Ramankutty Guptan vs Avara

K.S. Paripoornan, J.—The Petitioner in E.A. No. 331 of 1988 in E.P. No. 32 of 1962 in O.S. No. 98 of 1978 (Defendant in the suit), Sub Court, Ottappalam, is the revision Petitioner. The Respondent herein is the Respondent in E.A. No. 331 of 1988 (decree holder-Plaintiff in the suit). The Defendant-revision Petitioner filed E.A. No. 331 of 1988 before the Sub Court, Ottappalam u/s 28 of the Specific Relief Act, 1963 to rescind the contract, dated 16th January 1976. The Court below dismissed the petition, by order dated 28th February 1990. The Petitioner in the Court below (Defendant in the suit) has come up in revision.

I heard counsel for the revision Petitioner, Mr. V.R. Venkatakrishnan and also counsel for the Respondent, Mr. V.P. Mohankumar and Mr. Gopikrishnan.

A few facts are necessary to resolve the controversy in this case. The revision Petitioner-Defendant had entered into an agreement with the Respondent-Plaintiff on 16th January 1976, Ext. A-1 to sell immovable property. The Respondent filed O.S. No. 98 of 1978 for specific performance of the contract. The trial Court (Sub Court, Ottappalam) dismissed the suit. In appeal by the Respondent as A.S. No. 213 of 1979, the District Court, Palakkad decreed the suit and ordered specific performance, judgment dated 27th January 1982. The Plaintiff was given time of one month (till 27th February 1982) to deposit the entire amount. The Plaintiff deposited the amount only on 10th March 1982. The Defendant filed S.A. No. 527 of 1982 D before this Court on 23rd May 1982. The second appeal was dismissed on 5th January 1988. The Plaintiff initiated proceedings in execution and filed E.P. No. 32 of 1982. The Defendant-revision Petitioner filed E,A. No. 331 of 1988 and pleaded for rescission of the contract. It was stated that, as per the terms of the decree in A.S. No. 213 of 1979, which was affirmed in S.A. No. 527 of 1982, the Respondent ought to have deposited the balai artiount due to the Defendant on or before 27th February 1982 and it was not so done. Since there was non-compliance by the Defendant Respondent, the Petitioner is entitled to rescind the contract, u/s 28 of the Specific Relief Act, 1963.

The Respondent herein, the Plaintiff, opposed the application. He contended that the application cannot be entertained by the execution Court. He also contended that the Defendant is not entitled to the relief u/s 28 of the Specific Relief Act, since the deposit should be held to have been made within time; it was made long before the dismissal of the second appeal on, 5th January 1988, which is the effective decree in the case. Deposit was made on 10th March 1982.

The Court below held that the appeal and the execution are continuation of the suit and so, there is no merit in the plea that the application filed u/s 28 of the Specific Relief Act in the execution Court is not maintainable. The Court below also held that the decree passed in A.S. No. 213 of 1979 merged in the decree passed by this Court is S.A. No. 527 of 1982 and so, the period allowed for payment of purchase money should be calculated from the date of the final appellate decree. It was further held that when a decree passed by the lower Court is taken in appeal and the appellate Court decides the matter, the decree of the appellate Court must be taken to have incor porated the terms of the decree of the Court of first instance and the period allowed for payment of purchase money should be calculated from the date of appellate decree. It was held that whenever there is an appeal, the decree of the Court of first instance merges in the appellate decree. In this view, It was held that the Respondent-Plaintiff need deposit the sum only after one month from the date of disposal of the second appeal. Since the deposit was made long before that date, as early as 10th March 1982, it was in time and the revision Petitioner cannot put forward the plea that he is entitled to rescind the contract, It is from the aforesaid order passed by the Court below in E.A. No. 331 of 1988, dated 28th February 1990, the Petitioner in the Court below has come up in revision.

Section 28 of the Specific Relief Act, 1963 is to the following effect:

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 on 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 of the vendor or lessor of all the rents and profits which may 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 vendor or lessee as earnest money or deposit in connection with the contract.

(3) If the purchaser 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, lessee, as the case may be.

(5) The costs of any proceedings under this section shall be in the discretion of the Court.

