The Supreme Court has ruled that a decree for specific performance of a property sale agreement can become unenforceable if the buyer fails to deposit the balance sale consideration within the time fixed by the court. Delivering a detailed judgment, the Court held that delay in payment without seeking extension of time can render the decree “inexecutable” and lead to automatic rescission of the contract.
The bench clarified that courts retain control over decrees for specific performance even after passing them, but parties seeking equitable relief must strictly comply with conditions imposed by the decree.
Background of the Case
The dispute arose from an agreement to sell agricultural land in Haryana between Habban Shah and Sheruddin in 2005. The seller had agreed to transfer about 12 kanals and 19 marlas of land for ₹5 lakh per acre and received ₹80,000 as advance money.
When the sale deed was not executed within the agreed period, Sheruddin filed a suit for specific performance. In 2012, the trial court decreed the suit and directed the seller to execute the sale deed within three months after receiving the balance consideration. The decree further allowed the buyer to seek execution through court if the seller failed to comply.
However, the buyer did not deposit the balance sale amount within the stipulated three months. Later, execution proceedings were initiated, which the seller challenged on the ground that the decree had become unenforceable due to non-compliance with the condition regarding payment.
Justice Pankaj Mithal and Justice S. V. N. Bhatti examined whether failure to deposit the balance consideration within the prescribed time would make the decree incapable of execution.
The bench observed that although the decree primarily directed the seller to execute the sale deed, it also imposed a reciprocal obligation on the buyer to deposit the balance amount within the same period.
“The decree imposes reciprocal obligations upon both the parties,” the Court noted while explaining that the buyer was expected to perform his part within the timeline fixed by the decree.
The Court rejected the argument that later permission granted by the executing court to deposit the amount automatically cured the delay. It held that there is neither automatic extension of time nor automatic condonation of delay in such cases.
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Referring to earlier precedents including P.R. Yelumalai v. N.M. Ravi and Balbir Singh v. Baldev Singh, the Court said a conditional decree for specific performance is “self-operative,” and failure to comply with its conditions may lead to automatic dismissal of the suit.
The bench further stressed that specific performance is an equitable and discretionary relief. A party seeking such relief must continuously demonstrate readiness and willingness to perform contractual obligations.
“The conduct of the plaintiff-respondent disentitles him the relief which was earlier granted,” the Court observed, pointing out that the buyer neither deposited the amount in time nor sought extension within the stipulated period.
Allowing the appeal, the Supreme Court set aside the Punjab and Haryana High Court’s order as well as the executing court’s decision that had permitted continuation of execution proceedings.
The Court held that the decree for specific performance dated October 31, 2012 had become inexecutable because of failure to deposit the balance sale consideration within three months.
The contract was treated as rescinded under Section 28 of the Specific Relief Act.
At the same time, the Court directed the seller to refund the advance amount of ₹80,000 along with 8% simple interest from October 19, 2005 till repayment. If the seller fails to refund the amount, he has been permitted to sell half an acre of the land to arrange payment within three months.
Case Details
Case Title: Habban Shah v. Sheruddin
Case Number: Civil Appeal arising out of SLP (C) No. 14479 of 2025
Judges: Justice Pankaj Mithal and Justice S. V. N. Bhatti
Decision Date: May 6, 2026
