If you have an e-ticket:
.
1) Yes, undoubtedly you can.
2) Log in to IRCTC,
Go under "Cancel ticket"
Re...
more... confirm your password
Select ticket
Click on "Go For Cancellation" (no don't worry, this won't cancel the whole of it, we all have our hearts in our mouths when we click this for the first time)
You'd be redirected to a page where u can select for which all passengers you want to go ahead with the cancellation. Select them.
Click Cancel.
Confirm it again in the dialog box (Okay this one will actually cancel it, don't mess it up, its irreversible).
You're done.