CANCELLATION OF INSTRUMENTS
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.
Essential of relief of cancellation
Section 31 provides a relief based upon the protective justice and upon the idea of “quia time” (for fear) that any person, against whom a written instrument is void or voidable, may request the court to cancel it.
1. Which instrument can be cancelled:
Under Section 31 written instruments which are void or voidable can be cancelled. Two expression which need clarification are: written instruments and void and voidable. Instrument as such is not defined under this Act but is defined under Section 2(14) of the Indian Stamp Act, 1899. It provides that “instrument includes every document by which any right or liability is or purports to be created, transferred, limited, executed, extinguished or recorded. ”
Under section 31 of this Act suit can be filed for cancellation when such document is void or voidable. A decree, an award a Will, a promissory note, and various types of documents fall within the provisions of the Section.
Contract and relief of cancellation: Under Section 26 relief of rectification can be claimed regarding contract and other written instruments. Therefore, moot question is whether relief of cancellation can be regarding the written instruments and not regarding the contracts. Written instrument is a wide expression which includes written contracts also. It means relief of cancellation cannot be claimed regarding oral contract.
2. Who can claim the relief: An important question is who can claim the relief of cancellation? Whether only the parties to the contract or someone else can also the relief? The expression used under Section 31 is written instrument is void or voidable provided other conditions are fulfilled.
The Apex Court of India has answered this question beautifully in Md. Moorul Joda v. Bibi RAifunnisa, 1996 SC where it stated that the word ‘person’ in this Section is wide and includes person seeking derivative title from a seller.
Example 1: Karta of joint Hindu Family enters into a contract to sell the JF property at very low price of Miss B. here other coparcener can claim relief of cancellation as written contract is voidable to them and their interest would be affected if it remains outstanding and unchallenged.
Example 2: A, representing that the tenants on his land were all at will, sells it to B, and conveys it to him by an instrument, dated the Ist January, 2010. Soon after that day, A fraudulently grants to C a lease of party of the lands, dated the Ist October, 2009, and procures the lease to be registered under the Registration Act. B may obtain the cancellation of this lease.
Example 3: A conveys land to B, who bequeaths it to C and dies. Thereupon D gets possession of the land and produces a forged instrument stating that the conveyance was made to B in trust for him. C may obtain the cancellation of the forged instrument.
However, where A sued B for possession of certain land under Section 6 of the Specific Relief Act, and pending the suit he sued B for cancellation of a deed of gift under which B claimed title to the land, there was nothing to prevent the Court from decreeing A’s second suit, for the question in the second suit, the only question in the first suit being whether A was dispossessed otherwise than in due course of law.
3. Grounds of relief of cancellation: The ground of making such request is reasonable apprehension that such instrument, if left outstanding may cause him serious injury. Hence, where there is no apprehension of injury to the plaintiff no suit can be filed under this Section as was also held by the Court in Chaganlal v. Dharmdas.
Reasonable apprehension: It is important to note that reasonable apprehension is to be decided with reference to the circumstances of the case with which the court deals with.
In case of Quardricon Pvt. Ltd. v. Bajrang Alloys Ltd., 2008. It was held that actual injury or an attempt to injure is not necessary to maintain an action under Section 31 of the Specific Relief Act. A question whether or not there is a reasonable apprehension of serious injury must depend upon the facts of each case.
No relief of cancellation: A party cannot sue under this Section if he has no interest in the subject matter of the instrument and can have no reasonable apprehension that, if left outstanding, the instrument may cause him serious injury.
Discretion of the court to grant relief of cancellation:
The words ‘may sue’ shows that it is discretion of the court to grant relief of cancellation. In Valley v. Dallubhoy, it was held that the relief under Section 31 cannot be claimed as a matter of right. It is discretion of the court to grant relief and the court gives due regard to the conduct of the parties. The court may ignore a void instrument, which is nullity.
Cancellation and alternate relief: however, it is not compulsory that where instrument is void or voidable the party to it should always seek relief of cancellation. He can claim alternate relief.
In Prem Singh v. Birbal, 2006 SC the Apex Curt of India held that if he is out of possession, still he need not seek cancellation, and may sue for possession. The Delhi High Court in Sanjay Kaushish v. D.C. Kaushish, 1992, stated that a person affected by a void instrument can very well ignore the same and file a suit seeking substantive relief which may be available to him without seeking any declaration that the document is void or any consequential relief of its cancellation. Therefore, where an instrument is altogether null and void, the plaintiff may ignore it if he is in possession of property, and need not bring a suit for cancellation. It was held by the Delhi High Court in Rambharosa Lal v. Binda Devi, 1956, that where a document is a forgery or fictitious, it must be declared and set aside before seeking other reliefs, like possession, in which case the plaintiff may sue for declaration that the instrument is void, and seek possession; and may also, if he so likes, sue for cancellation.
If an instrument is voidable, a plaintiff in possession may sue for a declaration that it is not binding on him, or may sue to have it set aside, or cancelled, but if he is out of possession, he will claim to have the sale set aside, for possession.
Moreover, if the plaintiff has not prayed for possession in a suit for cancellation, nor has taken leave to file a separate suit for that relief, a subsequent suit for possession is barred.
Relief of rescission under Section 27 and Relief of Cancellation under Section 31
The main difference between relief under Section 27 and under Section 31 is that under Section 27 relief of Rescission can be claimed when the contract is void or voidable. Significantly this relief can be claimed regarding the contract only and not to other instruments whereas Section 31 talks about relief of cancellation and is applicable to any written instrument which is void or voidable.
In the case of Bai Asmalbai v. Esmailji Abdulali, the relief under Section is wider than that available under Section 27 – its application is not restricted to contracts, but also extends to other instruments like gifts and Wills and also to void instruments. However, the Sections enable a person to sue, though he is not a party to the contract or instrument.
Point of Difference – Section 27 – Section 31
1. Relief of rescission or cancellation – It covers relief of rescissions.- It covers relief of cancellation
2. Whether granted in contract or written instrument – This relief is granted only in case of contract.- This relief is granted in case of any written instrument which includes written contracts also. Therefore, in case of voidable written contracts the plaintiff can claim relief or rescission or cancellation. However, in case of void agreements only relief of cancellation can be claimed.
3. Ground for granting relief – Ground for granting the relief is voidable contract – Ground for granting the relief is that written instrument is void or voidable.
4. Reasonable apprehension of serious injury – The plaintiff is not required to prove such reasonable apprehension – This relief is granted where it is proved by the plaintiff that he has reasonable apprehension that if such instrument is left outstanding it will cause serious injury to the plaintiff.
No relief where both are parties to fraud or illegality or are in Pari Delicto:
The Apex Court of India in case of Viswanatha Pillai v. K.M. Shanmugham Pillai, held that the Court may deny cancellation where both parties are party to the illegality or fraud. Thus, where A entered into a partnership with B and advanced money for the purchase of a lorry which was in the name of the defendant, it was held the plaintiff, was not entitled to the return of the money by way of equitable relief or on the doctrine of unjust enrichment.
Limitation Period: Limitation period for suit for declaration of sale deed as null and void is within three years from the date of accrual of cause of action.
Orders in cases of Registered instrument [Section 31(2)]
Where the instrument has been registered under the Indian Partnership Act, 1908, the Court shall also send a copy of its decree to the officer in whose officer 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.
In case of Kattiya Pillai v. Ramaswamia Pillai, the Court held it is the function of the court to send a copy of its decree to the registrar, and the plaintiff need not pray for it.
