.
In Anand Narayan Shukla v. Jagat Dhari[1], the Supreme Court reaffirmed that a decree for specific performance does not automatically stand rescinded merely because the decree-holder fails to deposit the balance sale consideration within the time stipulated in the decree. The Court held that courts retain jurisdiction to extend the time for payment even after expiry of the prescribed period, provided the equities of the case justify such extension. The judgment, delivered on 8 May 2026 by a Bench comprising Justice Manoj Misra and Justice Manmohan, is an important reaffirmation of the equitable foundations underlying decrees for specific performance. Read together with the Court’s near-contemporaneous decision in Habban Shah v. Sheruddin[2], where a differently constituted Bench reached the opposite conclusion on markedly different facts, the ruling offers a fuller picture of both how far this equitable discretion extends, and where its limits lie.
STATUTORY FRAMEWORK: SECTION 28 OF THE SPECIFIC RELIEF ACT, 1963
Before turning to the judgment, it is worth recalling the text and structure of the provision itself, since much of the Court’s reasoning turns on what the section actually permits. Section 28 is what allows a court that has already decreed specific performance to continue supervising the transaction until it is actually completed, it is not a one-time order after which the court’s role is exhausted. The section has five parts.
Sub-section (1) applies once a decree for specific performance of a contract for the sale or lease of immovable property has already been passed. If the purchaser or lessee fails, within the time allowed by the decree or any extended time the court may permit, to pay the purchase money or other sum the court has directed, the vendor or lessor may apply, in that very suit, for rescission of the contract. The court may then rescind the contract in whole, or only as against the defaulting party, as the justice of the case requires.
Sub-section (2) governs what follows rescission. If the purchaser or lessee had been given possession of the property under the contract, the court must direct that possession be restored to the vendor or lessor, and may call for an account of rents and profits received in the meantime. Where fairness requires it, the court may also direct repayment of earnest money or any deposit already made by the purchaser or lessee.
Sub-section (3) protects the purchaser or lessee who does comply in time: on a further application in the same suit, the court may grant relief such as execution of a proper conveyance or lease, and delivery of possession, or partition and separate possession, where the property is held jointly with others.
Sub-section (4) bars a separate suit, no party, whether vendor, purchaser, lessor, or lessee, may institute independent proceedings for any relief that Section 28 itself allows them to claim by application in the original suit.
Sub-section (5) leaves the costs of any such proceeding entirely to the discretion of the court.
Read as a whole, the provision does two things at once: it arms the vendor with a remedy against a defaulting purchaser, and it keeps the final word on whether that default should actually result in rescission with the court, rather than with either party unilaterally. It is this second, supervisory character of Section 28, and not merely the remedy of rescission, that the Supreme Court’s judgment in Anand Narayan Shukla brings to the fore.
TRACING THE DOCTRINE: SECTION 28 IN THE COURT’S EARLIER DECISIONS
The equitable, discretionary reading of Section 28 did not emerge for the first time in 2026. The Supreme Court has, over three decades, built up a fairly consistent body of law on the provision, and the present judgment draws on this lineage rather than departing from it.
As early as Ramankutty Guptan v. Avara [(1994) 2 SCC 642], the Court was called upon to decide whether an application under Section 28 could be entertained on the execution side of a decree, or whether it had to be filed afresh in the original suit. The Court took a practical view: although an application under the section is, in form, an application “in the same suit”, a court of first instance that is also seized of execution may treat and number such an application as an interlocutory application in the original suit, rather than insist on a fresh filing. The decision is often cited for its observation that procedure exists to serve justice, not to obstruct it, a theme that recurs throughout the later case law on this provision.
Sardar Mohar Singh v. Mangilal [(1997) 9 SCC 217] carried this reasoning further on the substantive side. The Court held that a court which has passed a decree for specific performance does not become functus officio the moment the decree is signed; it continues to control the decree until the sale deed is actually executed, and retains the power to enlarge the time available to the judgment-debtor for compliance, even where the other side has already filed an application seeking rescission. The mere pendency of a rescission application, in other words, does not by itself foreclose the possibility of an extension.
V.S. Palanichamy Chettiar Firm v. C. Alagappan [(1999) 4 SCC 702] adopted and extended the approach in Ramankutty Guptan, and added an important symmetry: if a decree-holder can approach the court for an extension of time, a vendor or judgment-debtor is equally entitled to resist execution, or seek rescission, on the ground of default. The discretion under Section 28, on this view, runs in both directions.