The earlier law is contained in Section 35 of the Specific Relief Act, 1877. There is substantial difference between the two provisions. It is based on the ninth report of the Law Commission, Section 28 of the Specific Relief Act, 1963 has been enacted with appropriate changes or modifications.

The sole ground, on which the relief prayed by the revision Petitioner u/s 28 of the Specific Relief Act has been refused, is based on the principle of merger of the decree of the lower appellate Court in the dccree passed by the High Court in second appeal. The Court below has assumed that whenever a judgment or decree of the first Court is taken in appeal and decision is rendered by the appellate Court, there is merger. There is merger of the decree passed by the lower Court in the appellate Court decree. I am of the view that this is an over-statement of the law. The doctrine of merger is not one of universal application. It does so only for certain purposes, viz. for the purposes of computing the period of limitation for execution of the decree or for computing the period of limitation for an application for final decree in a mortgage suit, etc. The law on the point has been admirably stated by a Constitution Bench of the Supreme Court in State of U.P. v. Mohammed Nooh AIR 1958 S.C. 86 at page 95 para 13. This decision came up for consideration in a later Constitution Bench of the Supreme Court. The point decided in para 13 of the judgment was not doubted or deviated in the later decision, S.S. Rathore Vs. State of Madhya Pradesh, . In State of Madras Vs. Madurai Mills Co., Ltd., , it was held that the doctrine of merger is not a doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by the inferior authority and the other by a superior authority, passed in an appeal or revision, there is a fusion or merger of two orders irrespective of the subject matter of the appellate or revisional order and the scope of the appeal or revision contemplated by the particular statute. The application of the doctrine depends on the nature of the appellate or regional Order in each ease and the scope of the statutory provisions conferring the appellate or revisional jurisdiction. The earlier decision, rendered in Mohammed Nooh''s case AIR 1958 S.C. 86 at page 95 para 13 was relied on by the Court in the above decision. The same principle has been reiterated by this Court in a Full Bench decision in Thambi v. Mathew 1987 (2) KLT 848.

It is bearing this above principles in mind, we have to examine whether the direction to make the deposit within one month by the lower appellate Court (District Court, Palakkad) on or before 27th February 1982 is satisfied when the deposit was made on 1Oth March 1982, long before this Court retidered the decision in S.A. No. 527 of 1992 on 5th January 1988. In other words, the deposit was made after the expiry of the time fixed by the lower appellte Court, District Court, Palakkad, but lbng before the final decree was passed in the case, in S.A. No. 527 of 1982. it should be remembered that this Court dismissed S.A. No. 527 of 1982 and affirmed the decree of the lower appellate Court in A.S. No. 213 of 1979. It is the decree of the District Court, Palakkad in A.S. No. 213 of 1979 that flxed the date for depositing the amount, on or before 27th February 1982. The question is whether the period of one month fixed in A.S. No. 213 of 1979 is to be calculated from the date of the decree in A.S. No. 213 of 1979 or from the appellate decree, i.e., S.A. No. 527 of 1982?

On this point, the decisions of the Courts are not uniform. The High Court of Bombay and the Chief Court of Punjab ana the Judicial Commissioner''s Court at Tripura, took the view that the period should be calculated from the date of the appellate decree. This was based on the ground that the lower Court''s decree is merged in the decree of the appellate Court. It was so held notwithstanding the fact that the appellate or final decree did not enlarge the period originally fixed. On the other hand, the High Courts of Madras, Allahabad, Madhya Pradesh, Rajastan, Nagpur and Travancore-Cochin took the view that though the lower Court''s decree is merged in the appellate decree, in the absence of express provision extending the time, the appellate decree should be taken as confirmed, as it stands in the lower Court''s decree. It cannot be held by implication, that the period fixed by the lower Court''s decree is extended. See Chitaley-Code of Civil Procedure Vol. 2 (10th Edn.) page 526.

Delivering the judgment of the Full Bench in Joseph John v. Varkey Thomas AIR 1957 T.C. 954, M.S. Menon, J., as he then was, stated the law thus:

Where the appellate decree confirms the decree of the first Court and is silent regarding the time fixed for payment by the Court of first instance, a further period would not be given for payment from the date of the appeal decree and the party in default is not entitled to reckon the time from the date of the appellate decree.

