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Rectification, Rescission and Cancellation | 18 Oct 2023

Introduction

The law relating to specific performance enshrined under the Specific Relief Act, 1963 (SRA) is an
important facet of civil law.
SRA was introduced as an important piece of Legislation after duly replacing the prior Act of
1877.
The Act exclusively deals with equitable reliefs/remedies, namely:
Recovery of Possession
Specific Performance of Contracts of Agreements of sale
Rectification of Instruments
Cancellation of Instruments
Rescission of Contracts of Agreements of sale
Declaratory reliefs

Rectification of Instruments

Rectification means correction of an error in an instrument to give effect to the real intention of the
parties. Section 26 of SRA deals with the provision for rectification of instruments.
Section 26 - When instrument may be rectified —

(1) When, through fraud or a mutual mistake of the parties, a contract or other instrument in writing not
being the articles of association of a company to which the Companies Act, 1956 applies does not express their
real intention, then—

(a) either party or his representative in interest may institute a suit to have the instrument rectified; or

(b) the plaintiff may, in any suit in which any right arising under the instrument is in issue, claim in his pleading
that the instrument be rectified; or

(c) a defendant in any such suit as is referred to in clause (b), may, in addition to any other defence open to
him, ask for rectification of the instrument.

(2) If, in any suit in which a contract or other instrument is sought to be rectified under subsection (1), the court
finds that the instrument, through fraud or mistake, does not express the real intention of the parties, the court
may, in its discretion, direct rectification of the instrument so as to express that intention, so far as this can be
done without prejudice to rights acquired by third persons in good faith and for value.

(3) A contract in writing may first be rectified, and then if the party claiming rectification has so prayed in his
pleading and the court thinks fit, may be specifically enforced.

(4) No relief for the rectification of an instrument shall be granted to any party under this section unless it
has been specifically claimed:

Provided that where a party has not claimed any such relief in his pleading, the court shall, at any stage of the
proceeding, allow him to amend the pleading on such terms as may be just for including such claim.

Essentials to be Proved

There must be a mutual mistake or fraud.

That the instrument on that account did not truly express the intention of parties.
For mistake to act as a ground under Section 26 for relief must be mutual and not unilateral.
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In the case of Nawab Begum v. A. H. Creet (1905), the Allahabad High Court held that a mistake may
either be of fact or of law although the court of equity will not generally grant relief against a mistake
of law, except where the mistake results in an inequitable result.

Rescission of Contracts
The rescission is an equitable remedy and is dependent upon the discretion of the court. The Sections
27 to 30 of the SRA deal with the provision of rescission of contracts.
Section 27 - When rescission may be adjudged or refused

(1) Any person interested in a contract may sue to have it rescinded, and such rescission may be adjudged by
the court in any of the following cases, namely: —

(a) where the contract is voidable or terminable by the plaintiff;

(b) where the contract is unlawful for causes not apparent on its face and the defendant is more to blame than
the plaintiff.

(2) Notwithstanding anything contained in sub-section (1), the court may refuse to rescind the contract—

(a) where the plaintiff has expressly or impliedly ratified the contract; or

(b) where, owing to the change of circumstances which has taken place since the making of the contract not
being due to any act of the defendant himself, the parties cannot be substantially restored to the position in
which they stood when the contract was made; or

(c) where third parties have, during the subsistence of the contract, acquired rights in good faith without
notice and for value; or

(d) where only a part of the contract is sought to be rescinded and such a part is not severable from the rest of
the contract.

When Rescission may be Allowed

The Court may allow rescission in the following cases:

Where the contract is voidable or terminable by the plaintiff.

Where the contract is unlawful for causes not apparent on its face and the defendant is more to blame.

Loss of Right of Rescission

The relief of rescission is based upon a voidable contract and every voidable contract is valid till the
contract is avoided.
Relief therefore can be sought till the time the contract is in a voidable state.
Section 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.

As it is commonly said that one who seeks equity must do equity, therefore while decreeing rescission the
court might direct not only payment of compensation but can also order to restore the benefits
received if any.
A party seeking specific relief may pray that specific relief is not allowed and the contract be rescinded
instead.

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Cancellation of Instruments

Cancellation of Instruments is provided from Section 31 to 33 of the Act.

Cancellation of instruments means the nullification of a written document which is proof of a
transaction between the parties that are part of the transaction.
If there is an instrument, which is void or voidable due to some reason and a party to such an instrument
has enough reasons to believe that the said instrument if not cancelled may cause serious injury to him,
then such a person can file a suit with regards to the cancellation of such instrument.
Section 31 - When cancellation may be ordered -

(1) Any person against whom a written instrument is void or voidable, and who has reasonable apprehension
that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or
voidable; and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled.

(2) If the instrument has been registered under the Indian Registration Act, 1908, the court shall also send a
copy of its decree to the officer in whose office the instrument has been so registered; and such officer shall note
on the copy of the instrument contained in his books the fact of its cancellation.

Who may Cancel the Instrument

Section 31 empowers the court to cancel the instrument and not any administrative authority.
In Sri Lakha Granites v. Eklavya Singh (2011), the Rajasthan High Court held that it is not within the
powers of the Registrar of Partnership firm to declare that the partnership deed was null and void.

Partial Cancellation of Instruments

Cancellation of instruments can be done in the following ways according to Section 32 of SRA:

Complete cancellation where the court decides to cancel the whole instrument.
Partial cancellation where only a part of the instrument is cancelled out.

Power to Require Benefit or Compensation

The provisions with regards to the power of the Court, to require restoration of benefits received and
fair compensation which are supposed to be made when an instrument is cancelled are provided under
Section 33 of the SRA.
The primary aim of this section lies in serving justice to the participants of a particular
instrument/contract in case such is cancelled by the court.

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