More recently, P.R. Yelumalai v. N.H. Ravi [(2015) 9 SCC 52] added a note of caution against reading the provision too liberally in the purchaser’s favour: mere acceptance of a delayed deposit by the executing court, without any application of mind or valid justification recorded, does not by itself amount to a deemed extension of time. Also in Ishwar v. Bhim Singh [2024 SCC OnLine SC 2338], decided barely two years before the present case, the Court reaffirmed that Section 28 relief must be decided within the original suit even where that suit has formally been disposed of, and that an execution court which also happens to be the court of first instance must transfer any Section 28 application to the suit file before deciding it.
It is against this settled, decades-old understanding, that Section 28 vests continuing, equitable, and essentially supervisory jurisdiction in the court that passed the decree, that the facts in Anand Narayan Shukla v. Jagat Dhari fell to be decided.
FACTUAL BACKGROUND OF THE CASE
The dispute arose from an agreement to sell dated 14 November 2011, concerning approximately 3.75 acres of land, at the rate of Rs. 16 lakh per acre. Disputes arose between the parties over completion of the transaction, and the purchaser, later the appellant before the Supreme Court instituted a suit for specific performance. On 3 March 2017, the trial court decreed the suit and directed the purchaser to pay, or deposit in court, the balance sale consideration of Rs. 57.5 lakh within one month.
The purchaser acted promptly. On 1 April 2017, well within that window, he issued a notice to the seller calling upon him to accept the balance amount and execute the sale deed. The seller neither accepted the payment nor permitted execution, and instead filed a first appeal against the decree itself. Since no stay had been granted on execution, the purchaser initiated execution proceedings in July 2017, expressly stating before the executing court that he was ready and willing to deposit the balance amount, but that the seller was unwilling to accept it.
What followed was a protracted, and on the record somewhat inconsistent, course of execution proceedings. The executing court repeatedly adjourned the matter and issued notices to the seller, at times directing payment of the balance amount without consistently directing that it be deposited into court. It was only on 26 November 2020, well over three years after the decree, that the executing court expressly directed the purchaser to deposit Rs. 57.5 lakh that very day, in order to test his bona fides. The purchaser complied immediately, depositing the amount through six cheques.
Notwithstanding this, the seller applied for rescission of the contract under Section 28, contending that the balance amount had not been deposited within the one-month period fixed by the decree. The executing court accepted this argument and dismissed the execution proceedings, holding that the decree was conditional and that the stipulated period had long expired. The Madhya Pradesh High Court, in revision under Article 227 of the Constitution, upheld that view. Meanwhile, the seller’s own first appeal against the decree remained pending until 2023, when it was dismissed for non-prosecution, that is, for default, and not on merits.
Before the Supreme Court, the purchaser argued that the courts below had adopted an unduly technical approach and had failed to appreciate the surrounding circumstances, including the seller’s own conduct in refusing payment and challenging the decree, the intervening Covid-19 pandemic, and the executing court’s own inconsistent handling of the matter. It was contended that Section 28 expressly empowers courts to extend the time for deposit, and that rescission does not follow automatically merely because of delay. The seller, for his part, argued that a delay of over three years in making the deposit, despite repeated directions from the executing court, disentitled the purchaser to any equitable relief.
RE-DEFINING THE NATURE OF A DECREE FOR SPECIFIC PERFORMANCE
The Supreme Court reiterated the well-settled principle that a decree for specific performance is in the nature of a preliminary decree. Unlike an ordinary money decree, it does not conclude the court’s jurisdiction the moment it is passed. The court retains supervisory jurisdiction until the sale deed is executed and the transaction is fully completed. This principle becomes particularly important under Section 28 of the Specific Relief Act, which empowers the court to rescind the contract where the purchaser fails to comply with the terms of the decree, while simultaneously enabling the court to extend time for compliance where circumstances warrant such indulgence. The power under Section 28, on this reading, is not merely punitive; it is fundamentally discretionary and equitable in character, and it survives for as long as the sale deed remains unexecuted.
NO AUTOMATIC RESCISSION OF THE CONTRACT
One of the most important aspects of the judgment is the Court’s categorical clarification that non-payment or non-deposit within the stipulated period does not, by itself, automatically rescind the contract or the decree. The Court observed that many courts have tended to treat the timeline mentioned in decrees for specific performance as rigid and inflexible, an approach that, in the Supreme Court’s view, defeats the equitable nature of the remedy itself.
