Rectification, cancellation and declaratory decrees

1. Rectification of instruments: section 26

Where, through fraud or a mutual mistake of the parties, a contract or other instrument in writing (other than the articles of association of a company) does not express their real intention, then:

• either party or his representative in interest may sue to have the instrument rectified (section 26(1)(a));
• the plaintiff may, in any suit in which a right under the instrument is in issue, claim in his pleading that it be rectified (section 26(1)(b));
• a defendant in such a suit may, in addition to any other defence, ask for rectification (section 26(1)(c)).

The court may in its discretion direct rectification so far as it can be done without prejudice to rights acquired by third persons in good faith and for value (section 26(2)). The rectified contract may be specifically enforced if the party asks for it (section 26(3)). Relief must be specifically claimed, but the court may allow an amendment of the pleading at any stage (section 26(4)).

Three conditions follow from the text.

• There was a prior agreement, and the document fails to record it. The court rectifies the document, not the bargain; it will not make a new contract for the parties.
• The mistake must be mutual, shared by both parties. A unilateral mistake is not enough unless the other party's fraud caused it.
• The real intention must be clearly proved, because the court is departing from the written words.

Example: A agrees to sell B plot No. 12; the sale deed by a clerical error describes plot No. 21. Either party may have the deed rectified to say plot No. 12.

2. Cancellation of instruments: sections 31 to 33

Section 31(1): any person against whom a written instrument is void or voidable, and who has a reasonable apprehension that if left outstanding it may cause him serious injury, may sue to have it adjudged void or voidable. The court may in its discretion so adjudge and order it to be delivered up and cancelled. If the instrument is registered, the court sends a copy of the decree to the registering officer, who notes the cancellation in his books (section 31(2)).

Section 32: where an instrument evidences different rights or obligations, the court may cancel it in part and allow the rest to stand.

Section 33 makes the party who gets relief do equity:

• on cancelling an instrument, the court may require the plaintiff to restore any benefit he received from the defendant and to make compensation (section 33(1));
• where a defendant successfully resists a suit on the ground that the instrument is voidable, the court may require him to restore the benefit (section 33(2)(a));
• where the defendant resists on the ground that the agreement is void because he was not competent to contract under section 11 of the Contract Act, the court may require him to restore the benefit to the extent that he or his estate has benefited (section 33(2)(b)).

Section 33(2)(b) matters for the minor's agreement topic. Mohori Bibee v. Dharmodas Ghose (1903, Privy Council) refused to order a minor to repay the loan under the old section 41 of the 1877 Act. The 1963 Act now allows restitution against a minor to the extent of the benefit he actually received.

Void and voidable instruments. A voidable instrument stands until it is set aside, so a suit for cancellation is needed. A void instrument does not legally exist, and its victim may ignore it, though he may still sue to remove it if it creates a cloud. Prem Singh v. Birbal, 2006 INSC 280, (2006) 5 SCC 353: a suit to cancel a voidable instrument must be filed within three years under Article 59 of the Limitation Act, but a void document need not be set aside, and Article 59 does not apply to it.

3. Declaratory decrees: section 34

Any person entitled to any legal character, or to any right as to any property, may sue any person denying, or interested to deny, his title to that character or right. The court may in its discretion declare that he is so entitled, and the plaintiff need not ask for any further relief.

Ingredients:

• the plaintiff is entitled to a legal character (status as a son, a wife, an heir, a member of a caste, a citizen) or to a right in property;
• the defendant denies, or is interested in denying, that character or right;
• the declaration asked for is of that character or right;
• the plaintiff, if able to seek further relief, has sought it (the proviso).

The proviso. No court shall make a declaration where the plaintiff, being able to seek further relief than a mere declaration of title, omits to do so. A plaintiff out of possession who sues only for a declaration of title, without claiming possession, will fail. The reason is to prevent a multiplicity of suits: if the plaintiff can get complete relief in one suit, he must ask for it. The Explanation adds that a trustee of property is a person “interested to deny” a title adverse to the beneficiary.

Anathula Sudhakar v. P. Buchi Reddy, 2008 INSC 395, (2008) 4 SCC 594, ties sections 34 and 38 together: where the plaintiff's title is in serious dispute, a suit for a bare injunction is not enough; he must sue for a declaration of title with the consequential relief of injunction or possession.

4. Effect of a declaration: section 35

A declaration is binding only on the parties to the suit, persons claiming through them, and, where a party is a trustee, the persons for whom he would be trustee. It is not a judgment in rem; strangers are not bound. A declaratory decree is not executable in itself, because it orders nothing, which is another reason the proviso requires the consequential relief to be claimed.

5. Problem

A is in possession of land. B, his cousin, gets his name entered in the revenue records and tells villagers the land is his. A sues for a declaration that he is the owner. B says the suit fails for want of further relief.

Issue. Is a bare declaration maintainable when the plaintiff is in possession?

Law. Section 34 allows a declaration against a person denying the plaintiff's title. The proviso bars it only where the plaintiff was able to seek further relief and did not.

Application. A is in possession, so possession is not further relief he can claim. B has denied A's title and acted on it by changing the records, which may make an injunction against interference available as consequential relief. If B has not threatened to disturb possession, the declaration alone is complete relief.

Conclusion. The suit is maintainable. A would be wise to add a prayer for perpetual injunction under section 38 so that nothing is left out. Had A been out of possession, a bare declaration would fail under the proviso.

How this is examined

Mostly short notes: “Rectification of instruments”, “Cancellation of instruments”, “Declaratory decrees”. For section 34 always deal with the proviso and section 35. A 10-mark question may ask for the difference between rectification and cancellation, or for the conditions for a declaratory decree. Link section 33(2)(b) to the minor's agreement answer; examiners reward it.