Cancellation of Sale Deed: Navigating the Process

Introduction to Cancellation of Sale Deed

• Sometimes the information involved in the transaction is misrepresented or omitted, and, in such scenarios, the only realistic way to walk out of a defective agreement is to Cancellation of Sale Deed by executing a proper document, known as a cancellation deed.
• Specific Relief Act 1963 prescribes the time span of three years for Cancellation of Sale Deed; such cancellation is a tricky process, and therefore one must have relevant experience.
• Also, if they get stuck in the cancellation of a sale deed case, they must consult a lawyer online who may guide them through the process, as the terms of such a transaction are more tedious and complicated.
  

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Law Governing Cancellation of the Sale Deed

• Cancellation of Sale Deed cancels the transaction involving the transfer of property from the buyer to the seller, and therefore it must be signed by both parties.
• Just like the other deed, a cancellation deed is also a legal document that extinguishes the right the buyer may have on the property, and therefore in order to extinguish these given rights, one must be well aware of all the legal implications in this regard.

According to Section 31 to 33 of the Specific Relief, Cancellation of sale deed, if possible, in the following circumstances: – 

• Where an individual thinks that the deed so executed is voidable or doubts that it may cause injury if performed.
• Where the parties mutually agree to cancel the deed
• It is to be noted that if the deed was registered as per the provision Indian Registration Act, 1908, then the court shall send a copy of the decree to the officer in whose office the deed registration took place. Such an officer shall take note of the Cancellation of the sale deed.

Also, one must be aware that a suit for Cancellation of the sale deed is triable by the Civil Court and not revenue courts.

Partial Cancellation of Sale Deed

• Suppose the court believes that it is unjustifiable to Cancel the deed entirely. In that case, it may pass an order for partial Cancellation of the sale deed where it may agree that only such part shall stand canceled, which seems to be unfavorable to the party.
• Such partial Cancellation of the sale deed is generally found in cases where there are various parties to the sale deed, and each party has different rights and obligations; also, in such cases, the parties may file a plea for compensation.
  

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Compensation for Cancellation of Sale Deed

A deed of cancellation leads to the rescission of the contract, and as per Section 62 of the Indian Contract Act, any rescission must be done only bilaterally.

As the cancellation deeds executed bilaterally, i.e., by both parties, can be registered by the Registering Officer, provided all the other requirements of the Indian Registration Act are satisfied.

• If deemed fit, the court may order the other party to compensate or return the benefit he enjoyed. 
• If a defendant resists a suit because it is voidable, or the defendant has received several benefits, the court may order the defendant to make compensation for it.
• If the deed has not been drawn up according to the laws stated in Section 11 of the Indian Contract Act, 1872, the court may choose to let him restore any benefit to the party they enjoyed, courtesy of the deed.

Cancellation of sale deed after Mutation 

Whenever there is a property ownership change, the new owner is responsible for updating the municipal authorities’ revenue records. Such a process is called ‘mutation,’ referred to as ‘Dakhil Kharji’ and ‘Intekal’ in Hindi. So, the party to the transaction has the right to apply for Cancellation of the sale deed even after the mutation has occurred.

The practicality of Cancellation of the sale deed

• A full bench of Madras High Court held that a Cancellation of a sale deed could not be made unilaterally once a sale deed registration has been successfully done and acted upon. 
• Such Unilateral Cancellation of the sale deed is wholly void and honest and does not assign, limit or extinguish any right, interest, or title in property and thus cannot be accepted for registration.
• In Balasundara Pandiam Pillai Vs. Authimulam Chettiar, the court held that the time for a suit for Cancellation of sale deed would commence from the date when the plaintiff knows facts that create a reasonable apprehension that the plaintiff will suffer injury if the document is left outstanding.
• In the case of Yanala Malleswari and others v. Ananthula Sayamma and others, the court held that the Cancellation of the sale deed could be sought only by a person who executed the document. 
• In the case of Vidyadhar v. Manikrao, the Supreme court held that Once the title to the property has been passed and the entire sale consideration has not been paid, it cannot be held as a ground for Cancellation of Sale Deed. 

Conclusion

• To establish the right of Cancellation of sale deed or any other document, the plaintiff must show that there has been either a mutual mistake, also a piece of oral evidence admissible to prove fraud or mistake.
• In Numerous instances, it has been seen that a legal battle involves long periods, which turns burdensome for everyone involved. As a result, these cases have gained disrepute in recent years.
• Therefore, one should hire a lawyer online to review their case and find the most amicable resolution for both sides as these matters turn out to be complicated.

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Frequently Asked Questions

Q1. What is a Cancellation of Sale Deed?

Ans: A Cancellation of Sale Deed is a legal document used to nullify or revoke a previously registered sale deed due to reasons such as fraud, misrepresentation, or mutual consent between buyer and seller.

Q2. Under which law can a sale deed be cancelled in India?

Ans: The cancellation of a sale deed is governed by Sections 31 to 33 of the Specific Relief Act, 1963, and must comply with provisions of the Indian Registration Act, 1908.

Q3. Can a sale deed be cancelled unilaterally?

Ans: No, unilateral cancellation is not valid once a sale deed has been registered and acted upon. The cancellation must be mutual and supported by a proper legal process.

Q4. Who can initiate the cancellation of a sale deed?

Ans: Only the person who executed the sale deed can initiate its cancellation. This was upheld by courts, including in the case of Yanala Malleswari v. Ananthula Sayamma.

Q5. What are valid grounds for cancelling a sale deed?

Ans: Grounds for cancellation include:

• Mutual agreement between parties
• Fraud or misrepresentation
• Voidable contract that may cause injury if left unresolved

Q6. Can a sale deed be cancelled after mutation?

Ans: Yes, a party can apply for cancellation even after the mutation has been completed in the revenue records, as mutation does not affect the validity of the sale deed.

Q7. Is partial cancellation of a sale deed possible?

Ans: Yes, courts may allow partial cancellation when the deed affects multiple parties with different rights, and only a specific portion is found invalid or unfavorable.

Q8. Can compensation be claimed after cancellation?

Ans: Yes, under Section 62 of the Indian Contract Act, the court may order the other party to return any benefit received or offer compensation, especially if the cancellation impacts one party unfairly.

Q9. What is the time limit to file for cancellation of a sale deed?

Ans: The time limit to file for cancellation is three years from the date the affected party becomes aware of the issue, as per the Specific Relief Act, 1963.

Q10. What should one do if they suspect fraud in a sale deed?

Ans: If fraud or misrepresentation is suspected, one should immediately consult a property lawyer and file a suit in the civil court for the cancellation of the sale deed along with supporting evidence.