The Supreme Court has dismissed an appeal challenging a series of land sale transactions executed through General Powers of Attorney (GPAs), holding that allegations of fraud, misuse of fiduciary position, and collusive transactions cannot succeed merely on suspicion unless supported by reliable evidence. 

The bench of Justice Ujjal Bhuyan and Justice Vipul M. Pancholi has ruled that the person alleging that a registered transaction was merely a loan-security arrangement bears the initial burden of proving such a claim. 

The dispute arose from two agricultural land parcels in Coimbatore purchased by the appellant in 1996. The appellant contended that she had executed two registered GPAs in favour of the respondents only as collateral security against loans of Rs. 2 lakh and Rs. 5 lakh carrying interest, and not for transferring ownership rights. She alleged that the respondents, who were brothers and allegedly engaged in money-lending activities, misused those GPAs and transferred the properties to their relatives through registered sale deeds. 

According to the appellant, the loans had been repaid over time through periodic principal and interest payments, but the respondents neither cancelled the GPAs nor returned the title documents. She further alleged that she became aware of the transactions only in 2008 after inspecting records at the Sub-Registrar’s office and thereafter approached the court seeking cancellation of the sale deeds and permanent injunction against further alienation. 

The Trial Court had accepted her arguments and held that the GPAs had been executed merely as security for loans, declaring subsequent sale transactions null and void. However, the First Appellate Court reversed that decision after re-evaluating the evidence and concluded that the appellant had failed to prove repayment of loans or establish that the GPAs were intended solely as security documents. The High Court subsequently refused to interfere, holding that no substantial question of law arose. 

Before the Supreme Court, one of the primary contentions raised by the appellant was that the First Appellate Court violated Order XLI Rule 31 of the Code of Civil Procedure by failing to properly frame points for determination while reversing the Trial Court’s judgment. The appellant argued that such non-compliance rendered the appellate judgment invalid. 

The Supreme Court rejected this argument and observed that compliance with Order XLI Rule 31 requires substantial rather than technical compliance. The Court held that while an appellate court must independently analyse evidence and assign reasons, the substance of the judgment is more important than rigid adherence to form. Since the appellate court had thoroughly reappreciated oral and documentary evidence and dealt with issues relating to possession, limitation, mutation entries and loan transactions, the judgment could not be invalidated merely on technical grounds. 

The Court then dealt with the more substantial issue concerning the true nature of the transactions. It observed that while fraud and fiduciary misuse allegations can shift the burden of proof in appropriate cases, foundational facts must first be established by the person making such allegations. In the present case, the appellant failed to produce documentary proof showing loan transactions, payment of interest, repayment of principal, or discharge of debts. Even the Trial Court had earlier recorded that repayment had not been established. 

A significant factor considered by the Court was the appellant’s decision not to enter the witness box despite making serious allegations of fraud and misuse of authority. The Court relied on settled principles that permit drawing adverse inference where a party possessing special knowledge of facts abstains from testifying. It observed that allegations involving forgery, blank signed papers and collusive transfers required direct explanation from the appellant herself. 

The Court also rejected the challenge against receipts acknowledging consideration, despite the appellant’s argument that the receipts did not specify exact amounts and attesting witnesses were not examined. The Court held that such documents cannot be examined in isolation and must be considered along with surrounding circumstances, including the admitted execution of GPAs, subsequent sale deeds, and mutation entries that continued for years. 

On the issue of possession, the Supreme Court clarified that mutation entries alone do not create title. However, it added that where such entries continue for long periods, remain unchallenged, and are supported by registered transactions, they become relevant in determining possession and conduct of parties. The Court therefore found no error in reliance upon revenue records as one of the relevant circumstances. 

The Court also found the nearly ten-year delay in initiating proceedings to be a major factor against the appellant. It noted that despite multiple registered transactions and mutation entries, no steps had been taken to cancel the GPAs or challenge the transactions for almost a decade. The explanation that the appellant became aware of the transactions only later was considered unconvincing. 

Dismissing the appeal, the Supreme Court held that no perversity, patent illegality, or jurisdictional error existed in the High Court’s decision and reiterated that second appellate jurisdiction under Section 100 CPC cannot be used merely for reassessing factual findings. 

Case Details

Case Title: Mallika Versus R. Nallathambi & Ors. 

Citation: JURISHOUR-1363-SC-2026

Case No.:Civil Appeal No. 9837 Of 2017

Date: 22/05/2026

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