The Court drew a sharp distinction based on how the decree itself is worded. Where the decree expressly states that failure to deposit the amount within the prescribed period will result in automatic rescission of the contract or dismissal of the suit, that default clause takes effect on its own terms, and the decree becomes inexecutable the moment the period lapses without compliance. But where the decree contains no such stipulation, as was the position here, the mere expiry of time does not extinguish the decree-holder’s rights; the court instead retains discretion to examine, on the facts, whether the time for compliance should be extended. The distinction matters enormously in practice: it means the drafting of the decree itself, at the trial stage, effectively pre-determines how much room for equitable relief will later be available under Section 28.
POWER OF COURTS TO EXTEND TIME
The Supreme Court further clarified that an application seeking extension of time for deposit may be made either before or after expiry of the stipulated period. Importantly, the Court held that no specific form is prescribed for seeking such extension. Even a prayer seeking permission to deposit a delayed amount may itself be treated as a request for extension of time, and such requests may, in appropriate circumstances, even be made orally, particularly where the execution court is itself already dealing with issues concerning compliance with the decree.
This approach reflects a pragmatic understanding that procedural technicalities should not override substantive justice. The judgment also clarified the procedural position where the decree is passed by an appellate court: in such cases, the application for extension may still be made before the court of first instance, having regard to Section 37 of the Code of Civil Procedure, which deems certain courts to be the “court which passed the decree” for execution purposes. What is essential, the Court underlined, is that any such application, however informally made, must be treated as an application in the original suit, and numbered accordingly as an interlocutory application, rather than left floating as a mere request on the execution side.
EQUITY AS THE GOVERNING PRINCIPLE
Perhaps the most significant contribution of the judgment lies in its detailed articulation of the equitable considerations that should guide courts while exercising powers under Section 28. The Court observed that specific performance is inherently an equitable remedy. Therefore, while considering whether to rescind the contract or extend time for compliance, courts must carefully examine the conduct of the parties, the surrounding circumstances, and the overall balance of equities between them.
The Court emphasized that the objective should not be to punish delay mechanically. Instead, courts should assess whether the judgment-debtor can be adequately compensated for the delay by imposing appropriate terms and conditions on the decree-holder, additional costs, interest, or other conditions calibrated to the actual prejudice caused. This reasoning recognises that delays may occur for a variety of reasons, including the pendency of appeals, the conduct of the opposite party, external disruptions such as the Covid-19 pandemic, or genuine procedural complications beyond either party’s control. The discretion under Section 28 must accordingly be exercised judiciously, on the facts of each case, and not arbitrarily or as a matter of routine.
WILLFUL NEGLIGENCE VERSUS MERE DELAY: THE “POSITIVE REFUSAL” TEST
The Supreme Court also drew an important distinction between mere delay and willful negligence. The Bench clarified that while every single day’s delay need not be explained with the same rigour as an application for condonation under Section 5 of the Limitation Act, the court must still evaluate the overall conduct of the decree-holder through the litigation.
The decisive test, according to the Court, is whether the conduct of the decree-holder amounts to a “positive refusal” to complete his part of the contract, or otherwise discloses willful negligence; that is, whether it can logically be inferred from his conduct that he had no real intention of completing the transaction. Where the surrounding circumstances reveal deliberate inaction, abandonment of obligations, or such willful negligence, the court may legitimately exercise its power to rescind the contract. But where the delay does not indicate an absence of bona fides, and the purchaser remains willing and able to perform, rescission is not the appropriate course. This nuanced approach ensures that Section 28 functions as an equitable safety valve rather than as a rigid penal provision that operates automatically against any decree-holder who misses a date.
THE DOCTRINE OF MERGER: WHY THE PENDING APPEAL DID NOT ASSIST THE SELLER
A distinct doctrinal question the judgment resolves concerns the doctrine of merger. The seller’s first appeal against the trial court’s decree remained pending for six years, and was eventually disposed of in 2023, but for non-prosecution, not on merits. This raised the question of whether the trial court’s decree had, in the interim, “merged” into the appellate proceeding, such that the one-month timeline fixed by the trial court ceased to be the operative timeline.
