A agreed to sell house to B for Rs. 15 lacs. Rs. 10 lacs paid, possession given. A fails commitment. B gets specific performance decree with 2 months to pay balance Rs. 5 lacs. B fails to pay. A applies for rescission. Will A succeed?

The Factual Scenario in Legal Terms

Let us first map the facts onto the legal framework. A agreed to sell a house to B for Rs. 15 lakhs. B paid Rs. 10 lakhs and received possession — performing a substantial portion of his obligation under the contract. A then failed to perform his part — presumably refusing to execute the sale deed. B brought a suit for specific performance and obtained a decree directing A to execute the conveyance upon B paying the balance of Rs. 5 lakhs within two months. B failed to pay this balance within the stipulated period. A now applies for rescission of the contract.

This is precisely the factual matrix that section 28 was designed to address.

The Framework Under Section 28

Section 27 of the Act, which governs ordinary rescission of contracts, has a clear boundary — it applies to original proceedings, not to situations arising after a decree for specific performance. As the courts have firmly held, rescission post-decree for specific performance is governed exclusively by section 28, and is available only at the instance of the vendor or lessor — not the purchaser. Since A is the vendor, his application for rescission squarely falls within the ambit of section 28(1).

Section 28(1) lays down the essential condition: where a decree for specific performance of a contract for the sale of immovable property has been passed and the purchaser does not, within the period allowed by the decree (or such further period as the court may allow), pay the purchase money, the vendor may apply in the same suit — not by way of a separate suit — to have the contract rescinded. Sub-section (4) expressly bars a fresh suit; the application must be made in the same suit in which the decree was passed.

Will A Succeed?

The short answer is: A may succeed, but success is not automatic. Section 28 confers a discretionary power on the court — the word "may" is used advisedly, and the courts have consistently held that rescission under this section is not a matter of right upon mere proof of default. A clear and established case of default must be made out, and the court will weigh the equities before exercising this power.

That said, on the facts given, A's application is on strong footing:

• B is in possession of the property having been given possession at the time of the contract. He has had the benefit of possession throughout the litigation and continues to enjoy it, without having completed payment.

• B paid only Rs. 10 lakhs of Rs. 15 lakhs — a significant portion remains unpaid, and the decree specifically required him to pay the balance of Rs. 5 lakhs within two months.

• B did not seek an extension of time. The courts have held that the mere failure of the vendor to apply for rescission does not automatically extend the time for the purchaser to pay. The purchaser must independently apply for extension and satisfy the court. In Prem Jeevan v. K.S. Venkata Raman (2017 SCC OnLine SC 179), the Supreme Court held unequivocally that non-filing of an application for rescission by the vendor does not result in extension of time — the purchaser must move for extension, and the burden is on him to explain the default.

• B has not, on the facts, provided any explanation for failing to deposit the balance amount within the stipulated time.

The Court's Discretion and What It Will Consider

Even in the face of default, the court retains the power to extend time and decline to rescind the contract. The Supreme Court, in K. Kalpana Saraswathi v. P.S.S. Somasundaram (AIR 1980 SC 512), confirmed that the court may extend time for deposit even after expiry of the period originally fixed. However, the purchaser must apply for such extension and must offer a cogent explanation. The court is not required to extend time mechanically or as a matter of course.

What tips the balance in A's favour on these facts is threefold. First, B is in possession of the property — he has been enjoying the fruits of the contract — making the equity in A's favour all the more compelling. Second, no cause has been shown for B's failure to deposit the balance. Third, the longer B remains in possession without paying the balance, the greater the unjust enrichment — the court will not indefinitely leave the vendor in a position where his property is occupied and his purchase money remains unpaid. As the Supreme Court observed in Chanda v. Rattni (AIR 2007 SC 1514), when the decree holder failed to deposit the balance sale consideration even within the extended time, and no satisfactory explanation was given, rescission of the contract was justified.

Consequences If Rescission Is Granted

If the court orders rescission under section 28(1), the consequences flow automatically from section 28(2):

• The court shall direct B to restore possession to A, since B obtained possession under the very contract that is being rescinded. This is mandatory — the court has no discretion to withhold this direction.

• The court may direct B to pay A all rents and profits that accrued from the date B took possession until the date of restoration.

• The court may, if justice so requires, direct A to refund the earnest money or deposit paid by B — that is, the Rs. 10 lakhs paid.

This last consequence — the refund of Rs. 10 lakhs — is the section's built-in expression of the principle that he who seeks equity must do equity. The court, while rescinding the contract in A's favour, will simultaneously require A to restore the benefit he received, in keeping with section 30 which requires the party granted rescission to restore any benefit received and make such compensation as justice requires.

The Pivotal Qualification: No Separate Suit

One procedural point of practical importance must be stated. A cannot file a fresh suit for rescission. Section 28(4) specifically bars any separate suit for reliefs under this section. A must move the same court that passed the specific performance decree, by an interlocutory application in the original suit. The application must be filed within three years of the date on which B's default accrued — that is, from the date of the expiry of the two-month period stipulated in the decree, as governed by Article 137 of the Limitation Act, 1963.

In sum, A stands on solid legal ground. The court is likely to grant rescission, direct restoration of possession, and require A to refund the Rs. 10 lakhs paid by B — thereby restoring both parties, as far as possible, to the position they occupied before the contract was made.