Rectification Of Instruments

Contents

• Introduction
• Specific Relief Act, 1963

1. Section 26 of the Specific Relief Act, 1963

• Effect of rectification of the instrument
• Case laws

Key Takeaways

• Any changes or correction made to an instrument is rectification.
• Section 26 of the Specific Relief Act, 1963 deals with rectification.
• Rectification can be made only when there is fraud or mutual mistake of parties.

Introduction

Rectification of an instrument is the process of making changes to an instrument. This prevents the parties from fraud or mutual mistakes of either party to the contract. Section 26 of the Specific Relief Act, 1963 states about rectification. However, it is at the discretion of the court to grant rectification. The only two grounds on which rectification can be claimed are fraud and mutual mistake of parties and only the parties or their representative can file a suit for the same.

If any written contract does not convey the real intention or the specific agreement made by the parties, the court can order rectification. Modification to a contract can be made under the directions of the court and the changes made resume the parties to a place where they would have been if the error hasn’t been made. It must be proved that the parties had a consensus of mind to the contract but was entered incorrectly when reduced to writing

Specific Relief Act, 1963

Specific Relief Act, 1963 was enacted to provide remedies against contractual and civil rights breaches. This comes into play when the compensation or damages provided are not adequate. There are two types of relief in the act: specific relief and preventive relief. Sections 5 to 35 relate to specific relief that is provided when a person has been affected by any breach of contract and the fiscal compensation fails to meet the contractual obligation. This is for matters regarding the recovery of immovable property or movable property. Say, A has paid the sum as agreed in the terms of the contract but B who received the sum, refuses to hand over the house to A. the court can order specific relief for A to recover the house from B. Sections 36 to 42 deals with preventive relief, it is provided when someone is prevented from doing something which he is legally liable to do. For example, if X had paid a sum of money to Y to search for a house for him and Y ignored X in search of a house for Z. then the court may award a preventive relief where Y needs to fulfill his obligations against X first before searching a house for Z.

A legal instrument is a legal document that is in written form and is legally enforceable. It may confer certain rights, duties, promises, and obligations to the parties of the document. Rights and liabilities may be created, transferred, restricted, or extended. “Rectification of an instrument” means correcting the instrument’s errors. Under the Specific Relief Act, rectification is seen as an impartial remedy of a grant by the court when facts do not align with the intention of the parties. In a contract, rectification means corrections or changes made to the contract. Chapter III and Chapter V of the Specific Relief Act, 1963 deal with the rectification of instruments and cancellation of instruments respectively. Relief of rectification can be sought for contracts or any written instruments.

Section 26 of the Specific Relief Act, 1963

Section 26 of the Specific Relief Act deals with rectification. It reads as follows:

“When instrument may be rectified.—

(1) When, through fraud or a mutual mistake of the parties, a contract or other instrument in writing [not being the articles of association of a company to which the Companies Act, 1956 (1 of 1956) applies] does not express their real intention, then—

(a) either party or his representative in interest may institute a suit to have the instrument rectified; or

(b) the plaintiff may, in any suit in which any right arising under the instrument is in issue, claim in his pleading that the instrument be rectified; or

(c) a defendant in any such suit as is referred to in clause (b), may, in addition to any other defence open to him, ask for rectification of the instrument.

(2) If in any suit in which a contract or other instrument is sought to be rectified under sub-section (1), the court finds that the instrument, through fraud or mistake, does not express the real intention of the parties, the court may, in its discretion, direct rectification of the instrument to express that intention, so far as this can be done without prejudice to rights acquired by third persons in good faith and for value.

(3) A contract in writing may first be rectified, and then if the party claiming rectification has so prayed in his pleading and the court thinks fit, may be specifically enforced.

(4) No relief for the rectification of an instrument shall be granted to any party under this section unless it has been specifically claimed: Provided that where a party has not claimed any such relief in his pleading, the court shall, at any stage of the proceeding, allow him to amend the pleading on such terms as may be just for including such claim.”

There are certain circumstances when the rectification shall be made to a contract:

A) When there is a commitment of fraud or a mutual mistake by both parties then either the party or his representatives can file for rectification of the instrument. No other person has the right to file a suit for rectification. The plaintiff can file a suit to rectify the instrument if any of his rights are in issue and the defendant can file under sub-clause (b) of the section.

B) If rectification is made under clause (1) and the court eventually discovers that there is the involvement of fraud or mutual mistake of parties, then the discretionary powers lie with the court for rectification.

