Ms. Mallika, you executed registered GPAs in favour of the respondents. You also executed registered sale deeds. You did not cancel the GPAs for nearly ten years. Why should the Court believe that the GPAs were only security?

My Lord, the respondents were professional money lenders. They routinely obtained registered documents as security. They assured the petitioner that the GPAs were only for security and would be cancelled once the loans were repaid. The petitioner trusted them because they were known to her. She repaid the loans fully, but the respondents did not cancel the GPAs. She discovered the fraudulent sale deeds only in 2008 when she inspected the Sub-Registrar's records. The delay is explained. Moreover, the receipts (Ex. B7 and Ex. B9) do not mention the amount paid. The attesting witnesses were not examined. The sale deeds were among close relatives. These suspicious circumstances shift the burden to the respondents to prove bona fides. They have failed to do so.

You did not enter the witness box. Your husband deposed. Under Vidhyadhar v. Manikrao, an adverse inference can be drawn. Why should this Court not uphold that inference?

My Lord, Vidhyadhar v. Manikrao applies when the party with special knowledge fails to enter the witness box. Here, the petitioner's husband (PW-1) had full knowledge of the transactions. He was managing the finances and properties. He deposed on behalf of the petitioner. The petitioner is a woman; in many families, the husband manages property affairs. The Trial Court accepted PW-1's testimony. The First Appellate Court reversed without properly appreciating that PW-1 had sufficient knowledge. Moreover, the petitioner's non-examination does not override the inherent suspicious nature of the transactions. The receipts are doubtful, the attesting witnesses were not examined, and the transfers were among relatives. The adverse inference is not fatal.

The First Appellate Court framed points for determination. They may not be perfectly worded, but the court discussed the evidence in detail. Is that not substantial compliance with Order XLI Rule 31?

My Lord, the First Appellate Court framed only three general points. The second point is merely 'Whether the Judgment and Decree passed by the lower court is not sustainable and the Plaintiff is not entitled for the reliefs claimed in the plaint?' That is not a proper point for determination; it is a conclusion. The court did not frame specific points on the validity of the receipts, the burden of proof, or the fiduciary duty of the GPA holders. This is not substantial compliance. This Court in H. Siddiqui held that compliance is mandatory. The judgment should be set aside on this ground alone.

The Trial Court found that you did not prove repayment of the loans. You have not challenged that finding. How can you succeed without proving the foundational fact of repayment?

My Lord, the petitioner accepts that the Trial Court recorded a finding that repayment was not proved. However, that finding was based on the fact that the respondents maintained accounts in a pocket notebook. The petitioner requested the respondents to produce that notebook, but they failed to do so. The adverse inference should have been drawn against the respondents, not the petitioner. Moreover, the petitioner's case is not solely based on the loan transaction; it is based on the misuse of the GPAs and the suspicious nature of the receipts and subsequent transfers. Even if repayment is not proved, the respondents must still prove that they paid consideration under the sale deeds. They have failed to do so. The receipts (Ex. B7 and Ex. B9) do not mention the amount. The attesting witnesses were not examined. The burden was on the respondents to prove consideration.

For PetitionerCivil

GPAs Executed as Loan Security, Respondents Misused Them — (2026) INSC 529

The registered General Powers of Attorney were executed only as collateral security for loans of Rs. 2 lakhs and Rs. 5 lakhs.

Mallika v. R. Nallathambi — (2026) INSC 529

Core Argument

The registered General Powers of Attorney were executed only as collateral security for loans of Rs. 2 lakhs and Rs. 5 lakhs. The respondents, holding a fiduciary position, misused the GPAs to execute sham sale deeds in favour of their own relatives without paying any consideration. The Trial Court correctly declared the sale deeds void.

Key Precedents

Subhra Mukerjee v. Bharat Coking Coal Ltd. (2000) 3 SCC 312 — Held that where fraud and fiduciary abuse are alleged, the burden lies heavily upon the beneficiary of the transaction to establish bona fides.
H. Siddiqui (dead) by LRs v. A. Ramalingam (2011) 4 SCC 240 — Held that compliance with Order XLI Rule 31 of the CPC is mandatory; the first appellate court must formulate points for determination and record findings with reasons.
Vidhyadhar v. Manikrao (1999) 3 SCC 573 — Distinguished: the petitioner submits that adverse inference should not be drawn when the party's representative (husband) has deposed with full knowledge.

