On 6 May 2026, a two-judge Bench of the Supreme Court comprising Justice Pankaj Mithal and Justice S.V.N. Bhatti delivered a judgment in Habban Shah v. Sheruddin (2026 INSC 451) that every property litigator needs to internalise. The question before the Court was deceptively narrow: what happens to a decree for specific performance when the buyer, having won the suit, simply fails to pay the balance sale price within the time the decree itself fixed? The answer the Court gave — that the decree can die on its own, without the seller having to file a separate application to say so — reshapes how both sides of a specific performance dispute should behave the moment a court orders execution of a sale deed “on receipt of the balance consideration.”

The Facts: A 2005 Land Deal That Took Two Decades to Resolve

The dispute traces back to an agreement to sell dated 19 October 2005, under which Habban Shah agreed to sell 12 kanals and 19 marlas of agricultural land in village Shikarpur, Tehsil Tauru, District Mewat, Haryana, to Sheruddin at Rs. 5,00,000 per acre. Sheruddin paid Rs. 80,000 as earnest money, and the sale deed was to be executed on or before 15 March 2006. It never was, and Sheruddin sued for specific performance.

The trial court decreed the suit on 31 October 2012, directing that the sale deed be executed “on receipt of the balance consideration” within three months. That three-month window is the crux of the entire case. Sheruddin did not deposit the balance within it. His first execution petition, filed in March 2013, was dismissed in August 2014 for want of prosecution. He then filed a second execution petition in January 2015, and it was only in that second round — with the Executing Court’s permission — that he deposited Rs. 6,92,410 in October 2015, roughly three years after the decree required payment. Habban Shah resisted execution on the ground that the decree had, by then, become inexecutable. The High Court disagreed and allowed execution to proceed; Habban Shah appealed to the Supreme Court.

Specific performance decrees are rarely unconditional. Courts routinely direct that the sale deed be executed “on payment of,” or “on deposit of,” the outstanding price within a fixed period — a structure Order XX Rule 12A of the Code of Civil Procedure contemplates and which the Supreme Court, in this judgment, described as akin to a preliminary decree: the court “retains control over the decree even after the passing of the decree till the sale deed is executed or the decree is rendered inexecutable.” The seller’s obligation to convey and the buyer’s obligation to pay were treated as reciprocal, so that a default on one side could not be indefinitely absorbed as if the decree were an unconditional final order.

Two lines of Supreme Court authority framed the debate. One, represented by P.R. Yelumalai v. N.M. Ravi, (2015) 9 SCC 52, holds that a conditional, self-operative decree dismisses itself automatically the moment its condition is breached without a timely extension being sought. The other, represented by Balbir Singh v. Baldev Singh (Dead) through LRs, (2025) 3 SCC 543, confirms that the executing court is not rendered functus officio and retains jurisdiction under Section 28 of the Specific Relief Act, 1963 to extend time or to declare the contract rescinded. The Court had to decide which principle controlled where — as here — the buyer neither paid on time nor sought an extension within the stipulated period, but the seller also never formally moved a Section 28 application to have the contract declared rescinded.

What the Court Held

The Bench answered in the seller’s favour on every count that mattered:

  • A formal Section 28 application is not a precondition. The Court held that it is “not mandatory for a defaulting party” — here, the seller resisting execution — “to move an application under Section 28” before a court can treat the contract as rescinded; where non-compliance has already rendered the decree inexecutable, the court can recognise that fact directly, relying on Prem Jeevan v. K.S. Venkata Raman & Anr., (2017) 11 SCC 57.
  • Permission to deposit late is not the same as an extension. The Executing Court’s 2015 order allowing Sheruddin to deposit the balance did not retroactively cure his failure to pay, or to apply for more time, within the original three-month window. The Court followed P.R. Yelumalai on this point squarely.
  • The second execution petition being within limitation did not save the decree. Filing a fresh execution petition (governed by Article 136 of the Limitation Act, 1963) after an earlier one was dismissed for want of prosecution is procedurally permissible, but it cannot revive substantive rights that had already lapsed when the underlying deposit deadline passed.
  • Continuous readiness and willingness failed. Sheruddin’s three-year gap between the decree and actual payment, with no explanation and no application for extension filed within time, showed — in the Court’s words — that he was not “continuously ready and willing to perform,” which is fatal to a specific performance claim under Sections 16(c) and 20 of the Specific Relief Act.

