Cancellation of Instruments | Specific Relief Act 1963

Cancellation of instruments is a remedy provided under the Specific Relief Act, which combines equity and law so as to provide justice to the aggrieved. There can be a void or voidable instrument, which can be sought to be cancelled at the option of the plaintiff. The remedy is dependent upon the discretion to be exercised by the court.

I. Introduction to Cancellation of Instruments under the Specific Relief Act 1963

Mentioned in Chapter 5 of Part 2 of the statute[1], the equitable relief of “Cancellation of Instruments” provides the plaintiff with an opportunity to come out of an instrument that can be void or voidable or potentially a source of mischief.

This ensures that the aggrieved person need not wait for the instrument to be executed against him, which could later be a source of injury or harm.

This remedy was also provided in the old act of 1877 under its then existing section 39. Under the present law of 1963, the remedy has been enhanced and encompasses a wider situation giving multiple options to the plaintiff. In the coming article, the nuances of this equitable remedy would be investigated.

II. Meaning: Cancellation of Instruments

Supreme Court has clarified the meaning of the word cancel. Jurisprudentially, it means “to destroy the force, effectiveness or validity of an order, a decision, to bring to nothingness.”[2] Thus, an instrument that was being entered into, its legal effect would be completely nullified with the remedy of cancellation of instruments.

III. Essential conditions

This remedy is the result of the discretion exercised by the court in the name of equity. Under Section 31(1) of the new act of 1963, this remedy has expiated as follows-

“Any person against whom a written instrument is void or voidable, and who has a 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.”

The above-mentioned provision encompasses three essential conditions on the fulfilment of which this remedy can be granted by the court-

1. The instrument must be void or voidable.
2. The plaintiff must have a reasonable apprehension of serious injury if the instrument is left outstanding.
3. Under the circumstances of the case, the court exercises its discretion and orders the instrument to be delivered up and cancelled.

IV. What is an Instrument?

Now, the question arises as to what type of document would constitute to be an instrument under the purview of section 31 of the Specific Relief Act. As per the judicial interpretation, the word “instrument” refers to un-adjudged instruments, which have not been adjudged upon by courts, tribunals or arbitral panels.[3] The logic is that such judgments or orders are public records and cannot be reduced to an option that can be cancelled.

Such an instrument can include various examples like that of a power of attorney,[4] an endorsement on a negotiable instrument, or a mortgage.[5] The exception of the judgment or order applies upon an order concerning a compromise entered upon between the parties because a compromise is in the nature of a contract.[6]

The two types of instruments that have been mentioned in the law are void and voidable. In the case of a void instrument, since it is non-est, a decree or order would not be necessary anyhow.[7] When it comes to the voidable instruments, the court is reposed with both the powers of rescission and cancellation, which are coextensive in nature, hence, even after granting rescission, the court can order for cancellation.[8]

One of the examples of such voidable instruments is a sham transaction.[9] If a lady enters into a sale transaction with a price consideration much below the market price would be considered a fraudulent transaction and hence liable to be cancelled.[10]

Reasonable Apprehension

Another major component of the eligibility of an instrument to be cancelled is a “reasonable apprehension by the person of causing a serious injury” if the instrument is left outstanding.[11] Such avoidance of the vexatious use of the instrument against the plaintiff is aimed at preventing confusion over the title of the plaintiff. It is also aiming at protecting the plaintiff from litigation in the future when the facts become difficult to prove.[12]

Now the question arises as to when such an apprehension amounts to exist. The question has to be answered based on the circumstances of the particular case. Hence a mere presence of speculation on part of the plaintiff will not amount to reasonable apprehension. There can be unknown or vague complication which can arise in the future but it will not amount to reasonable apprehension.[13]

But, this question would not arise if the instrument is itself patently illegal and on the face of it, it is clear that it is null and void.[14] The plaintiff needs to have a legal interest in the property to be eligible to file such a suit against the defendant.

In the landmark case of Iyyappa v. Ramalakshmamma, when the plaintiff had already sold the property to her nephew and then alleging cancellation of the same on the ground of forging, the court held that the plaintiff is not entitled to do the same since she has no legal interest in the property comprised in the sale deed.[15]

V. Nature of the remedy

The very language of section 31 of the act indicates the optional nature of the remedy that would be exercisable by the volition of the plaintiff. It is because of the usage of the phrase “may sue” in the section. Further, discretion is also vested with the court to deliver up and so cancel the instrument if it so deems fit.[16]

Thus, the nature of the remedy becomes permissive and not obligatory in nature.[17] The court is very well authorised to ignore an instrument which patently is illegal and a nullity.[18] The person claiming the right is very well authorised to ignore an altogether void instrument[19] and need not seek a declaration of cancellation and continue with the remedies already available.[20]

Adjudging the instrument as void or voidable, ordering it to be delivered up and cancelling it are the limits of the powers of the court.[21] The court can even cancel the instrument in part, which would be discussed later.[22]

