Section 28 Specific Relief Act: No Separate Application Needed for Rescission of Agreement on Buyer Default

In Habban Shah v. Sheruddin (2026 INSC 451), decided on May 6, 2026, the Supreme Court held that when a decree for specific performance requires the buyer to deposit the balance sale consideration within a stipulated period and the buyer fails to do so, the contract stands automatically rescinded under Section 28 of the Specific Relief Act, 1963. No separate application by the judgment debtor (seller) is required to seek rescission. The bench of Justice Pankaj Mithal and Justice S.V.N. Bhatti set aside the Punjab and Haryana High Court's order condoning the buyer's delay.

What Section 28 of the Specific Relief Act Provides

Section 28 deals with rescission of contracts for the sale or lease of immovable property where a decree for specific performance has already been granted. The provision states that if a purchaser or lessee does not pay the purchase money or other sum the decree directs within the period allowed, the vendor or lessor may apply in the same suit to have the contract rescinded. The court may then rescind the contract either against the defaulting party or altogether. The provision operates as a safeguard for sellers who, having lost at trial, are entitled to finality if the decree-holder (buyer) fails to perform within the court-stipulated timeframe.

Facts of the Case

The trial court had decreed specific performance in favour of the respondent-plaintiff, directing him to deposit the balance sale consideration within three months. The buyer failed to comply with this timeline. The seller argued that the failure to deposit within the stipulated period rendered the decree inexecutable and the contract rescinded by operation of law. The High Court, however, condoned the delay and allowed the buyer additional time to deposit the amount. The seller appealed to the Supreme Court, challenging the High Court's liberal approach to time extensions.

The Supreme Court's Ruling

The Supreme Court held that the buyer's failure to deposit within the stipulated period renders the decree for specific performance inexecutable. The non-compliance results in the suit being treated as automatically dismissed and the contract as rescinded under Section 28, even without a separate formal application by the seller. The Court emphasised that once a decree specifies a clear timeline for performance, that timeline carries the force of a judicial mandate and cannot be casually extended by condoning unexplained delays. The High Court's order was set aside.

Practical Implications for Property Disputes

This judgment strengthens the position of sellers in property litigation. Once a specific performance decree sets a deposit timeline and the buyer defaults, the seller no longer needs to file a separate application under Section 28 to seek formal rescission. The contract terminates by operation of the decree's own terms. For buyers, the message is clear: compliance with court-mandated timelines in specific performance decrees is not optional, and courts will not readily condone delays that effectively keep sellers in indefinite uncertainty about the fate of their property.