C) If a claim for rectification is made, then it is at the discretion of the court to grant and enforce it.

D) No relief shall be granted until the parties specifically claim for rectification of the instrument.

Section 26 explicitly provides modes of rectification such as during fraud, mutual mistake of parties, and real intention of parties.

1. Fraud

Any act to deceive a person amounts to fraud. Fraud is said to have been committed when there is the presence of untrue facts, voluntary concealing of fact, or failure to fulfill a promise which was committed with the same intent. So when someone intentionally suggests or falsifies a fact with the motive to misrepresent them, there lies a way to rectify the instruments.

2. Mutual mistake of parties

In a case that involves the mistake of both parties to the contract, the person claiming for rectification is to prove the agreement that the agreement was formed with the consent of the parties because the mistake when reduced to writing failed to reveal the real intention of the parties.Mutual mistakes shall be established by either party. Had the mistake not been from the side of either party but from the written document, no rectification can be made. A unilateral contract not amounting to fraud shall not be subject to rectification.

3. Intention of parties

The real intention of the parties is important to decide rectification. Court decides the authentic intention of the parties in framing the contract. The objective of Section 26 is to ensure that the defects do not prevail over the intention of the parties.Pre-requisites for Section 26 include the existence of fraud and mutual or common mistakes. The burden of proof rests with the person claiming for rectification of the instrument.

Effect of rectification of the instrument

An instrument shall be rectified by the court only.The confirmation of the court vests for the authenticity of the deed as to the real intention of the parties. This ensures the affirmation of the true intention of the parties to the contract while executing it. After the execution of the rectified instruments, it is to be read and construed as if the original one had been drafted incorporating the changes in the rectified instrument. A deed of the transfer becomes a conveyance when rectified by the court. The court’s order should declare that the deed is rectified and specify the manner of rectification along with the direction of endorsement on the order of conveyance. If rectification is allowed then the changes shall have a retrospective effect.

Section 31 of the Specific Relief Act, 1963 deals with the cancellation of the instrument which occurs when there is a potential cause of damage to the parties rendering the document void or voidable. It is at the discretion of the court to cancel it.

Case Laws

InNatarajan Asari Vs Pichamuthu Asari AIR 1972 Mad 192, it was held that a suit for rectification can be claimed for a sale deed on grounds of mutual mistake concerning the description or cost of the property.

In the case of Gerela Kalita Vs Dharmeshwar Saika (2961), the suit can be filed for rectification on grounds of fraud or mutual mistake at whatever time they may be discovered.

Supreme Court in the case of Joseph John Peter Sandy Vs Veronica Thomas Rajkumar2013 AIR SCW 2604, held that no person other than a party to the instrument or his representative can institute a suit for rectification. It was held in the Trend text Trading Corporation Vs Credit Suisse[1981] UKHL J1022-1 that the relief can be availed by or against the representative of the party to a written document too.

In the case of Joseph Johan Peter Sandy Vs Veronica Thomas Rajkumar and another, the children of one Mr. B.P Sandy were the appellants. Mr. Sandy transfers two houses to his children but transfers them wrongly. The house to be transferred to his son was to be transferred to the daughter and the house to the daughter was to be given to the son. Rectification in the transfer deed was claimed and the court held that it can be granted only in case of fraud or mutual mistake and this case doesn’t fall within that ambit.

In Shamim Ahmed Siddique Vs Society Ltd. And others (2008), the court held that rectification under Section 31, then the fact of mutual mistake is to be proved and that the instrument did not reveal the true intention of parties. Mistake in drawing the instrument also needs to be proved to ascertain the intention of the parties. If the court is satisfied that there is a presence of mutual mistake regarding the true intention of the parties, then it can rectify the instrument or document.

In Sartaj Vs Ayub Khan(2019) 137 ALR 611 case, the appellant filed a suit for appeal alleging that the plaintiff who purchased the land from him upon registration of the sale deed is taking undue advantage due to some mistake in the deed. The court held that the appeal was valid and the decree passed by the trial court was set aside.

In Noordin Esmailji Kurwa Vs Mahomed Umar Subrati (1939), the issue was regarding an agreement for the division of land between Nevitia Floor Mills and Sardar Haji Badloo Subrati.Rectification on mutual mistake grounds was held provided there was no infringement of the rights of third parties. The time period is calculated from the date of the notice.