I would respectfully adopt the above observations as my own. In the light of the preponderance of judicial opinion and in particular the decision of the Full Bench of the Travancore-Cochin High Court in Joseph John�s case AIR 1957 T.C. 94. the deposit should have been made by the Respondent-Plaintiff on or before 27th February 1982. In this case, while dismissing S.A. No. 527 of 1992 affirming the judgment and decree in A.S. No. 213 of 1979, this Court did not enlarge the time to make the deposit. In this view of the matter, I should hold that the� deposit made by the Respondent-Plaintiff is not in conformity� with the decree passed in A.S. No. 213 of 1979. It was not in time. The plaintiff also did not apply to the Court for extending the period for making the deposit Admtttedly, there is default in depositing the amount due to the revision Petitioner. The Court below was in error in applying the doctrine of merger to the instant case and in holding that the deposit made by the Respondent within one month from the date of disposal of the second appeal is in time and so, the revision pentioner cannot so that he is entitled to rescind the contract. On this point, the reasoning and conclusion of the Court below are erroneous in law. I hold so.

If the matter has remained thus, the revision has to be allowed. The Court may have to hold that the Defendant-revision Petitioner is entitled to rescind the contract u/s 28 of the Specific Relief Act, 1963. But, counsel for the Respondent-Plaintiff assailed the reasoning and conclusion of the Court below in holding that the application filed in the execution Court is competent. The decree holder-Respondent had urged in the Court below that the application filed by the revision Petitioner is not maintainable m the execution Court. The Court, executing the decree, was incompetent to entertain the plea to rescind the contract. The Court below adverted to Section 28 of the Specific Relief Act and held that the appeal and the execution are continuation of the suit and so, there is no merit in the said plea. I am afraid that the Court below has completely misunderstood the scope and impact of Section 28 of the Specific Relief Act. In a case where a decree for specific performance is passed and the purchaser has failed to pay the purchase money within the time ordered by the Court, the vendor may apply in the same suit, in which the decree is made, have contract resci�ded.

A Court, executing the decree, should execute the decree as it stands. It cannot go behind the decree. It is only the Court which passed the decree (original side of the Court) that can rescind the contract. It is that Court, which made the decree in the suit, that can afford the relief. So, on a plain reading of Section 28(1) of the Specific Relief Act, it is clear that the application to rescind the contract should be filed in the Court which Can rescind the contract. It is the Court which rendered the decree that can rescind the contract. In other words, it that Court which passed the decree that can entertain the plea to rescind the contract.

The analogous provision (Section 35) in the Specific Relief Act, 1877 came up for consideration before the Madras High Court in Abdul Shaker Sahib v. Abdul Rahiman Sahib and Anr. AIR 1923 Mad 284. Delivering the judgment, Schwabe, C.J. stated the law thus:

...After the original judgment for specific performance it is the definite practice in England that all consequential relief by reason of any party failing to comply with the terms of the judgment must be sought by application to the Court by which the judgment was passed. Such applications are made by motion in the action showing that in England after the original judgment the action is by no means ended but remains under the control of the same Court. If the defeult is made by the purchaser in payihg the purchase money, there are several remedies open to the Vendor. (1) He may on motion in the action obtain an order fixing a definite time and place for payment and delivery over of the conveyance and title deed and can, after the expiration of that time, levy execution for the amount, if not paid. (2) He may apply by motion in the action for an order rescinding, not the judgment but the contract, and in order to Succeed in such a motions, he has to satiSfy the Court that there has been a positive refusal to complete, which it may be observed in the present ease, the Respondent has certainly not proved. A similar right is given by Section 35 of the Specific Relief Act of l877. (3) He can enforce his unpaid vendor�s lien for the purchase money and costs. (4) He can by motion in the action obtain an order for sale by the Court of the property when he will be at liberty to bid. The proceeds of the sale are paid into Court and the vendor gets his contract price, interest and costs and the purchaser the balance, if any. Where the vendor is in default, the remedies arc even more varied.

