RESCISSION OF CONTRACT

PRELIMINARY NOTE:

Section 35 sets out the three exceptional cases to the general rule that a contract cannot ordinarily be rescinded by one party without the consent of the other. Under Section 35, any aggrieved party may sue for the rescission of the contract, which may be adjudged by the court in the cases enumerated in sub-sections (a), (b), and (c) of Section 35.

SCOPE:

Clause (a) and (b) of Section 35 are general and apply to all contracts, whereas clause (c) specifically applies to contracts of sale and contracts of lease.

MEANING OF RESCISSION OF CONTRACT:

Rescission means the cancellation of a contract by mutual consent between the parties before its discharge by performance. It may also be granted by the court when certain legal grounds exist.

CASES IN WHICH COURT MAY RESCIND THE CONTRACT

(Section 35)

Any person interested in a contract in writing may sue to have it rescinded, and such rescission may be adjudged by the Court in any of the following cases:

1. WHEN THE CONTRACT IS VOIDABLE OR TERMINABLE BY THE PLAINTIFF:
    If the contract is voidable or terminable at the option of the plaintiff, the court may grant rescission.

2. WHEN THE CONTRACT IS UNLAWFUL FOR CAUSES NOT APPARENT ON ITS FACE:
    If the contract is unlawful for reasons not visible on its face and the defendant is more at fault, rescission may be granted.

3. WHEN PURCHASER OR LESSEE DEFAULTS IN PAYMENT DECREED BY THE COURT:
    Where a decree for specific performance of a contract of sale or lease has been made, and the purchaser or lessee defaults in payment of the court-ordered amount:

   • If the purchaser or lessee is in possession wrongfully, the court may also order him to pay rents or profits received during possession.

ILLUSTRATIONS:

• (a) A sells a field to B. There is a right of way over the field of which A has direct personal knowledge, but which he conceals from B. B is entitled to have the contract rescinded.
• (b) A, an advocate, induces his client B, a Hindu widow, to transfer property to him for the purpose of defrauding B's creditors. Here, the parties are not equally at fault, and B is entitled to have the instrument of transfer rescinded.

RESCISSION FOR MISTAKE

(Section 36)

Rescission of a contract in writing cannot be adjudged for mere mistake, unless the party against whom it is adjudged can be restored to substantially the same position as if the contract had not been made.

ALTERNATIVE PRAYER FOR RESCISSION IN SUIT FOR SPECIFIC PERFORMANCE

(Section 37)

A plaintiff instituting a suit for specific performance of a contract in writing may pray in the alternative that if specific performance cannot be granted, the contract may be rescinded and delivered up to be cancelled.

• The court, if it refuses to enforce the contract specifically, may order rescission and cancellation accordingly.

COURT MAY REQUIRE PARTY RESCINDING TO DO EQUITY

(Section 38)

On adjudging the rescission of a contract, the court may require the party to whom such relief is granted to make compensation to the other party as justice may require.

CONCLUSION:

Rescission is a discretionary remedy provided under the Specific Relief Act, 1877, enabling the court to cancel contracts where justice and equity demand. It is particularly important in cases involving fraud, mistake, or breach of duty. The court ensures that no party unfairly benefits from rescission and may direct the restoring of benefits or payment of compensation. Rescission safeguards parties against unjust enrichment and allows the restoration of parties to their original positions when contracts fail to reflect fair or lawful agreement.