The Court did draw a line against pure technicality, noting (citing Dr. Amit Arya v. Kamlesh Kumari, 2025 SCC OnLine SC 2886) that hyper-technical objections should not defeat substantive justice — but held that principle inapplicable here, because Sheruddin’s default was not a minor procedural slip but a multi-year failure with no attempt at timely correction.

Ultimately, the Court declared the 31 October 2012 decree inexecutable, held the underlying agreement to sell rescinded under Section 28, and directed the execution proceedings closed. As is characteristic of Section 28 jurisprudence, the Court did not leave Sheruddin empty-handed: it directed Habban Shah to refund the Rs. 80,000 earnest money with simple interest at 8% per annum from the date of receipt, or, failing refund, to convey half an acre of the land to Sheruddin (or a third party, with proceeds applied to the refund) within three months — a reminder that rescission under Section 28 is an equitable remedy that cuts both ways, quoting the maxim “he who seeks equity must do equity.”

Why This Matters for Practitioners

For decree-holders (buyers), the message is unambiguous: a decree conditioning execution on payment within a fixed period is not a formality to revisit at leisure. If funds are not ready, the safer course — confirmed by this ruling — is to apply for extension of time within the period the decree allows, not after it has lapsed. Waiting for the executing court’s later indulgence is a gamble this judgment says buyers will usually lose.

For judgment-debtors (sellers) facing a buyer who has gone silent past the deadline, the case is now a ready precedent: a formal, separate application invoking Section 28 is not a jurisdictional prerequisite to resisting execution. Sellers can raise inexecutability as a defence within the execution proceedings themselves, without a fresh suit or separate petition.

For both sides, the ruling reaffirms that Section 28 retains its discretionary, equitable character — a shorter delay or a credible, timely explanation could yield a different outcome. But where the delay is measured in years and no extension was sought in time, courts are now more clearly empowered to close the door.

Conclusion

Habban Shah v. Sheruddin does not change the text of the Specific Relief Act, but it clarifies how courts should treat conditional specific performance decrees at the execution stage. It reconciles the “self-operative dismissal” line from P.R. Yelumalai with the “continuing jurisdiction” line from Balbir Singh, landing on a practical rule: courts retain control over a conditional decree, but that control does not require a defaulting decree-holder’s obligations to be enforced indefinitely, nor does it require the other side to clear a separate procedural hoop to say so. For a dispute that ran from a 2005 agreement to a 2026 Supreme Court judgment, the ruling is also a quiet plea for diligence: rights delayed within the four corners of a decree can, eventually, be rights denied.

Frequently Asked Questions

Does this judgment mean every late payment in a specific performance case will kill the decree?

Not automatically. The Court’s holding rests on the buyer’s failure to both deposit the balance within the stipulated time and to apply for an extension within that same period. Courts retain discretion under Section 28 of the Specific Relief Act, and a buyer who promptly seeks extension with a credible reason may still be granted relief.

Was a separate application under Section 28 filed by the seller in this case?

No. That was precisely the point of contention. The Supreme Court held that such a formal application is not mandatory before a court can treat a conditional decree as inexecutable and the underlying contract as rescinded.

What happened to the buyer’s earnest money?

The Court ordered Habban Shah to refund the Rs. 80,000 earnest money to Sheruddin with simple interest at 8% per annum from the date it was received, or, if unable to refund it, to convey half an acre of the disputed land in its place.

Which earlier Supreme Court decisions did the Court rely on most heavily?

Primarily P.R. Yelumalai v. N.M. Ravi, (2015) 9 SCC 52, for the proposition that conditional decrees are self-operative, and Prem Jeevan v. K.S. Venkata Raman & Anr., (2017) 11 SCC 57, for the proposition that a formal rescission application is not mandatory. It distinguished Balbir Singh v. Baldev Singh, (2025) 3 SCC 543, and Dr. Amit Arya v. Kamlesh Kumari, 2025 SCC OnLine SC 2886, on facts.

What should a buyer who has won a specific performance decree do if they cannot pay on time?

File an application seeking extension of time with the executing court before the deadline in the decree expires, and be able to show a credible reason for the delay. This judgment indicates that seeking permission only after the deadline has passed is unlikely to be treated as a valid extension.

Does this ruling affect the limitation period for filing execution petitions?

Not directly. The Court accepted that Sheruddin’s second execution petition was filed within limitation under Article 136 of the Limitation Act, 1963. The decree failed not because the execution petition was time-barred, but because the underlying obligation to deposit within the decree’s own three-month window had already lapsed.

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