Registered Sale Through Power of Attorney Cannot Be Set Aside Merely by Alleging It Was Given as Loan Security

Held: The Supreme Court held that where a person admits execution of registered Powers of Attorney and later challenges sale deeds executed through those Powers of Attorney on the ground that they were only loan-security documents, the burden lies on that person to prove the alleged loan transaction, repayment, fraud or misuse of authority through reliable evidence. The Court held that mere allegations of fraud, fiduciary misuse or collusive family transfers are not enough unless foundational facts are proved. The Court further held that non-examination of the plaintiff, unexplained delay of nearly ten years, uncancelled Powers of Attorney, long-standing mutation entries, registered sale deeds and failure to prove possession are relevant circumstances against the plaintiff.

Summary: The appellant purchased agricultural lands in Coimbatore in 1996 and later executed two registered General Powers of Attorney in favour of Respondent Nos. 1 and 2. According to her, those documents were executed only as security for loans and the respondents misused them to execute sale deeds in favour of their relatives and family members. She filed a suit in 2008 seeking declaration that the sale deeds were null and void and also sought injunction, claiming that she discovered the transactions only upon inspecting Sub-Registrar records. The Trial Court decreed the suit, but the First Appellate Court reversed the decree, holding that the appellant failed to prove the alleged loan, repayment, continued possession or misuse of the GPAs. The High Court dismissed the second appeal under Section 100 CPC, holding that no substantial question of law arose. The Supreme Court agreed, holding that the appellant did not enter the witness box despite alleging fraud, did not prove repayment of the alleged loans, did not examine relevant witnesses, did not cancel the GPAs for nearly a decade, and failed to dislodge the registered transactions and revenue records relied upon by the respondents.

Decision: The Supreme Court dismissed the appeal and affirmed the judgment dated 03.01.2017 passed by the Madras High Court in Second Appeal No. 714 of 2016, which had upheld the First Appellate Court’s reversal of the Trial Court decree. The Court held that the First Appellate Court had substantially complied with Order XLI Rule 31 CPC, had properly reappreciated the oral and documentary evidence, and that the High Court had rightly found no substantial question of law under Section 100 CPC. Pending applications were disposed of.