HELD v. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd . (2019) 4 SCC 376 –

HELD: 1. The doctrine of merger operates as a principle upon a judgment being rendered by the Appellate Court. In the present case, once the Appellate Court confirmed the judgment and decree of the Trial Court, there was evidently a merger of the judgment of the Trial Court with the decision of the Appellate Court. Once the Appellate Court renders its judgment, it is the decree of the Appellate Court which becomes executable. [Para 17] [1047-B]

2.1 The High Court held that there was a failure on the part of the appellant to deposit the balance of the sale consideration within a period of two months from the date of the decree and as a consequence the decree had been rendered inexecutable by virtue of the provisions of Section 28 of the Specific Relief Act 1963. The High Court noted that of the total sale consideration of Rs. 8,35,000/- under the terms of the agreement to sell, the appellant in 2004 had paid an amount of Rs. 5,85,000/- while the balance of Rs. 1,15,864/-, consequent upon the partial decree in the suit had been deposited on 19 February 2015 after the dismissal of the first appeals on 17 January 2015. According to the High Court, the time frame for the deposit of the balance sale consideration was implicit in the decision of the Trial Court which had ordered the execution of the sale deed within two months from the date of the judgment upon deposit of the remaining sale consideration. The High Court held that the A B C D E F G H 1038 SUPREME COURT REPORTS [2019] 9 S.C.R. judgment and decree had not been stayed during the pendency of the first appeals and the mere filing of an appeal did not amount to a stay under Order 41 Rule 5 of the Code of Civil Procedure 1908. Hence, it was not open to the appellant to seek the execution of the decree on account of the lapse of the period stipulated in the decree for its execution. [Paras 7, 8] [1040-F-G; 1041-A-B; 1042-A-C]

2.2 The appellant had deposited an amount of Rs. 5,85,000/-. The partial decree of the Trial Court in the suit for specific performance was placed in issue before the Appellate Court. After the Appellate Court affirmed the decree, the decree of the Trial Court merged with that of the Appellate Court. Barely a month thereafter, on 19 February 2015 the appellant deposited the balance of the sale consideration. The appellant acted bona fide. The equities in a matter arising out of a decree in a suit for specific performance must weigh in his favour. The High Court impermissibly substituted the decree for specific performance with an order for refund of the sale consideration, beyond the earnest money of Rs. 2,00,000/- to the decree holder. The reasons which weighed with the High Court in doing so as well as its ultimate directions are unsustainable. [Para 21] [1050-D-F] Chandi Prasad v. Jagdish Prasad (2004) 8 SCC 724 : [2004] 4 Suppl. SCR 942; Sardar Mohar Singh v. Mangilal (1997) 9 SCC 217 : [1997] 1 SCR 297; Bhupinder Kumar v. Angrej Singh (2009) 8 SCC 766; Kunhayammed v. State of Kerala (2000) 6 SCC 359: [2000] 1 Suppl. SCR 538 ; Khoday Distilleries Ltd v. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd . (2019) 4 SCC 376 – relied on. Shanthi v. T D Vishwanathan Civil Appeal No. 10442 of 2011, 2018 SCC OnLine SC 2196 ; S Palanichamy Chettiar Firm v. C Alagappan (1999) 4 SCC 702 : [1999] 349; Ramankutty Guptan v. Avara [1994] 2 SCC 642 : [1994] 1 SCR 542 – referred to. 1 SCR A B C D E F G H SURINDER PAL SONI v. SOHAN LAL (D) THRU LRS . 1039 Case Law Reference [2004] 4 Suppl. SCR 942 relied on [1997] 1 SCR 297 relied on [2000] 1 Suppl. SCR 538 relied on (2019) 4 SCC 376 relied on (2009) 8 SCC 766 relied on Para 9 Para 9 Para 13 Para 13 Para 19 [1999] 1 SCR 349 referred to Para 20 A B CIVIL APPELLATE JURISDICTION: Civil Appeal No.5360 of C 2019 From the Judgment and Order dated 01.06.2018 of the High Court of Punjab and Haryana at Chandigarh in Civil Revision No. 3372 of 2015 A. Tewari, Ms. Eliza Bar, Shree Pal Singh, Advs. for the Appellant. Gopal Jha, Adv. for the Respondent. The Judgment of the Court was delivered by DR DHANANJAYA Y CHANDRACHUD, J.

#1. A learned Single Judge of the High Court of Punjab and Haryana allowed a Civil Revision instituted by the respondents and in the process dismissed the application of the appellant for the execution of a decree in a suit for specific performance. Accepting the objections of the judgment debtor, the High Court directed a refund of earnest money in substitution of the decree for specific performance.

#2. In 2006, the appellant instituted a suit for specific performance of an agreement to sell dated 8 December 2003. The appellant sought to enforce an agreement for the sale of land bearing 12 kanals and 9 marlas, representing a half share out of the land bearing Khewat Khatauni No. 565/525, Khasra No. 94/18 (7-8), 19(8-0), 20/1 (6-3), 21/1 (1-7) and 94/ 21/3 (2-0) situated in village Billa, Tehsil and District Panchkula. On 20 March 2012, the Civil Judge (Senior Division), Panchkula decreed the suit except for land bearing 2 kanals mentioned in the sale deed in exhibit- D3. Insofar as is material, the decree provided thus : D E F G H 1040 SUPREME COURT REPORTS [2019] 9 S.C.R. “Resultantly, a decree for possession by way of specific performance of the agreement to sell Ex. P1 dated 08.12.2003 is passed in favour of the plaintiff in respect of remaining suit land, i.e., except the land of 2 kanals mentioned in sale deed Ex. D3, on making balance sale consideration amount to the L.Rs. of defendant No.1, after deducting the consideration of aforesaid 2 kanals land. The L.Rs of the defendant No.1 are directed to execute the sale deed in respect of the remaining suit land within a period of two months from today in receipt of remaining balance sale consideration after deduction of consideration of 2 kanals land and in case of failure of the L.Rs. of defendant No.1 to do so, the plaintiff is entitled to get the sale deed executed and registered quo the aforesaid land through the Court agency.”

