Supreme Court Upholds Executing Court’s Decision To Extend Payment Time In Contract Case

Supreme Court Upholds Executing Court’s Decision To Extend Payment Time In Contract Case

In a recent ruling, the Supreme Court affirmed the decision of an Executing Court. It is to extend the deadline for a decree-holder to pay the balance amount due under a contract. The decision was made despite arguments. These include, such an application should have been addressed in the original suit rather than during execution proceedings.

The Supreme Court bench, comprising Justices JB Pardiwala and Manoj Misra, reasoned that since the decree-holder had consistently shown willingness to pay the remaining amount, and because the original decree did not specify a payment deadline or method, the Executing Court was within its rights to grant an extension. The Court highlighted that overriding the lower court’s decision on purely technical grounds would result in significant injustice to the decree-holder.

Background

The case originated from a specific performance suit. The trial court directed the appellant to execute a sale deed. It was in favour of the respondent (decree-holder) upon payment of the balance within two months. The respondent failed to make the payment within this period. Hence, they sought additional time from the Executing Court, rather than paying directly to the appellant. In response, the appellant filed an application under Section 28 of the Specific Relief Act, 1963 (SRA) to rescind the contract. However, the Executing Court dismissed the appellant’s application and allowed the decree-holder to deposit the remaining amount.

After the High Court rejected the appellant’s civil revision against the Executing Court’s decision, the matter was brought before the Supreme Court. The key issues considered were whether the Executing Court had jurisdiction to handle applications. It is for rescission of the contract or extension of time. Also, whether such matters should be addressed as part of the original suit.

Interpreting Section 28 of the SRA, the Supreme Court acknowledged that while such applications are typically handled within the original suit, the Executing Court may also decide these matters if it was the court that passed the original decree. The Court ruled that the Executing Court’s decision to allow the balance payment extension did not warrant interference. This is because it achieved substantial justice between the parties.

In making its decision, the Supreme Court referenced the precedent set in Chanda v. Rattni (2007), where the Court had held that a delay in payment is justifiable and the decree-holder is not at fault. The contract should not be rescinded, and additional time for payment may be granted.

Conclusion

The Supreme Court concluded that the appellants’ focus was primarily on challenging the decree rather than on fulfilling the contract. Thereby, justifying the Executing Court’s discretion in favour of the decree-holder. As a result, the appeal was dismissed. This reinforced the principle that substantial justice should take precedence over procedural formalities.