Cancellation of Instruments

The conditions

Three, and all are required.

1. A written instrument. The remedy is about documents.
2. It is void or voidable against the plaintiff. Note the words "against whom": it is enough that the instrument is void or voidable as regards him. He need not show it is a nullity for all purposes.
3. Reasonable apprehension that, if left outstanding, it may cause him SERIOUS injury. Both the apprehension must be reasonable and the injury serious.

The court's power

Discretionary. Sub-section (1) says the court may, in its discretion, so adjudge. Like rectification, and unlike specific performance since 2018, this remedy remains discretionary.

Two orders. The court may adjudge the instrument void or voidable, and order it to be delivered up and cancelled.

Sub-section (2): the register

Where the instrument was registered under the Indian Registration Act 1908, the court shall send a copy of its decree to the registering officer, who shall note on the copy in his books the fact of the cancellation. This is what makes the remedy effective in practice: a later searcher sees the cancellation.

Section 32: partial cancellation

"Where an instrument is evidence of different rights or different obligations, the court may, in a proper case, cancel it in part and allow it to stand for the residue."

The condition is that the instrument is evidence of different rights or different obligations. Where it is, the bad part may be struck out and the rest allowed to stand.

Compare section 27(2)(d), which lets the court refuse rescission where the part sought to be rescinded is not severable. The same idea of severability runs through both chapters.

Section 33: restoring the benefit

This section has two limbs and the second is the one students miss, because it operates where the person concerned is a defendant and has not asked for anything.

"(1) On adjudging the cancellation of an instrument, 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.

(2) Where a defendant successfully resists any suit on the ground

(a) that the instrument sought to be enforced against him in the suit is voidable, the court may if the defendant has received any benefit under the instrument from the other party, require him to restore, so far as may be, such benefit to that party or to make compensation for it;

(b) that the agreement sought to be enforced against him in the suit is void by reason of his not having been competent to contract under section 11 of the Indian Contract Act, 1872, the court may, if the defendant has received any benefit under the agreement from the other party, require him to restore, so far as may be, such benefit to that party, to the extent to which he or his estate has benefited thereby."

Sub-section (1): the plaintiff who obtains cancellation

He may be required to restore any benefit received from the other party and to make such compensation as justice may require. The same equitable principle as section 30.

Sub-section (2)(a): the defendant who defeats a voidable instrument

Where a defendant successfully resists a suit on the ground that the instrument is voidable, the court may require him to restore any benefit he received under it, or to compensate for it. He has won, and he must still give back what he took.

Sub-section (2)(b): the minor's case

This is the provision that completes Module II's treatment of minors, and the two chapters should be read together.

Where a defendant successfully resists a suit on the ground that the agreement is void because he was not competent to contract under section 11 of the Indian Contract Act 1872, the court may require him to restore any benefit received, to the extent to which he or his estate has benefited.

Note the careful limit: "to the extent to which he or his estate has benefited thereby." This is not a money decree enforcing the void bargain, which Ajudhia Prasad v. Chandan Lal, AIR 1937 All 610, refused. It is restoration measured by actual enrichment. The distinction is exactly the one drawn in [The Minor's Position: Necessaries, Restitution and Ratification], and it is why a student must not say flatly that a minor never restores anything.

Cancellation compared with its neighbours

A worked example

Fatima discovers that a sale deed purporting to convey her land to Girish has been executed on a forged power of attorney and registered.

• Can she sue for cancellation? Yes. It is a written instrument which is void against her, and while it stands on the register it clouds her title, so she has a reasonable apprehension of serious injury. Section 31(1).
• What will the decree do? The court may adjudge it void and order it delivered up and cancelled, and under sub-section (2), the deed being registered, shall send a copy of the decree to the registering officer, who shall note the cancellation in his books.
• The same deed also validly records an unrelated easement Fatima did grant. Section 32: the instrument evidences different rights, so the court may cancel it in part and let it stand for the residue.
• Fatima had received twenty lakh rupees from Girish, believing it was for something else. Section 33(1): on adjudging cancellation the court may require her to restore that benefit and make such compensation as justice requires.

