The Supreme Court of India recently issued a crucial directive regarding appellate courts' obligations under Order XX Rule 12A of the Code of Civil Procedure (CPC), 1908. It stated that appellate courts must specify a time limit for depositing the balance sale consideration in cases concerning specific performance involving the sale or lease of immovable property.
Order XX Rule 12A of CPC mandates that a decree for specific performance must specify the period within which the purchaser or lessee must deposit the purchase money or any other required sum. The Supreme Court highlighted that failure to specify such a period by an appellate court creates legal complications and potential injustices.
The Court reiterated that, under the doctrine of merger, any decree passed by a trial court merges with the appellate court’s order when an appeal is filed. Consequently, if the appellate court fails to specify a time limit for depositing the balance sale consideration, the decree cannot be deemed in executable merely due to a delay in deposit.
“Where an appeal is filed against the decree passed by the trial court and the appeal is disposed of, the appellate court should specify time to deposit the balance sale consideration. It is too much to say that since the trial court had granted two months' time to the decree holder to deposit the balance sale consideration, the same time period would apply even to the decree drawn by the appellate court. The appellate court owes a duty to specify the time period.”
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Case Background: Ram Lal v. Jarnail Singh (Deceased) Through LRs & Ors.
The ruling came in the case of Ram Lal v. Jarnail Singh (Deceased) Through LRs & Ors. The appellant (original plaintiff) had obtained a trial court decree for the specific performance of an agreement to sell agricultural land. The trial court directed the plaintiff to deposit the balance sale consideration within two months of the decree date. However, when the First Appellate Court affirmed the trial court’s decree in 2015, it failed to specify a deadline for the deposit.
The plaintiff deposited the balance sale consideration in 2019—four years after the appellate court's ruling. The High Court later declared the decree in executable due to the delay. However, the Supreme Court overruled this, emphasizing that courts must consider various factors, including the plaintiff’s bona fide intentions and any equities created during the interregnum period.
The Supreme Court ruled that the delay in depositing the balance sale consideration does not automatically render a decree in executable unless there is wilful negligence or abandonment of the contract by the decree-holder. The Court exercised its discretion under Section 28 of the Specific Relief Act, 1963, stating that time extensions should be granted judiciously.
“This discretion has to be exercised judiciously, keeping in mind various factors like the bona fide nature of the decree holder, reasons for failure to deposit the balance sale consideration in time, length of delay, and equities created in favor of the judgment debtor.”
Furthermore, the Court held that since the balance sale consideration of Rs. 4,87,000/- had already been deposited in 2019, the High Court should not have interfered with the execution of the decree. It ordered the respondents (judgment debtors) to receive the amount along with 9% simple interest for the period of delay.
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Key Takeaways from the Ruling:
Appellate Court’s Obligation: The appellate court must specify the time frame for depositing the balance sale consideration.
Doctrine of Merger: The trial court’s decree merges with the appellate court’s ruling; thus, the appellate court’s decree becomes the operative one.
Judicial Discretion in Time Extension: Courts have the discretion to extend the deadline for depositing the balance sale consideration if the delay is justified and does not indicate abandonment of the contract.
Impact on Execution of Decrees: A decree remains executable if the balance sale consideration is deposited within a reasonable period, even if there is some delay.
Interest on Delayed Payments: The Court directed the decree holder to pay 9% simple interest to the respondents for the period of delay.
Case Title: RAM LAL VERSUS JARNAIL SINGH (NOW DECEASED) THROUGH ITS LRS & ORS.
