The Supreme Court has ruled that a decree for specific performance of a property sale agreement cannot be cancelled automatically merely because the buyer delayed depositing the balance sale amount. The Court restored execution proceedings in a long-running land dispute from Madhya Pradesh and asked the trial court to reconsider whether the buyer deserved more time to comply with the decree.
Background Of The Case
The dispute arose from a 2011 agreement for sale of 3.75 acres of land in Satna district, Madhya Pradesh. According to the agreement, the land was to be sold at Rs.16 lakh per acre, and an advance of Rs.2.5 lakh had already been paid.
In March 2017, the trial court decreed the suit for specific performance and directed the buyer, Anand Narayan Shukla, to pay the remaining Rs.57.5 lakh within one month or deposit the amount before the court. The seller was then required to execute the sale deed.
The buyer later initiated execution proceedings, claiming the seller had refused to accept payment despite legal notice. However, the balance amount was ultimately deposited only in November 2020 after directions from the execution court.
The execution court later dismissed the proceedings, holding that the decree was conditional and the amount had not been deposited within the stipulated one-month period. The Madhya Pradesh High Court upheld that view.
A Bench of Justice Manoj Misra and Justice Manmohan examined Section 28 of the Specific Relief Act, which deals with rescission of contracts after a decree for specific performance.
The Bench observed that courts retain control over such decrees even after they are passed. It clarified that a decree for specific performance is “in the nature of a preliminary decree” and does not become automatically unenforceable merely because payment was delayed.
The Court said,
“There is no automatic rescission of the contract/decree for non-payment/non-deposit within the period stipulated by the decree.”
At the same time, the Court clarified that permission to deposit money after expiry of the deadline does not automatically wipe out the seller’s right to seek cancellation of the contract.
The Bench noted that while deciding whether to extend time or rescind the contract, courts must consider the conduct of both parties, surrounding circumstances, and whether the delay can be compensated through additional terms.
Importantly, the Court found that neither the execution court nor the High Court had examined whether the buyer’s conduct actually showed an intention to abandon the contract.
Setting aside the orders of both the execution court and the Madhya Pradesh High Court, the Supreme Court restored the execution proceedings and related applications back to the trial court for fresh consideration.
The Bench directed the court below to reconsider the issue of rescission of contract and extension of time in accordance with the legal principles laid down in the judgment.
The appeal was accordingly allowed.
Case Details:
Case Title: Anand Narayan Shukla v. Jagat Dhari
Case Number: Civil Appeal No. 7355 of 2026 (@ SLP (C) No. 14206 of 2025)
Judges: Justice Manoj Misra and Justice Manmohan
Decision Date: May 8, 2026