...In my judgment this decree is in the nature of a preliminary decree, the driginal Court keeping control over the action And having full control over the action and having full power to make any just and necessary orders therein, including in appropriate cases the extension of the time.

Wallace, J., agreeing with the learned Chief Justice, stated the law thus:

...As I read that section, it lays down that when a decree for specific performance of a contract of sale has been passed and the purchaser makes default in payment of the sum which the Court has ordered him to pay, the vendor may either file a fresh suit for rescission of the contract or may, in the specific performance suit itself, apply to the Court to rescind the contract. It is perfectly clear that the contract is not determinable or determined by the mere failure to comply with the terms of the decree. It is not determined until the Court orders that it is determined....

The above decision was cited with approval in later decisions, viz. Akshayalingam Pillai Vs. Avyambalammal and Others, and CV. RM. Ramaswami Chettiar and Others Vs. AK. RM. M. CT. Chidambaram Chettiar, . In Narayan Gangadhar Deshpande and Ors. v. Rango Krishna Dixit AIR 1960 Mys. 175(9), Hegde, J., as he then wan, adverting to Section 35 of the Specific Relief Act, 1877, stated the law thus:

...In view of this provision, a right is conferred on the unsuccessful Defendant in a suit for specific performance to apply to the Court which passed the decree and that in ''the same case'', to rescind the contract and the Court may so rescind the contract. The true effect of this provision is that the Court which passed the decree for specific performance, is given power to rescind the contract and consequently set aside the decree which it had passed earlier if the successful Plaintiff fails to comply with the terms of the decree.

In Ibrahim Shariff v. Masthan Shariff 1967 (2) Andhara weekly Reporter 60 at page 65, Chandrasekhara Sastry, J. elucidated the law thus:

...Clause (c) of Section 35 refers to decrees for specific performance of a contract of sale, or of a contract to take a lease and it specifies what may happen if the purchaser or lessee makes default in payment of the purchase money or other sums which the Court has ordered him to pay. The last paragraph of Clause (c) provid s that the Court may by order in the suit in which the decree has been made and not complied with rescind the contract either so for as regards the party in default or altogether as the justice of the case may require. Therefore, it is clear that it is only the Court which passed the decree may rescind the contract. It implies that the Court may extend the time also in the suit itself. In my view, the executing Court cannot extend the time granted by the Court which passed the decree. It is well settled that an executing Court has to execute the decree as it is and cannot in any manner alter the terms of the decree.

There are observations to the above effect in Maruti Vishnu Kshirsagar Vs. Bapu Keshav Jadhav, at 619 and Bisun Prasad Mishra Vs. Kamla Kant Jha and Others, at 325 para 10.

The Supreme Court had occasion to consider the scope of Section 35 of the Specific Relief Act, 1877 and Section 28 of the Specific Relief Act, 1963 in Hungerford Investment Trust Ltd. v. Haridas Mundhta AIR 1972 S.C. 1826. In that case, there was an application dated 21st March 1967 to rescind the agreement. it was contended that the application was not maintainable. In paragraphs 21 to 24 of the judgment, the law on the subject has been stated in detail. It was held that a Court, which passed the decree for specific performance, retains control over the decree even after the decree has neen passed and, as the Court retainacd control over matter in dispute, despite the dectee, it open to the Court, when, it was alleged that the party moved against has positively refused to complete the contract, to entertain the application and order rescind of the decree after the allegation Was proved. It is implicit from the said decision that the Court which is entitled to order resdission of the contract and the decree, is only the original Court which passed the decree. It cannot be done by the execution Court.

In the light of the above, the Court below was in error in holding that the application filed by the revision Petitioner (Defendant) u/s 28 of the Specific Relief Act is maintainable and can be entertained by the the execution Court. I hold that E.A. No. 331 of 1988 filed by the revision Pititioner is incompetent. The execution Court should execute the decree as it stands. It cannot go behind the decree. It has no jurisdiction to rescind the contract or annul the decre. I hold that the conclusion of the Court below is justified, though not for the reasOn gicen by it. The execution application was rightly dismissed.

The revision is dismissed. No costs.