The Supreme Court held that it had not. The doctrine of merger applies only where a superior forum has actually examined, and pronounced upon, the correctness of the order under appeal. An order dismissing an appeal for non-prosecution, that is, for the appellant’s own failure to pursue it, involves no such examination on merits, and Section 2(2) of the Code of Civil Procedure specifically excludes an order of dismissal for default from the definition of a “decree”. Consequently, there was, in law, no appellate decree for the trial court’s decree to merge into: the original decree of 3rd March 2017, together with its one-month timeline, remained the sole operative decree throughout. This finding mattered a great deal on the facts, because it meant that the purchaser’s obligation and the executing court’s continuing jurisdiction over it, could be traced without interruption back to the 2017 decree, notwithstanding the seller’s intervening but ultimately abandoned appeal.
IMPORTANCE OF TIME STIPULATIONS IN DECREES: ORDER XX RULE 12A CPC
The Court also examined the implications of Order XX Rule 12A of the Code of Civil Procedure, which requires courts to specify the period within which payment is to be made in decrees for specific performance concerning immovable property. The Court described this as a mandatory obligation, and went so far as to describe the present litigation as an object lesson for appellate courts on this very point: where a first appeal against a decree for specific performance is disposed of, whether by reversing a dismissal and granting the relief, or by dismissing the appeal on merits, the appellate court owes an independent duty to fix a fresh, clear timeline for payment. It is, after all, the appellate court’s own order that then becomes executable, and ambiguity at that stage simply relocates the dispute to the execution proceedings, years later.
Interestingly, the Court observed that where no timeline is prescribed at all, compliance must occur within a “reasonable period”, the content of which will depend on the facts and circumstances of each case. This observation is particularly relevant because many decrees, as a matter of drafting practice, have historically omitted clear timelines, leading to avoidable ambiguity during execution.
WHY THE SUPREME COURT INTERFERED
Applying these principles to the facts of the case, the Supreme Court found that both the executing court and the High Court had failed to exercise their discretion properly, and had approached the matter with what the Court itself termed a hyper-technical approach.
The Bench noted several factors that the courts below had overlooked: the executing court had itself repeatedly adjourned the matter and directed the purchaser to deposit the amount on future dates, rather than treating any single missed date as fatal; the seller’s own first appeal against the decree remained pending for several years before its eventual dismissal for non-prosecution; the Covid-19 lockdown intervened during the execution proceedings; and, tellingly, when the executing court finally did direct an immediate deposit in November 2020, to test the purchaser’s bona fides, the purchaser complied that very day, through six cheques. Neither court below had considered whether the seller could be adequately compensated in money for the delay, nor had either court squarely asked whether the purchaser’s conduct, taken as a whole, reflected an intention to abandon the contract.
On this analysis, the Supreme Court held that the dismissal of the execution proceedings was unsustainable, set aside the orders of the executing court and the High Court, and restored the execution application for fresh consideration, directing that the rival applications be treated and numbered as interlocutory applications in the original suit, to be decided by balancing the equities between the parties.
A CONTEMPORARY COUNTERPOINT: HABBAN SHAH V. SHERUDDIN
Read in isolation, Anand Narayan Shukla might suggest that Section 28 will almost always excuse a delay so long as the purchaser eventually pays. A decision of a differently constituted Bench: Justice Pankaj Mithal and Justice S.V.N. Bhatti, delivered within days of the present case, in Habban Shah v. Sheruddin, shows why that reading would be too broad, and helps to locate the true boundary of the doctrine.
In that case, an agreement to sell agricultural land, dated 19 October 2005, envisaged execution of the sale deed by 15th March 2006, against an advance of Rs. 80,000. After the seller failed to complete the transaction, the buyer sued for, and in October 2012 obtained, a decree for specific performance directing execution of the sale deed within three months of payment of the balance consideration. Unlike the purchaser in Anand Narayan Shukla, however, the buyer here neither deposited the balance within those three months, nor made any application, oral or written, seeking an extension, either before or promptly after the three-month period lapsed. The seller’s own appeal against the decree was pending, but no stay had been granted, and even the limited interim protection that did exist, restricted to alienation of the property, had lapsed before the three months were up. It was only years later, in a second execution petition filed in 2015, that the buyer sought and obtained permission to deposit the amount. The Punjab and Haryana High Court condoned this delay; the Supreme Court did not.
Reversing the High Court, the Court held that the buyer’s prolonged inaction, not merely the length of the delay, but the complete absence of any request for indulgence within a reasonable time of default, amounted to a failure to demonstrate continued readiness and willingness to perform, as distinct from the readiness and willingness he had shown at the time of obtaining the decree itself. On facts of that kind, the contract stood rescinded under Section 28 by the decree’s own default, and the Court held that a formal application by the judgment-debtor seeking rescission was not even a precondition for that consequence to follow: moving such an application is optional, not mandatory, and a court is not powerless to treat a contract as rescinded merely because no one asked it to say so in as many words.