Full Argument

The petitioner — Mallika — submits that the impugned judgment of the High Court dated 3 January 2017 dismissing her second appeal under Section 100 of the Code of Civil Procedure, 1908 (CPC) is erroneous and deserves to be set aside. The First Appellate Court and the High Court have erred in reversing the well-reasoned decree of the Trial Court, which had declared the impugned sale deeds null and void.

The legal foundation for the petitioner's case is that the respondents, holding General Powers of Attorney (GPAs) executed by the petitioner, occupied a fiduciary position and were bound to render proper accounts, to exercise authority bona fide, and to prove payment of consideration through clear and cogent evidence. The petitioner executed the GPAs only as collateral security for loans of Rs. 2 lakhs and Rs. 5 lakhs advanced by Respondent Nos. 1 and 2. The original title deeds were handed over only as security. The respondents were professional money lenders who routinely obtained registered documents and signed blank papers as security.

The respondents misused the GPAs and executed sale deeds in favour of their own close relatives and family members. The receipts acknowledging consideration (Ex. B7 and Ex. B9) are deeply suspicious. Neither receipt mentions the amount paid. The attesting witnesses were never examined. Both receipts contain identical stereotyped language, indicating they were created using signed blank papers obtained earlier from the petitioner. The sale deeds were repeatedly transferred among relatives — one transferee was a medical student, another a close family member — demonstrating a coordinated attempt to defeat the petitioner's ownership rights. This conduct itself demonstrates fraud and misuse of authority.

The petitioner relies on Subhra Mukerjee v. Bharat Coking Coal Ltd. (2000) 3 SCC 312, where this Court held that where fraud and fiduciary abuse are alleged, the burden lies heavily upon the beneficiary of the transaction to establish bona fides. The respondents failed to discharge this burden. They produced no accounts, no proof of payment of consideration to the petitioner, and no explanation for why the properties were routed back into their own family.

The petitioner further submits that the First Appellate Court failed to comply with Order XLI Rule 31 of the CPC. The points for determination framed by the First Appellate Court were general and did not address the specific contentions raised by the petitioner. The appellate court merely reproduced the reliefs sought without independently analysing the issues. As held in H. Siddiqui (dead) by LRs v. A. Ramalingam (2011) 4 SCC 240, compliance with Order XLI Rule 31 is mandatory. The First Appellate Court's judgment is vitiated on this ground alone.

The petitioner also submits that the High Court erred in affirming the First Appellate Court despite the defective framing of points. The High Court also failed to frame substantial questions of law under Section 100 CPC. Several substantial legal issues arose — improper reversal of burden of proof, non-compliance with Order XLI Rule 31, validity and proof of the receipts, evidentiary value of mutation entries, and fiduciary obligations of GPA holders. The High Court mechanically dismissed the second appeal.

The petitioner further submits that she was not required to personally enter the witness box because her husband (PW-1) had full knowledge of the transactions and deposed on her behalf. PW-1 was the person who managed the finances and properties. The adverse inference drawn by the First Appellate Court under Vidhyadhar v. Manikrao (1999) 3 SCC 573 was unjustified.

The petitioner therefore prays that this Court set aside the impugned judgment of the High Court and the First Appellate Court, and restore the Trial Court decree declaring the impugned sale deeds null and void.

Tactical Note — When & How to Deploy

Deploy this argument when challenging a first appellate court judgment that reversed a trial court decree, especially where the appellate court's points for determination are defective. Argue that Order XLI Rule 31 CPC requires mandatory compliance. In cases involving Powers of Attorney and alleged misuse, emphasise the fiduciary obligation of the GPA holder and the burden of proof on the beneficiary. Highlight suspicious circumstances like stereotyped receipts, non-examination of attesting witnesses, and transfers among relatives.

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