(1) When, through fraud or a mutual mistake of the parties, a contract or other instrument in writing [not being the article 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 so as 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 first for including such claim.
Illustrations
1. A intending to sell to B his house and one of the three godowns adjacent to it, executes a conveyance prepared by B in which, through B's fraud, all three godowns are included. One of the two godowns which were fraudulently included B gives one to C and lets the other to D for a rent, neither C nor D having any knowledge of the fraud. The conveyance may, as against B and C, be rectified so as to exclude from it the godown given to C but it cannot be rectified so as to affect D's lease.
2. By a marriage settlement A, the father of B, the intended wife covenants with C the intended husband, to pay to C, his executors administrators and assigns, during A's life an annuity of Rs. 5000 C dies insolvent and the official assignees claim the annuity from A. The court, on finding it clearly proved that the parties always intended that this annuity should be paid as a provision for B and her children, may rectify the settlement and decree that the assignee has no right to any part of the annuity.
According to section 26, when an account of fraud or mutual mistake of the parties a contract or some other instrument in writing does not express the real intention of the parties, the court is empowered to rectify the instrument so as to give effect to the real intention of the parties, and then specifically enforce the rectified instrument.
Dagdu v. Bhana, (1904) 28 Bom 420: "The court observed that the court in administering equitable principles permits mistakes to be proved where there are common, that is, where the expression of the contract is contrary to the concurrent intention of the parties. If such mistake be established, then the court can give relief of rectification, but what is rectified is not the agreement, but the mistaken expression of it.
Wallington v. Townsend, (1939) 2 All ER 225: A, the owners of two adjoining bungalows, conveyed the East Bungalow to B, keeping the west bungalow with himself. The plan accompanying the conveyance showed a straight line boundary. But in fact to the east of the line there was bathroom and other domestic offices of the west bungalow. A's claim for rectification failed because the intention of both the parties was not same, white A did not intend to sell the said disputed strip B intended to buy it.
1. The suit for rectification of instrument may be brought either by the parties thereto or by their representatives in interest.
2. 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
3. The defendant to any such suit in which the right arising under the instrument is in issue may, in addition to any other defence upon to him, ask for the rectification of the instrument.
Laxman v. Ganpat, 2 NCR 4: In the matter of rectification, the true question is what was the intention of the parties at the time of its execution and not what the parties intentionally omitted. The plaintiff must establish that the alleged intention to which he desires the document to be made conformable, continued concurrently in the minds of all parties down to the time of its execution. For, if the parties after an agreement changed their minds and it is their changed intention that is embodied in the instrument, there is no ground for rectification what is done on purpose, is obviously not done by mistake.
If in any suit in which contract or other suit is sought to be rectified, 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 so as to express the intention, so far as this can be done without prejudice to rights acquired by third persons in good faith and for value.
A contract in writing may be rectified as if the party claiming rectification has to prayed in his pleading and the court thinks fit, it may be specifically enforced. No relief for the rectification of an instrument shall be granted to any party under section 26, unless it has been specifically claimed.
However, 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.
The mistake to form a ground for the relief of rectification must be mutual and not unilateral. A mistake an one side may be a ground of defence or a ground for rescinding a contract, but not for correcting or rectifying an instrument. The mistake may be either of fact or law although the court of equity will not generally grant relief against a mistake of law except where the mistake results in an inequitable relief.
New India Rubber Works (P) Ltd. v. Oriental Fire & General Insurance Co., (1969) 1 Comp LJ 153 (Cal): The principle of granting relief by way of rectification is that where a contract as finally made fails to express or embody the agreement between the parties as originally made, it can be had rectified so as to bring at in accord with the intention of the parties.
Thus, where the final draft mentioned the price in weight when in fact it was agreed to be in count and riot risk was mentioned in an insurance cover by mistake, the court allowed rectification.
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