Provisions under the Act:

1) Section 27: Power to Rescind Contracts, Where rescission may be adjudged or refused.

Under section 27, the court can for all situations that seem just and proper rescind the contract. The courts could give rescission when the contract is voidable or its execution impossible or futile.

A contract can be rescinded provided that it was obtained through fraudulent misrepresentation or deceit.

If the contract had been entered into through a mistake of fact essential or a mistake of law, the rescission can be granted.

The contract, upon coercion or undue influence can be performed as rescission.

Section 27 enables the court to rescind a contract if the same is determinable or if the contract is voidable at the instance of the party seeking rescission.

Conditions for Rescission:

-The contract has to be determinable or it should be voidable.

-The party praying for rescission should not have waived their right to rescind the contract.

-The contract must not be performed and such performance should be so done that rescission is no longer possible.

Effect of Rescission:

-Rescission demolishes the contract as if it had never been entered into.

-Restores the parties, as far as possible, to their pre-contract positions.

2) Section 28: Rescission for Specific Grounds

-Section 28 deals with rescission of contracts, on specific grounds relating to the performance or enforceability of the contract. It allows rescission if the contract has not been performed as agreed upon, or if the performance becomes impossible on specific grounds.

Conditions for Rescission:

-Available where there is non-performance in accordance with the contract.

-Where it becomes impossible to perform the contract on account of unforeseen reasons, rescission may be sought.

3) Section 29: Rescission and Restitution

-The effect of Section 29 is that whenever a rescission is made, there must be restitution. For this purpose, it is necessary to restore all benefits or considerations received under the contract so as to place them in their former positions.

-The rule of restitution states that both parties need to return any benefit obtained from each other for the purpose of unjust enrichment to ensure justice.

Conditions:

-Rescission is not possible when the party seeking it has acted in bad faith or with undue delay.

-Relief cannot be granted that would unfairly affect third parties having acted on the validity of the contract.

4) Section 30: Limitations in Rescission

It defines those circumstances wherein rescission cannot be granted. It provides conditions and various types of exceptions for its limitation.

Conditions Which Limit Rescission

-Rescission cannot affect the rights of third parties who have acquired rights or interests in good faith.

-Where circumstances have so changed that specific relief by way of rescission would cause unfairness or hardship, the relief might be refused by the court.

Criteria for Rescission:

-A ground such as misrepresentation, fraud, mistake, or coercion has to exist, based on which it can be held that the contract is voidable.

-The moving party must have acted promptly and within a reasonable time since the time such grounds for rescission were discovered.

-Restitution, the party shall be ready to return whatever benefit or consideration obtained under the contract.

Limitations and Exceptions:

-There has to be a reasonable time limit within which the rescission should be sought.

-The court will consider whether, given the specific facts and circumstances of the case, rescission is fair and equitable.

-Rescission cannot prejudice the rights of bona fide third parties that have, with regard to the contract, acquired rights in good faith.

When Relief Can Be Granted:

-The discretion of rescission from the court grants it on grounds of equity and fairness. If the rescission restores the parties to their pre-contractual positions effectively and equitably, the relief is likely to be granted.

-A party has to apply for rescission with reasonable expedition after discovery of the ground upon which rescission is sought. If a party does nothing until too much time has passed, relief may be denied.

-The party applying for rescission must be free from bad faith or contribution to the circumstances which surrounded the breach or voidability.

When Relief Can Be Refused:

-The relief may be refused when the party seeking rescission has shown bad faith or has delayed unduly.

-The court would also reject rescission if the other party has performed the contract or relied on its validity to their detriment, especially when undue hardship or injustice could be caused by it.

-Where performance of the contract has become impossible, and rescission would not be able to restore the parties to their pre-contract positions, the court may refuse rescission.

