Cancellation under Section 31 versus Rescission under Section 27

Cancellation and rescission are close cousins, and they often travel together, but they act on different things. Cancellation under Section 31 strikes down a written instrument that is void or voidable against the plaintiff. Rescission under Section 27 unwinds a contract and restores the parties. One destroys a document; the other undoes a relationship. This note explains each in its own right, compares them, and works through an example.

Figure: Cancellation under Section 31 and rescission under Section 27 compared, instrument against contract

1. Cancellation under Section 31 in Its Own Right

Cancellation acts on a written instrument. Where an instrument is void or voidable against the plaintiff and, left outstanding, may cause him serious injury, the court may adjudge it void and order it delivered up and cancelled. It needs a document to operate on. Where the instrument is registered, Section 31(2) requires the decree to be sent to the registering officer, who notes the cancellation. On cancellation the court may, under Section 33, put the party relieved on terms to restore benefits. The result is that the document is annulled.

2. Rescission under Section 27 in Its Own Right

Rescission acts on a contract. Under Section 27 the court may adjudge rescission where the contract is voidable or terminable by the plaintiff, or unlawful for a cause not apparent on its face with the defendant more to blame, and it sets the parties back where they stood. It needs no document; it can undo an oral contract just as well as a written one. On rescission the party to whom relief is granted must, under Section 30, restore the benefits he received and do equity. The result is that the contract is unwound.

3. The Two Compared

4. Instrument against Contract

5. A Worked Example

Suppose A is induced by fraud to sell his land to B and executes a registered sale deed. A wants to be free of the whole affair. He seeks rescission of the contract of sale under Section 27, on the ground that his consent was procured by fraud, so that the sale is set aside and, under Section 30, the parties restore what they received. But the registered deed still sits in the record, apparently conveying the land to B; to be rid of it A also seeks cancellation of the deed under Section 31, and the court, adjudging it void, sends its decree to the registering officer under Section 31(2). Here both are needed. Contrast a purely oral contract induced by fraud, with no document: there A needs only rescission under Section 27, for there is no instrument to cancel.

6. Frequently Asked Questions

Q. What is the difference between cancellation and rescission?
A. Cancellation under Section 31 strikes down a written instrument that is void or voidable against the plaintiff; rescission under Section 27 unwinds a contract and restores the parties.

Q. Does rescission need a document?
A. No. Rescission acts on the contract, so it can undo an oral contract; cancellation needs a written instrument to operate on.

Q. When are both needed together?
A. Where a contract was reduced to a deed: the party rescinds the contract under Section 27 and cancels the deed that records it under Section 31.

Q. What happens to a registered instrument on cancellation?
A. Under Section 31(2), the court sends a copy of its decree to the registering officer, who notes the fact of cancellation on the instrument in his books.