Upholding Precedent on Section 28 SR Act and Binding on Subordinate Courts in Civil Property Disputes
Summary
| Category | Data |
|---|---|
| Case Name | FA/120/2022 of KAILASH MALGHANI Vs R. C. Lalwani |
| CNR | CGHC010236972022 |
| Date of Registration | 22-08-2022 |
| Decision Date | 02-09-2025 |
| Disposal Nature | DISMISSED |
| Judgment Author | Per Sachin Singh Rajput, J. |
| Concurring or Dissenting Judges | None |
| Court | High Court of Chhattisgarh at Bilaspur |
| Bench | Hon’ble Smt. Justice Rajani Dubey & Hon’ble Shri Justice Sachin Singh Rajput |
| Precedent Value | Binding on subordinate courts |
| Overrules / Affirms | Affirms trial court order |
| Type of Law | Civil Procedure & Specific Relief |
| Questions of Law | Whether Section 28 of the Specific Relief Act, 1963 allows rescission of a specific-performance decree when the purchaser fails to pay the balance consideration or prove readiness and willingness within the time fixed by the decree. |
| Ratio Decidendi |
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| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon |
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| Facts as Summarised by the Court | The parties executed an agreement for sale dated 29-10-2012 (2610 sq.ft. + 1121 sq.ft. + 420 sq.ft.) at ₹2,500/ sq.ft.; plaintiff paid ₹10 lacs earnest money. The trial court decreed specific performance on 09-05-2016 with deadlines (notice by 30 June; sale deed by 31 July 2016). The purchaser allegedly failed to appear on 30 July 2016 and later relied on a possession dispute. Defendants rescinded under Section 28 SR Act; trial court allowed rescission and ordered refund. The High Court affirmed. |
| Citations | FA No. 120 of 2022; CNR CGHC010236972022 |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Chhattisgarh |
| Persuasive For | Other High Courts considering Section 28 SR Act applications |
| Follows |
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What’s New / What Lawyers Should Note
- Confirms that a specific-performance decree is preliminary; courts retain jurisdiction under Section 28 SR Act to rescind for purchaser default.
- Emphasises continuous demonstration of readiness and willingness, including documentary proof of financial capacity.
- After-thought defences (e.g., possession disputes not raised at the outset) cannot excuse non-performance.
- Courts will scrutinise correspondence (notices/letters) and registrar records to assess actual attempts to execute the sale deed.
- Highlights the interplay of Section 28 SR Act with equitable considerations and value escalation of property over prolonged litigation.
Summary of Legal Reasoning
- Nature of Decree: A decree for specific performance is preliminary; suit continues post-decree.
- Section 28 SR Act: Empowers the decree-granting court to rescind the contract if the purchaser defaults in payment or performance within the decree-fixed or extended time.
- Discretion and Equity: Rescission under Section 28 is discretionary, based on conduct, facts, and justice.
- Readiness & Willingness: Buyer must prove capacity (financial means) and genuine intent throughout (Acharya Swami, His Holiness Ganesh Dassji).
- Assessment of Correspondence: Letters dated 24-06-2016, 18-07-2016, 31-08-2016 show inconsistent defences; defendants appeared, purchaser defaulted.
- Precedents: Bhupinder Kumar clarifies court’s continued jurisdiction and equitable reach; Shenbagam endorses fairness where property value escalates.
- Conclusion: Trial court’s rescission decision under Section 28 was a proper exercise of discretion given purchaser’s failure.
Arguments by the Parties
Petitioner (Plaintiff)
- No evidence of avoidance; always ready and willing to perform decree.
- Possession dispute with Ashok Kumar Chaturvedi prevented execution.
- Defendants assured performance post-dispute but instead sought rescission.
- Seeks setting aside rescission or extension of time to deposit balance consideration.
Respondent (Defendants)
- Plaintiff did not appear on 30 July 2016 despite notice and presence of vendors.
- Lacked funds; gave false possession-dispute excuse.
- Complied with Section 55 TPA; provided all documents and notices.
- Entitled to rescission under Section 28 SR Act; earnest money refunded.
Factual Background
- On 29 October 2012, parties entered an agreement for sale of three diverted land parcels (total 4,151 sq.ft.) at ₹2,500/ sq.ft.; plaintiff paid ₹10 lacs earnest money.
- Trial court on 09 May 2016 decreed specific performance, fixing deadlines: vendor’s notice by 30 June 2016; plaintiff to fix sale-deed date by 20 July; execution by 31 July 2016.
- Defendants sent notices (24 June, 31 August 2016) with documents; plaintiff requested registry attendance on 30 July and then relied on an after-the-fact possession dispute.
- Defendants applied under Section 28 SR Act for rescission; trial court allowed and ordered earnest-money refund.
- High Court dismissed appeal, affirming rescission due to purchaser default.
Statutory Analysis
- Section 28, Specific Relief Act, 1963: Empowers the decree-granting court to rescind a specific-performance contract if purchaser defaults on payment or performance within decree-fixed or court-extended time; rescission relief is discretionary, guided by equity.
- Sub-sections (1)–(5): Outline rescission procedure, restoration of possession, rents and profits, refund of earnest money, and costs discretion.
- Section 55, Transfer of Property Act, 1882: Requires vendor to do all acts necessary to enable sale-deed registration; court found defendants complied.
- Preliminary Decree Doctrine: Specific-performance decree does not extinguish contract; suit remains pending until final conveyance.
Alert Indicators
- ✔ Precedent Followed – Affirms established principles on Section 28 SR Act and readiness/willingness requirements.
Citations
- 2022 SCC OnLine SC 1863 (Kishor Ghanshyamsa Paralikar)
- (2005) 9 SCC 262 (Polymat India)
- 2024 SCC OnLine SC 2338 (Ishwar thr. LRs)
- (2009) 8 SCC 766 (Bhupinder Kumar v. Angrej Singh)
- 2023 SCC OnLine SC 184 (P. Shyamla v. Gundlur Masthan)
- AIR 2018 SC 5098 (Vijay Kumar v. Om Prakash)
- (1982) 1 SCC 525 (Babu Lal v. Hazari Lal Kishori Lal)
- AIR 1983 Mad 169 (H.G. Krishna Reddy & Co. v. M.M. Thimmaiah)
- 2022 SCC OnLine SC 71 (Shenbagam & Ors. v. KK Rathinavel)
- (1996) 4 SCC 526 (His Holiness Acharya Swami Ganesh Dassji v. Sita Ram Thapa)