Interlinked with Indian Contract Act:

Under the Indian Contract Act, 1872, and the Specific Relief Act, 1963, rescission of a contract often does fall within the ambit of application, though the rescission addresses the issue from different perspectives. The Indian Contract Act generally deals more with the grounds for rescission of contracts and the effects thereof, while the Specific Relief Act has more to say about the remedy of rescission in that context.

Rescission under the Indian Contract Act, 1872

-Misrepresentation and Fraud, Sections 17 and 18:

A contract can be rescinded if it was induced by misrepresentation or fraud. Misrepresentation involves false statements made innocently, whereas fraud involves intentional deceit.

-Undue Influence, Section 16:

The agreement would be voidable in case one of the parties to the contract happens to be in a position to dominate the will of the other party, and actually uses that position for the creation of an unfair advantage.

-Mutual Mistake, Section 20:

Rescission may be sought when both parties to the contract are at a mistake as to some fact or thing which is essential to the agreement.

-Incapacity, Section 11:

This section provides for rescission of contracts in cases where one of the parties is not competent to contract.

-Illegality, Sec 23:

The object of the contract being illegal or immoral, then the contract is void and can be rescinded.

Mode of Rescission:

-The party seeking rescission must give notice to the other party for its intention to rescind the contract. It may be in the form of a formal letter or by filing a suit in the civil court.

-In case of rescission, the moving party should be prepared to return any benefit received under the contract or pay restitution to the extent possible. This is in an effort to ensure there will not be any unjust enrichment on behalf of the other party.

-If a peaceful settlement is not possible, the proper suit for rescission can be made before the civil court where the plaintiff has to establish his grounds of rescission and, also, that he acted within reasonable time.

Effects of Rescission:

-Parties are reinstated to their pre-contract position. There is a return of any property or benefit derived.

-The contract is considered void ab initio, and future obligations coming under it are discharged.

References to Case Laws:

Indian Oil Corporation Ltd. v. Amritsar Gas Service (AIR 1991 SC 1046):

This case explained the grounds of rescission and restitution under Indian Contract Act.

P. M. S. (India) Ltd. v. Prabhakar (AIR 1956 SC 223):

Explains the rescission and restitution principles explained under the Specific Relief Act.

S. N. Ghosh v. J. K. Synthetics Ltd. (AIR 2003 SC 587):

This lays down that there should be no unnecessary delay and that the party praying for rescission must be ready to restore; on failure of which, the prayer under the Specific Relief Act would be rejected.

Effects of Rescission

-The most obvious result of rescission is the placing of the parties, as far as possible, into the same position as that in which they were prior to entering into the contract.

-A general principle related to rescission is the restitution of benefits received, in money, property, or any other form whatsoever, by the parties under the contract from one another.

-Parties are discharged from any further obligations under the contract.

Examples:

An unforeseen event that renders performance of the contract impossible may give rise to rescission.

Case Law:

Smt. K.K. Verma vs. Union of India

This case has, in turn, laid down rescission and restitution and the necessity in restoring the benefit if a contract is rescinded.

V.G. Dandekar v. Smt. G. Laxmi Bai (AIR 1969 SC 786)

The Supreme Court had held that in case of either misrepresentation or fraud, rescission would be granted, if the plaintiff acts with due dispatch when the misrepresentation is discovered.

Chand Rani v. Kamal Rani (AIR 1986 SC 1448)

It thus emerged from this that rescission would not ipso facto operate and that the intervention of courts was essential both to establish the grounds and to ascertain that by lapse of time, the right to rescind had not been waived.

Conclusion

The rescission provided under the Specific Relief Act is indeed a good remedy to address any situation where enforcement of a contract becomes impossible or unfair. This is allowed on certain legal grounds and requires an attentive review of facts, evidence, and timeliness of the request. The Courts consider each case on its merits with a view to satisfying that the relief of rescission conforms to principles of equity and justice.

The full understanding of these aspects forms the building blocks necessary for the processes that are instituted in court in pursuit or in defense against the rescission of a contract.