Placed side by side, the two decisions are not in tension; they mark out opposite ends of the same equitable spectrum that Section 28 requires a court to assess. In Anand Narayan Shukla, the purchaser had issued a notice within days of the decree, gone to execution within months, repeatedly appeared before the executing court, and deposited the amount the very day the court asked him to; a record entirely inconsistent with an intention to abandon the contract, even though the actual deposit came years late. In Habban Shah, the buyer did none of this: he simply allowed the three-month period, and then several years more, to pass without ever asking the court for anything, until a second round of execution proceedings years later. The lesson for practitioners is that Section 28 does not measure delay by the calendar alone, it measures conduct, and in particular, whether the defaulting party ever engaged with the court to explain or cure the default. A litigant who is late but visibly diligent stands in a fundamentally different position from one who is simply absent.
KEY TAKE-AWAYS FOR LAW PRACTITIONERS
Read together, these decisions carry considerable practical importance for litigation involving specific performance of contracts, and suggest several concrete points of practice.
- The decisions prevent unjust enrichment by judgment-debtors who attempt to avoid execution merely by relying on procedural delay, despite the decree-holder’s continued and demonstrable willingness to perform.
- They reinforce that decrees for specific performance are not to be interpreted mechanically. Because such decrees concern the transfer of immovable property and inherently equitable obligations, courts must adopt a balanced, justice-oriented approach at every subsequent stage, including execution.
- They provide much-needed clarity on the procedural flexibility available under Section 28, recognising oral requests and implied prayers for extension of time and thereby reduce the scope for hyper-technical objections, while still requiring that any such request eventually be numbered and treated as an application in the original suit.
- For a decree-holder facing any obstruction or delay in payment, the safer course is never to remain silent. Anand Narayan Shukla succeeded substantially because his conduct, the prompt notice, the early execution application, the repeated appearances left a clear paper trail of continuous readiness and willingness. Habban Shah’s buyer failed for the opposite reason. Counsel advising a decree-holder in default should, at the first sign of difficulty, place an application on record, however informally worded, seeking extension of time, rather than waiting for the other side to move first.
- At the drafting stage, counsel appearing for a vendor or lessor would be well advised to seek an express default clause in the decree itself, one stating clearly that failure to pay within the stipulated period will result in automatic rescission or dismissal, since it is precisely the absence of such a clause that leaves the door open to the equitable, case-by-case extension jurisdiction discussed above. Conversely, counsel for a purchaser should resist the inclusion of so rigid a clause wherever possible.
- Where a first appeal against a specific performance decree is filed, practitioners should not assume that a subsequent dismissal for non-prosecution disturbs the trial court’s own payment timeline. As Anand Narayan Shukla clarifies, such a dismissal does not trigger the doctrine of merger, and the original decree and its original deadline continues to govern the parties’ obligations throughout the pendency of that appeal.
- Finally, the decisions strengthen judicial consistency by summarising the governing legal principles in a structured manner, thereby providing clear guidance to subordinate courts across the country on how the discretion under Section 28 and the mandatory duty under Order XX Rule 12A CPC to fix a payment timeline in the first place ought to be exercised.
CONCLUSION
The Supreme Court’s ruling in Anand Narayan Shukla v. Jagat Dhari marks an important reaffirmation of the equitable character of specific performance jurisprudence in India, consistent with a line of authority stretching back to Ramankutty Guptan v. Avara in 1994. The judgment decisively rejects the notion that delay in deposit automatically extinguishes rights under a decree for specific performance, and clarifies that Section 28 of the Specific Relief Act vests continuing jurisdiction in courts to balance equities, assess conduct, and determine whether extension of time or rescission would better serve the ends of justice. Habban Shah v. Sheruddin, decided at almost the same moment, is best read not as a departure from this approach but as its natural corollary: where a decree-holder’s conduct discloses no engagement with the court and no genuine intention to perform, the same equitable jurisdiction that rescues a diligent-but-delayed purchaser will not rescue one who has, in substance, walked away from the bargain. Taken together, the two decisions leave subordinate courts and practitioners appearing before them with a considerably more structured framework within which to plead, and to decide, applications under Section 28.
[1]Civil Appeal No. 7355 of 2026, decided on 8 May 2026; reported as 2026 INSC 463
[2]2026 INSC 451.