It indicates towards the discretion that has to be exercised by the court guided by judicial principles and possible to be corrected at the appellate level, but the appellate court would not lightly interfere with the lower court’s decision.[23] But, when the lower court has not exercised the discretion at all, then the appellate court can be deemed to be justified so as to interfere in the decision of the lower court.[24]

The remedy is restricted by the Limitation Act, wherein the person claiming the right has to bring the suit within three years from the emergence of the cause of action.[25] Rajasthan High Court has categorically held that such a relief can be claimed form a civil court only and not a revenue court because the jurisdiction to try such matters lies with the civil courts only.[26]

VI. Locus Standi for Cancellation of Instruments

After studying the essentials of when the cancellation may be ordered, it becomes important to understand that who is vested with the right to seek the remedy of cancellation lawfully from the court. As per the settled position of the law, it is not only a party to the contract but also includes any person against whom the instrument is void or voidable.[27]

In the section, the word “person”, hence, becomes a wider term attracting even a person seeking a derivative title from a seller.[28] It would also include a legal heir, as a person having an interest in the property which is being subject to a compromise decree.[29] Thus, such a legal heir being an eligible “person” can very well file a suit for cancellation of such a compromise decree that is an “instrument” as explained above.

Even a recorded tenure holder who has a prima facie interest and possession of the land can very well file a suit for cancellation in a civil court.[30] What can he seek to get cancelled? It would a sale deed that could be obtained on the ground of fraud or impersonation.[31]

Under section 53 of the Transfer of Property Act, with regards to a fraudulent transfer, one creditor on behalf of other creditors can sue for cancellation of the sale deed executed by the debtor to delay, defraud or defeat the rights of the creditors.[32]

A person who does not have a clear title over the property cannot seek the remedy of the cancellation. In case, there is a cloud over the nature of the interest in the property, the proper remedy that can be sought is a declaration of own title or that the impugned document is not affecting the title.[33]

VII. Partial Cancellation of Instruments

Corresponding to the section 40 of the repealed 1877 act, as per section 32, a court in its discretion can very well cancel only a part of the instrument.[34] It means, in residue, the instrument can stand in a proper case where there is evidence of different rights or different obligations.[35] This means that the rights and obligations identified must be distinct and separable.[36]

A classic example of the partial cancellation that has been ordered by the courts is Ram Chandar v. Ganga Saran.[37] In this Allahabad High Court judgment, the plaintiff claimed an endorsement on a document to be an act of forgery and thus false, hence, liable to be cancelled. The court answered in affirmative and partially cancelled only the endorsement because it is a document in itself separate and distinct from the rest of the document.

The instrument has also been cancelled by the court when the subject of the same has been situated in separate jurisdictions like the land over which the indigo has to be grown under a sublease.[38] Another party, who is affected by the terms of the instrument, can also seek partial cancellation being a “person” under section 32 of the act.

In the landmark case of Chajulal v. Gokul,[39] the neighbour of an owner of the house, while mortgaging his property wrongfully stated in the deed that the wall adjoining the properties belonged to him and that he had a right of way over the owner’s property. Hence, the court considered the owner eligible to get such recitals in the deed cancelled as they specifically were affecting his title and interest.[40]

In the case of the joint owners, if the consent of all of them is not taken before sale of the joint property, then, those joint owners can get the sale deed cancelled to the extent of their shares.[41]

Doing equity for seeking equity

The maxim of “he who seeks equity must do equity” is inherent in section 33 of the 1963 act,[42] corresponding to section 41 of the old act. But the new provision of law is wide and expansive in nature. The old law did not put the obligation on the defendant who has successfully resisted a suit to restore the benefit and was limited to the compensation aspect, whereas the new law encompasses both the aspects and includes the provision to restore the benefit also.[43]

This provision would apply to a case where the plaintiff has not specifically asked for relief of cancellation also.[44] It would cover a void instrument also which is to be declared so through it does not require any such declaration.[45]

Power to order for restoration of benefit is coupled with the power to order for compensation. Compensation would include any payment made in a transaction which is later declared to be null and void. It would also include the payment of interest.[46] But no compensation can be allowed in cases where the contract was without consideration.[47]

VIII. Exception – Cancellation of Instruments

This remedy of cancellation would not be available in specific instances like-

1. A will, during the lifetime of the testator. It is because a will is an ambulatory document that is revocable at any moment thus would have no legal effect thereafter.[48]
2. Document executed by a person claiming title adverse to the one whose rights would be affected by that very document, for instance, a sale by a person claiming against the true owner.[49]
3. A sale or mortgage deed, where the consideration is yet not paid. It is because the proper remedy is a suit for recovery of the amount due.[50]

Conclusion

There is a discretion vested with the court that is to be exercised within the limits of judicial principles. The plaintiff is entitled to exercise his option of claiming this remedy and the court can also order for restoration of benefit along with compensation.

Thus, it is a unique example of equity imbibed within the law to balance the rights of both the claimant and the respondent without sacrificing the principles of jurisprudence and justice.

