28. 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ordered him to pay, the vendor or lessor may apply in the same suit in which the decree is made, to have the contract rescinded and on suchapplication the court may, by order, rescind the contract either so far as regards the party in default or altogether, as the justice of the case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(2) Where a contract is rescinded under sub-section (1), the court-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 to the vendor or lessor of all the rents and profits which 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 vendee or the 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 relief’s, namely,-
(a) the execution of a proper conveyance or lease by the vendor or lessor;
(b) the delivery or 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 or lessee, as the case may be.
(5) The costs of any proceedings under this section shall be in the discretion of the court.
Section 28 empowers the Court to rescind the decree of specific performance of the contract of the sale or lease of immovable property..
In case of Narayan Gangadhar Deshpande v Rango Krishna Dixit, the Court held that the effect of this provision is to empower the Court which passed the decree for specific performance to rescind the contract and set aside the decree which it had passed earlier, if the successful plaintiff failed to comply with the terms of the decree, by making payment of the purchase money or other sums which the Court ordered him to pay. Thus, a suit once decreed, may be dismissed if the Court thinks it fit to do so.
Application for Recession– In the case of L Venkata Reddy v M. Anjappa(2009 AP), it was held by the court that the vendor or lessor must apply for rescission if the purchaser or lessee have failed to comply with the order of payment of the purchase money, and other sums ordered to be paid. Mere failure by the purchaser to extend the time for depositing balance price does not entitle the seller-judgment-debtor to rescind.
In case of Ramankutty Guptan v Avara (1994 SC), The application for rescission must be filed in the same Court as the suit itself, but where the decree for specific performance was sought to be executed in the Court in which the original suit was filed, an application for rescission before that Court could be treated as one one the original side, and not on the execution side, such an application might be numbered as an interlocutory application on the original side (1994 SC).
Extending time for depositing purchase price– Where the purchaser is directed by the Court to pay purchase money or other sum and he fails to deposit within the time permitted then he may request the Court to extend the time of depositing.
In Sham Kaur v Malagar Singh (2004 AIC), the Punjab and Haryana High Court held that Court has discretion to extend time under Section 28 of S.R. Act or under Section 148 of C.P.C.
No need to come to Court when the registering authority has power to cancel the sale deed.
In case of Yanala Malleshwari v Anathula Sayammam(2007 SC), under Section 7 and 8 of Transfer of Property Act, 1882 sale deed executed in favour of petitioner was cancelled by the registration authority. Division Bench held that Registration Act did not enable registering authority to conduct enquiry before registering cancellation deed, and, therefore, the dispute lies essentially in the realm of private law. Here in this petition moot question was whether registering authority could cancel the sale deed when requested by seller. It was held, that a sale of immovable property is a contract, which gives an individual civil right to the buyer, if such sale is in accordance with entrenched common law principles When sections 7 & 8 of TP Act mentioned that only person who was competent to contract and entitled to transfer property could transfer, any other transfer must be treated as void.
Likewise, if a transferee reserved power to himself to revoke transfer, such transfer/sale was not rendered void but transferor could even revoke sale deed without going to any court. Person, who has ex face right, can always approach registering authority, with a request to cancel a sale deed. Therefore, there was no prohibition operating on exercise of inherent power by the registering authority to cancel the sale deed. Hence, petition was dismissed.
Order of court after rescission [Section 28(2)]-
Where a contract is rescinded under Section 28(1), the court 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. However, where the purchaser or lessee deposited any money or other sum as directed by the court then he may be allowed any relief as the court thinks fit depending upon the circumstances of the case such as (a) the execution of a proper conveyance or lease by the vendor or lessor, or (b) the delivery of possession, or partition and separate possession, of the property on the execution of such conveyance or lease.
Relief to purchaser or lessee of Immovable property [Section 28(3)]-
It is important to mention that Section 28(3) talks about relief to purchaser or lessee of Immovable property. It provides that where the purchaser or lessee pays the purchase money or other sum which he is ordered to pay by the court then 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:
(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.
In case of Kantyattil Ummakulsumma v PT Vijiya Kumar (2015 Ker), the court held that for execution of proper conveyance by vendor and delivery of possession, the possession for the plaintiff is to pay the balance purchase money within the time mentioned in Section 28(1). There was failure on the part of the plaintiff purchaser to deposit the balance, sale consideration in Court. He made a false averment in the affidavit as to have paid the balance consideration. He played fraud on the Court. He became disentitled to relief of execution under Section 28(3). The vendor became entitled to get the contract rescinded.
No separate Suit [Section 28(4)]
The objective of Section 28 is to allow rescission of the contract, after the decree for specific performance has failed to provide the desired results. However, a separate suit has not to be filed to seek rescission of contract. Section 28(4), therefore, specifically provides that “No separate suit in respect of any relief which may be claimed under the Section (Section 28) shall lie at instance of the vendor, purchaser, lesser or lessee, as the case may be”. Significantly, main objective of Section 28(4) is to avoid multiplicity of the proceedings.
29. Alternative prayer for rescission in suit for specific performance.-
A plaintiff instituting a suit for the specific performance of a contract in writing may pray in the alternative that, if the contract cannot be specifically enforced, it may be rescinded and delivered up to be cancelled; and the court, if it refuses to enforce the contract specifically, may direct it to be rescinded and delivered up accordingly.
Significantly, vice versa is not permitted. Therefore, the prayer for rescission of contract or in alternate for a decree of specific performance is not permitted.
30. Court may require parties rescinding to do equity.-
On adjudging the rescission of a contract, the court may require the party to whom such relief is granted to restore, so far as may be, any benefit which he may have received from the other party and to make any compensation to him which justice may require.
Example- Rs. 2 Lac to B, an agriculturist, and by undue influence, induces B to execute a bond for Rs. 4 Lac with interest at 6 per cent per month. The Court A, money lender, advances may set the bond aside; ordering B to repay Rs. 2 Lac with such interest as may seem just.