#3. Both the appellant and the respondent filed appeals against the judgment of the Trial Court. On 23 April 2012, the Additional District Judge, Panchkula issued notice in the appeal and on the application for stay filed by the respondent.

#4. On 15 June 2012, the appellant filed proceedings before the Civil Judge (Senior Division), Panchkula for seeking the execution of the decree passed in his favour, pending the first appeal.

#5. On 19 May 2014, the respondent filed objections to the execution petition.

#6. On 17 January 2015, the Additional District Judge upheld the judgment and order of the Trial Court while dismissing both sets of appeals filed respectively by the appellant and the respondent.

#7. On 23 February 2015, the executing court rejected the objections of the respondents to the execution of the decree and allowed the appellant’s execution petition. The respondent then filed a civil revision before the High Court which resulted in the judgment of the learned Single Judge dated 1 June 2018 by which the order of the executing court was set aside. The High Court held that there was a failure on the part of the appellant to deposit the balance of the sale consideration within a period of two months from the date of the decree and as a consequence the decree had been rendered inexecutable by virtue of A B C D E F G H SURINDER PAL SONI v. SOHAN LAL (D) THRU LRS. [DR DHANANJAYA Y CHANDRACHUD, J.] 1041 the provisions of Section 281 of the Specific Relief Act 19632. The High Court noted that of the total sale consideration of Rs. 8,35,000/- under the terms of the agreement to sell, the appellant in 2004 had paid an amount of Rs. 5,85,000/- while the balance of Rs. 1,15,864/-, consequent upon the partial decree in the suit had been deposited on 19 February 2015 after the dismissal of the first appeals on 17 January 2015. The High Court opined thus: “A perusal of the operative portion of the decree under execution shows that though the lower court has not specifically fixed any time for deposit of the amount of balance sale consideration but it has been provided in unambiguous terms that the sale deed is to be executed within two months from the date of judgment upon deposit of balance sale consideration.” 1 28. Rescission in certain circumstances of contracts for the sale or lease of immovable property, the specific performance of which has been decreed.— (1) Where in any suit a decree for specific performance of a contract for the sale or lease of immovable property has been made and the purchaser or lessee does not, within the period allowed by the decree or such further period as the court may allow, pay the purchase money or other sum which the court has ordered him to pay, the vendor or lessor may apply in the same suit in which the decree is made, to have the contract rescinded and on such application the court may, by order, rescind the contract either so far as regards the party in default or altogether, as the justice of the case may require. (2) Where a contract is rescinded under sub-section (1), the court— (a) shall direct the purchaser or the lessee, if he has obtained possession of the property under the contract, to restore such possession to the vendor or lessor; and (b) may direct payment to the vendor or lessor of all the rents and profits which have accrued in respect of the property from the date on which possession was so obtained by the purchaser or lessee until restoration of possession to the vendor or lessor, and, if the justice of the case so requires, the refund of any sum paid by the vendee or the lessee as earnest money or deposit in connection with the contract. (3) If the purchase or lessee pays the purchase money or other sum which he is ordered to pay under the decree within the period referred to in sub-section (1), the court may, on application made in the same suit, award the purchaser or lessee such further relief as he may be entitled to, including in appropriate cases all or any of the following reliefs, namely:— (a) the execution of a proper conveyance or lease by the vendor or lessor; (b) the delivery of possession, or partition and separate possession, of the property on the execution of such conveyance or lease. (4) No separate suit in respect of any relief which may be claimed under this section shall lie at the instance of a vendor, purchaser, lessor or lessee, as the case may be. (5) The costs of any proceedings under this section shall be in the discretion of the court. 2 Specific Relief Act A B C D E F G H 1042 SUPREME COURT REPORTS [2019] 9 S.C.R. A B C D E F G H

#8. According to the High Court, the time frame for the deposit of the balance sale consideration was implicit in the decision of the Trial Court which had ordered the execution of the sale deed within two months from the date of the judgment upon deposit of the remaining sale consideration. The High Court held that the judgment and decree had not been stayed during the pendency of the first appeals and the mere filing of an appeal did not amount to a stay under Order 41 Rule 5 of the Code of Civil Procedure 19083. Hence, it was not open to the appellant to seek the execution of the decree on account of the lapse of the period stipulated in the decree for its execution. The High Court has relied upon the provisions of Section 28 of the Specific Relief Act. It also observed that no application for the enlargement of time had been filed by the appellant. The correctness of this view falls for determination in the present appeal.

#9. Mr A Tewari, learned Counsel appearing on behalf of the appellant urged the following submissions : (i) The judgment and decree of the Trial Court dated 20 March 2012 has merged with the decree of the First Appellate Court4 dated 17 January 2015. The doctrine of merger applies whether the judgment of a subordinate court is reversed, modified or upheld by a court superior to it (Chandi Prasad v Jagdish Prasad5); (ii) The decree for specific performance is in the nature of a preliminary decree and the court passing it does not become functus officio (Sardar Mohar Singh v Mangilal6). Since the decree of the appellate court dated 17 January 2015 makes no mention of the transaction becoming time barred, limitation would commence from 17 January 2015; (iii) The appellate court did not impose a time limit and, in consequence, the decree dated 17 January 2015 became enforceable from the date on which it was issued; (iv) The power which is entrusted to the court under Section 28 of the Specific Relief Act is equitable in nature and it is open to