What is rectification of an instrument?
The rectification of an instrument is the process of making changes to it. The grounds on which rectification can be sought are fraud and mutual mistake of the parties. Relief of rectification can be sought for contracts or any written instrument.
A legal instrument is a document written in a legal format which any right or liability is or purports to be created, transferred, limited, extended, extinguished, or recorded and is legally enforceable. It will confer certain rights, duties, promises, and obligations to the party / parties against whom the document is drawn. Such rights and liabilities may be created, transferred, restricted, or extended. A legal instrument includes a decree, a compromise decree, an award, and a decree based on an award.
The law relating to rectification
The Section 26 of the Specific Relief Act, 1963 is the legal provision that enables the rectification of instruments. The court has enough discretion in allowing rectification of the instrument and specific performance when they are applied for.
Who can file a suit?
The parties to the contract or their representative can file a suit for rectification if a written contract does not reflect the real intention or the specific agreement made by the parties. No other person has the right to file a suit for rectification.
The persons claiming under the parties are the heirs, devisees, legatees, assignees, voluntary grantees or judgment debtors or purchasers from them.
What should the plaintiff plead?
The parties should plead that there was fraud or mutual mistake by the parties and seek for rectification of the instrument along with other remedies required. The court has discretion to allow rectification and specifically enforce the performance. Without proper pleading no court can allow rectification.
To avoid multiplicity of suits the rectification and specific performance can be pleaded as the Section 26 of the Specific Performance Act provides for that.
What the party to the suit should prove?
The plaintiff must prove before the court that the parties had a consensus of mind to the contract, but the matter was entered incorrectly when reduced to writing.
In other words, there should be a prior valid contract between the parties and the consensus arrived at by the parties has not been accurately recorded in the subsequent written document, either due to fraud or mutual mistake by both parties.
What is meant by fraud?
Any act of a party to deceive another person amounts to fraud. A fraud occurs when there exist untrue facts, voluntary concealing of fact, or failure to fulfil a promise intentionally.
That means when someone intentionally suggests or falsifies a fact or misrepresent them with an illegal intention or motive, then it is an act of fraud. Then there arises a cause of action to rectify the instrument.
What is meant by mutual mistake of parties
The term mutual mistake refers to the common mistake on the part of both the parties to contract. Mutual mistake is the mistake about which both parties were unaware of at the time of making the contract.
If the mistake was from one party alone or one party knows about the mistake at the time of making the contract, no rectification can be made. That means a unilateral contract cannot be subjected to rectification.
In a case in which a party claims mistake of both parties to the contract, the person claiming for rectification is bound to prove that the agreement was formed with the consent of the parties and when the instrument was created it failed to reveal the real intention of the parties.
The right of the third parties
The right that the third parties acquired in good faith and value should not be prejudiced. A rectification cannot be made without notice to the third party if it prejudicially affects him. When a person has acquired rights under the transaction such rights are indefensible.
In fact, a failure to rectify the deed does not extinguish title to the property which was sold but not properly described in the sale deed.
No time bar or limitation
The limitation is governed under Article 113 of the Limitation Act, 1963. It is three years either from the execution of the document or from the date of notice or knowledge about the mistake.
The time would commence to run from the date of discovery of the mistake. There cannot be any time limit for discovery of the mistake. The limitation is to be computed from the date on which the cause of action arises. Cause of action arises only when the person suing comes to know about the mutual mistake in the instrument that it does not express the real intention of the parties. Therefore, there is practically no time bar or limitation for the parties to approach the court.
How to Prove what is pleaded?
The burden of proving fraud or mutual mistake, when seeking rectification of any instrument, rests with the person seeking rectification of the instrument.
Oral evidence under Section 92 of the Indian Evidence Act can be relied upon to find out the true intention of the parties. Previous written draft of the contract or letters or other documents in writing can evidence the real intention of the parties. Circumstantial evidence also can be resorted to.
No new instrument to be created
An instrument can be rectified by the court alone. When an instrument is rectified by the court, no new deed is to be prepared. A copy of the court’s order should be endorsed on the deed.
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 instrument. If rectification is allowed, then the changes shall have a retrospective effect. A rectified instrument is not a new instrument, but an instrument based on their original intention at the time of making it.
Further reading
