(Sections 27-30)
(1) Any person interested in a contract may sue to how it rescinded, and such rescission may be adjudged by the court in any of the following cases namely:-
(a) where the contract is voidable or terminable by the plaintiff,
(b) where the contract is unlawful for causes not apparent on its face and the defendant is more to blame than the plaintiff.
(2) Notwithstanding anything contained in sub-section (1), the court may refuse to rescind the contract,-
(a) where the plaintiff has expressly or impliedly ratified the contract, or
(b) where, owing to the change of circumstances which has taken place since the making of the contract (not being due to any act of the defendant himself), the parties cannot be substantially restored to the position in which they stood when the contract was made, or
(c) where third parties have during the subsistence of the contract, acquired rights in good faith without notice and for value, or
(d) where only a part of the contract is sought to be rescinded and such part is not severable from the rest of the contract.
Explanation.-In this section 'contract', in relation to the territories to which the Transfer of Property Act, 1882 (4 of 1882), does not extend, means a contract in writing.
Illustrations
(i) 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the field of which A has direct personal knowledge, but which he conceals from B. B is entitled to have the contract rescinded.
(ii) A, an attorney, includes 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 Here the parties are not equally in fault, and B is entitled to have the instrument rescinded.
Prem Raj v. D.L.F. Housing and Construction (Private) Ltd., MANU/SC/0039/1968 : AIR 1968 SC 1355: A person who sues for rescission of contract cannot claim alternative relief of specific performance but a person who files the suit for specific enforcement can alternatively claim for rescission of contract.
Hungerford Investment Trust v. Haridas, AIR 1972 SC 1826: A party has an option to rescind a contract and no aid of the court is necessary in this behalf. The court only adjudicates upon the antecedent right of the parties. By grant of declaration that a contract has been validly rescinded he does not create a right in favour of a party.
(1) Where in any suit a decree for specific performance of a contract for the sale or lease of immovable property has been made and the purchases or lessee does not, within the period allowed by the decree or such further period as the court may allow, pay the purchase-money or other sum which the court has ordered him to pay, the vendor or lesser may apply in the same suit in which the decree is made, to have the contract rescinded and no such application the court may, by order, rescind the contract either so far as regards the party in default or altogether, as the justice of the case may require.
(2) Where a contract is rescinded under sub-section (1), the court-
(a) shall direct the purchaser or the lessee, if he has obtained possession of the property under the contract, to restore such possession to the vendor or lessor, and
(b) may direct payment to the vendor or lessor of all the rents & profits which have accrued in respect of the property from the date on which possession was so obtained by the purchases or lessee until restoration of possession to the vendor or lesser, and if the justice of the case so requires, the refund of any sum paid by the vendee or lessee as earnest money or deposits in connection with the contract.
(3) If the purchaser or lessee pays the purchaser money or other sum which he is ordered to pay under the decree within the period referred to in sub-section (1), the court may, on application made in the same suit, award the purchaser or lessee such further relief as he may be entitled to, including in appropriate cases all or any of the following reliefs, namely-
(a) the execution of a proper conveyance or lease by the vendor or lessor,
(b) the delivery of possession, or partition and separate possession, of the property on the execution of such conveyance or lease.
(4) No separate suit in respect of any relief which may be claimed under this section shall lie at the instance of a vendor, purchaser, lessor or lessee, as the case may be.
(5) The cost of any proceedings under this section shall be in the discretion of the court.
Section 28 applies to both the plaintiff-vendor and the defendant-vendor and it enables them to have the contract rescinded in the very action in which the decree for specific performance was made. The provision in section 28 of Specific Relief Act go to show that the Trial Court would have jurisdiction to extend the time for payment of purchaser price even if it had fixed a date for the same in the first instance in the decree originally passed.
Abdul Shaikh Sahib v. Abdul Rahiman Sahib, MANU/TN/0139/1922 : AIR 1923 Mad 284: The Madras High Court held that the decree for specific performance was in its nature a preliminary decree, the original court was keeping contract over the action and full power to make any just and necessary orders therein, including in appropriate case the extension of time.
M. Sakuntala Devi v. V. Sakuntala, MANU/AP/0160/1978 : AIR 1978 AP 337: It was observed by the Andhra Pradesh High Court that section 28 of the Specific Relief Act may be said to recognise the power of the court to extend the time prescribed by the decree for payment of purchase money, it does not expressly confer any power on the court to extend time. It does not purport to prescribe the conditions subject to which the court may allow further time than that prescribed in the decree for payment of the purchase-money.
Raman Kutty Guptan v. Avara, MANU/SC/1564/1994 : AIR 1994 SC 1699: Where the decree is transferred for execution to a transferee executing court, then certainly the transferee court is not original court and executing court is not the "Same Court" within the meaning of section 28 of the Code. But when an application has been made in the court in which the original suit was filed and the execution is being proceeded with, then certainly an application under
section 28 is maintainable in the court.
A plaintiff instituting a suit for the specific performance of a contract in writing may pray in the alternative that, if the contract cannot be specifically enforced, it may be rescinded and delivered up to be cancelled, and the court, if it refuses to enforce the contract specifically, may direct it to be rescinded and delivered up accordingly.
Roopchand Chaudhari v. Ranjit Kumar: A person who sues for specific performance of the contract may alternatively sue for rescission of the contract, but a person who sues for rescission of a contract cannot sue alternatively for specific performance.
Vatsala Shankar Bansale v. Shambhaji Nanasabeh Khandore, MANU/MH/0708/2002 : AIR 2003 Bom 57: Where the court, while ordering specific performance in favour of the plaintiff, directed him to pay the balance amount within a specified date and that, on his failure to do so, his case would be dismissed, it was held on this failure to do so that the court could grant him extension of time.
On adjudicating the rescission of a contract, 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.
It is a maxim of law that "he who seeks equity must do equity" in the transaction in respect of which relief is sought so white decreeing rescission the court might direct not only payment of compensation to the defendant but also restoration of any benefit received by the plaintiff under the contract.
For example A, a money-lender, advances Rs. 100 to B an agriculturist, and by undue influence, induce B to execute a bond for Rs. 200 with interest at 6 per cent per month. The court may set the bond aside ordering B to repay
Rs. 100 with such interest as may seem just.
M. Mohamad Aslam v. CNA Gowthaman, MANU/TN/0812/2003 : AIR 2003 Mad 248: Where the purchaser deposited the money in the court as directed by the court, he was not allowed to withdraw it without first applying to the court for a direction to the vendor to execute, the sale deed, because until then it could not be said that the vendor had failed to comply with the order of the court.
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