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CS Professional · Drafting, Pleadings and Appearances · Commercial Contract Management

Nisha sues to rescind a voidable contract with Omkar. Before the suit, Piyush acquired rights in the subject matter during the subsistence of the contract, in good faith, for value and without notice. What may the court do under Section 27 of the Specific Relief Act, 1963?

The court may refuse rescission. Section 27(2)(c) of the Specific Relief Act permits refusal where a third party, during the subsistence of the contract, acquired rights in good faith, without notice and for value, even though the contract is voidable.

  1. AIt must rescind because the contract is voidable
  2. BIt may refuse rescission because a third party acquired rights in good faith without notice and for valueCorrect
  3. CIt must refuse rescission in every case of voidable contracts
  4. DIt may refuse only if Nisha proves Piyush paid full market price

Explanation

Section 27(1) allows rescission of a voidable contract, but Section 27(2)(c) lets the court refuse where third parties have acquired rights in good faith, without notice and for value during the contract. It is discretionary, not mandatory either way.

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