Introduction:

In a significant ruling reinforcing equitable principles governing decrees for specific performance, the Supreme Court of India has held that a marginal delay in depositing the balance sale consideration beyond the timeline fixed in a decree does not render the decree inexecutable, provided the buyer continues to demonstrate readiness and willingness to perform the contract. The judgment underscores that courts must look beyond rigid timelines and examine the conduct of the decree-holder, particularly whether there is any abandonment or positive refusal to perform contractual obligations.

The decision was rendered by a Bench comprising Justice Sanjay Karol and Justice Manoj Misra in Dr. Amit Arya v. Kamlesh Kumari, reported as 2025 LiveLaw (SC) 1240. The dispute arose from an agreement to sell executed in 2004, under which Dr. Amit Arya, the appellant-buyer, agreed to purchase a plot of land from Kamlesh Kumari, the respondent-seller, for a total consideration of ₹9.05 lakh. Litigation ensued when the sale deed was not executed, leading to a suit for specific performance.

The Trial Court decreed the suit in 2011, directing execution of the sale deed upon deposit of the balance consideration within two months. Though the decree was initially reversed in first appeal, the High Court, in second appeal in 2016, restored the decree for specific performance without prescribing any fresh timeline for deposit. Subsequently, the buyer initiated execution proceedings and deposited substantial portions of the balance amount with some delay beyond the period mentioned in the original trial court decree.

The High Court, in revision, held the decree inexecutable on the ground that the balance sale consideration was not deposited within the stipulated time and no formal extension was sought. This view was challenged before the Supreme Court, which was called upon to decide whether procedural delay alone can defeat substantive contractual rights, especially when readiness and willingness of the buyer stands judicially affirmed.

Arguments of the Buyer (Decree Holder):

The appellant-buyer argued that the delay in depositing the balance sale consideration was neither deliberate nor indicative of abandonment of the contract. It was contended that the buyer had consistently demonstrated readiness and willingness to perform his part of the agreement, a finding already recorded by the courts below while decreeing specific performance. The buyer emphasized that the execution petition was filed promptly after the High Court restored the decree in second appeal and that substantial payments were deposited soon thereafter, evidencing continued intent to complete the transaction.

A central submission was that the High Court, while restoring the decree in second appeal, did not prescribe any fresh time limit for deposit, and therefore, the decree could not be treated as inexecutable merely by mechanically applying the two-month period fixed by the Trial Court. Relying on the doctrine of merger, it was argued that once the appellate court affirmed the decree, the original decree merged into the appellate decree, and only the latter survived in law.

The buyer placed strong reliance on the recent Supreme Court decision in Ram Lal v. Jarnail Singh (2025 LiveLaw (SC) 283), where it was held that non-payment of the balance consideration within the time fixed by the Trial Court does not automatically amount to abandonment or rescission of the contract. The real test, it was argued, is whether the conduct of the plaintiff shows a positive refusal to perform, which was clearly absent in the present case.

It was further submitted that specific performance is an equitable relief, and courts must adopt a justice-oriented approach rather than a hyper-technical one. The buyer contended that denying execution on the ground of a short delay would unjustly reward the defaulting seller and defeat the very purpose of granting specific performance.

Arguments of the Seller (Judgment Debtor):

The respondent-seller argued that time was of the essence of the decree, and failure to deposit the balance sale consideration within the two-month period stipulated by the Trial Court rendered the decree unenforceable. It was contended that the buyer neither deposited the entire amount within time nor sought any formal extension from the court, thereby demonstrating lack of seriousness and diligence.

The seller maintained that readiness and willingness must be continuous, not only at the stage of filing the suit but also during execution. According to the respondent, the buyer’s failure to comply strictly with the timeline showed a lapse that went to the root of the decree. The seller relied on the principle that execution courts cannot go beyond the decree, and since the decree expressly required deposit within two months, non-compliance was fatal.

It was also argued that permitting delayed compliance without formal extension would undermine certainty in decrees and encourage laxity among decree-holders. The respondent supported the High Court’s view that in the absence of any express extension of time, the decree became inexecutable by efflux of time, and the executing court erred in overlooking this legal bar.

Court’s Judgment:

The Supreme Court decisively rejected the narrow and technical approach adopted by the High Court and restored the decree’s executability. Justice Sanjay Karol, authoring the judgment, held that a decree for specific performance cannot be treated as dead merely because of some delay in depositing the balance sale consideration, unless such delay is accompanied by conduct showing abandonment or refusal to perform the contract.

The Court reiterated the principle laid down in Ram Lal v. Jarnail Singh, emphasizing that non-payment within the stipulated period does not automatically rescind the contract. The true test, the Court held, is whether the plaintiff’s conduct amounts to a positive refusal to complete the transaction. Applying this test to the facts, the Court noted that the buyer had filed execution proceedings and deposited substantial amounts, which clearly evidenced continued readiness and willingness.

A crucial aspect of the judgment was the Court’s discussion on the doctrine of merger. The Court held that once the High Court, in second appeal, restored the decree for specific performance without prescribing any timeline, the decree of the Trial Court merged into the appellate decree. Consequently, the execution could not be defeated by relying on the original two-month period fixed by the Trial Court. The Court relied on Balbir Singh & Anr. v. Baldev Singh, reiterating that at any given point of time, only one decree can subsist in law.

The Court also found it significant that the delay was not inordinate. The execution petition was filed about 87 days after the expiry of the trial court timeline, and the actual delay in deposit was even shorter. Such a delay, the Court held, does not strike at the heart of the agreement, particularly when readiness and willingness had been judicially affirmed.

Importantly, the Court observed that denying execution in such circumstances would defeat substantive justice and convert equitable relief into a tool of oppression. Specific performance, being a discretionary and equitable remedy, requires courts to balance fairness rather than mechanically enforce timelines divorced from context.

Accordingly, the Supreme Court set aside the High Court’s order, allowed the appeal, and directed the Executing Court to proceed with execution of the decree in accordance with law. The ruling reinforces that procedural timelines cannot override substantive rights when equity, conduct, and justice point otherwise.