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References

[1] Specific Relief Act, 1963, § 31, No. 47, Acts of Parliament, 1963 (India).

[2] Nandi Infrastructure Corridor Enterprises Ltd. v. Election Commission of India, (2010) 13 SCC 334.

[3] Pratabmull Rameshwar v. KC Sethia, (1944) Ltd, AIR 1960 Cal 702; Dunia Lal Datta v. Nagendra Nath Datta, AIR 1982 Cal 163.

[4] Clara Aurora de Branganca v. Sylvia Angela Alvares, AIR 1985 Bom 372.

[5] Ram Chandar v. Ganga Saran, AIR 1917 All 155.

[6] Mohan Bai v. Jai Kishan, AIR 1988 Raj 22.

[7] Prem Singh v. Birbal, (2006) 5 SCC 353; Satyender Singh v. Gulab Singh, 2012 (129) DRJ 128.

[8] Mannu Singh v. Umadat Pande, (1890) ILR 12 All 523.

[9] Keshab Chandra Nayak v. Laxmidhar Nayak, AIR 1993 Ori 1.

[10] Mahiruddin Borbhuiya v. Rythun Nessa, AIR 1998 Gau 22.

[11] Specific Relief Act, 1963, § 31(1), No. 47, Acts of Parliament, 1963 (India).

[12] Chaganlal Haribhai v. Dhondu Chudaman Rangri, (1903) ILR 27 Bom 607.

[13] Jeka Dula v. Bai Jivi, AIR 1938 Bom 37.

[14] Umarannessa Bibi v. Jamirannessa Bibi, AIR 1923 Cal 362.

[15] Iyyappa v. Ramalakshmamma, (1890) ILR 13 Mad 549.

[16] Specific Relief Act, 1963, § 31(1), No. 47, Acts of Parliament, 1963 (India).

[17] Narsagauda Savantgauda Patil v. Chavagauda Adgauda Patil, AIR 1918 Bom 188.

[18] Fuli Bibi v. Khokai Mondal, AIR 1928 Cal 537.

[19] Khala Chinna Eswarareddi v. Kukkala Reddigari Venkatachellamma, AIR 1954 Mad 83.

[20] Prem Singh v. Birbal, (2006) 5 SCC 353.

[21] Specific Relief Act, 1963, § 31(1), No. 47, Acts of Parliament, 1963 (India).

[22] Id. at § 32.

[23] Firm Jai Narain-Babu Lal v. Firm Narain Das-Jaini Mal, AIR 1922 Lah 369.

[24] Vulley Mahomed v. Dattubhoy Hassam, (1900) ILR 25 Bom 10.

[25] Limitation Act, 1963, art. 59, No. 36, Acts of Parliament, 1963 (India).

[26] Khema v. Bhagwan, AIR 1995 Raj 94.

[27] Kapoorchand v. Municipal Board Sagwara, AIR 2006 Raj 160.

[28] Md Moorul Joda v. Bibi Raifunnisa, (1996) 7 SCC 767.

[29] Sneh Gupta v. Devi Sarup, (2009) 6 SCC 194.

[30] Shri Ram v. Ist Additional District Judge, (2001) 3 SCC 24.

[31] Id.

[32] Chajulal v. Gokul, AIR 1952 MB 168.

[33] Kamalakshi Amma v. Sangeetha, AIR 2012 Ker 180.

[34] Specific Relief Act, 1963, § 32, No. 47, Acts of Parliament, 1963 (India).

[35] Id.

[36] Kristodhone Ghose v. Brojo Gobindo Roy, (1897) ILR 24 Cal 895.

[37] Ram Chandar v. Ganga Saran, AIR 1917 All 155.

[38] Inder Pershad Singh v. Campbell, (1881) ILR 6 -7 Cal 474.

[39] Chajulal v. Gokul, AIR 1952 MB 168.

[40] Id.

[41] Karodi v. Dasai, AIR 2008 All 100.

[42] Gokeda Latcharao v. Viswanadhan Bhimayya, AIR 1956 AP 182.

[43] Specific Relief Act, 1963, § 33, No. 47, Acts of Parliament, 1963 (India).

[44] Mahommad Sardar v. Babu Gyanu Marathe, AIR 1952 Ngp 17.

[45] Muppudathi Pillai v. Krishnaswami Pillai, AIR 1960 Mad 1.

[46] Raja Ajit Singh v. Raja Bijai Bahadur Singh, (1884) 11 Cal 61.

[47] Ram Sarup v. Brij Mohan Lal, AIR 1938 Oudh 14.

[48] Hubert P. James v. Hussein Pakseema, AIR 1949 PC 151.

[49] Vemula Maniamma v. Allugada Venkatamma, AIR 1984 (NOC) 80 (Pat).

[50] Siddanna Bovi v. Hanumantha Reddy, AIR 1972 Mys 23.

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1. Specific Performance of Contracts
2. Preventive Relief under the Specific Relief Act 1963