Now change the roles.

• Girish sues Fatima on a different, voidable instrument, and she successfully resists it. Section 33(2)(a): although she has won, the court may require her to restore any benefit she received under the instrument, or to compensate for it.
• A lender sues Harsh on a loan agreement, and Harsh successfully resists it on the ground that he was a minor when he signed, so the agreement is void under section 11 of the Contract Act. Section 33(2)(b): the court may require Harsh to restore the benefit to the extent to which he or his estate has benefited. It is not a decree for the loan; it is restoration measured by his actual enrichment.

What it does NOT mean

"A void instrument needs no cancellation." It exists, it may be registered, and it can cause serious injury while it stands. That is the point of the remedy.

"Any void document may be cancelled." The plaintiff must have a reasonable apprehension that, if left outstanding, it may cause him serious injury.

"The court must cancel once voidness is shown." The power is discretionary.

"Cancellation only affects the parties." Where the instrument was registered, sub-section (2) requires the decree to be sent to the registering officer and the cancellation to be noted in the register.

"A minor who wins never has to give anything back." Section 33(2)(b) allows the court to require restoration to the extent to which he or his estate has benefited, which is not the same as enforcing the void agreement.

"Section 33 applies only to the plaintiff." Sub-section (2) applies to a defendant who successfully resists a suit.

Quick revision

• s.31(1): a person against whom a written instrument is void or voidable, with 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 delivered up and cancelled.
• s.31(2): if registered, the court shall send a copy of the decree to the registering officer, who shall note the cancellation.
• s.32: partial cancellation where the instrument evidences different rights or different obligations.
• s.33(1): on cancellation, the court may require the successful plaintiff to restore any benefit and make compensation.
• s.33(2)(a): a defendant who successfully resists a suit on the ground that the instrument is voidable may be required to restore the benefit he received.
• s.33(2)(b): a defendant who succeeds because the agreement is void for his incompetency under s.11 of the Contract Act may be required to restore the benefit to the extent to which he or his estate has benefited. Read with the minor chapters.
• The remedy remains discretionary, unlike specific performance since 2018.

Test yourself

1. What must a plaintiff show to obtain cancellation? That there is a written instrument which is void or voidable against him, and that he has a reasonable apprehension that the instrument, if left outstanding, may cause him serious injury. The court may then, in its discretion, adjudge the instrument void or voidable and order it to be delivered up and cancelled.

2. Why cancel an instrument that is already void? Because the document continues to exist and can cause harm while it does. It may appear on the register and be found on a search, it clouds the plaintiff's title, somebody may rely on it or sue upon it later when the evidence to answer it has gone, and the plaintiff may otherwise have to prove its invalidity again and again.

3. What happens where the cancelled instrument was registered? Under section 31(2) the court shall send a copy of its decree to the officer in whose office the instrument was registered under the Indian Registration Act 1908, and that officer shall note on the copy of the instrument in his books the fact of its cancellation, so that a later searcher sees it.

4. When may an instrument be cancelled in part? Under section 32, where the instrument is evidence of different rights or different obligations, the court may in a proper case cancel it in part and allow it to stand for the residue. The idea of severability is the same as that in section 27(2)(d), which lets the court refuse rescission of a part that is not severable.

5. What does section 33(2)(b) provide, and how does it fit with the law on minors? Where a defendant successfully resists a suit on the ground that the agreement sought to be enforced is void because he was not competent to contract under section 11 of the Contract Act, the court may require him to restore any benefit received under it, to the extent to which he or his estate has benefited. It is not a money decree enforcing the void agreement, which Ajudhia Prasad v. Chandan Lal, AIR 1937 All 610, refused, but restoration measured by actual enrichment, and it is why it is wrong to say that a minor never restores anything.