Case Note & Summary
The dispute concerns two items of agricultural land in Kalapatty Village, Coimbatore Taluk, purchased by the appellant, Mallika, in 1996 through registered sale deeds. In 1997 and 1998, she executed two registered General Powers of Attorney (GPAs) in favor of Respondent Nos. 1 and 2 (brothers) as security for loans of Rs. 2 lakhs and Rs. 5 lakhs, respectively, carrying 18% interest. The original title deeds were handed over as collateral security. The appellant alleged that the respondents misused the GPAs and executed sale deeds in favor of close relatives and family members without consideration. The suit properties were repeatedly transferred among relatives through various sale deeds, ultimately reaching members of the respondents' own family and later third parties. The appellant claimed she repaid the loans fully through monthly interest and yearly principal installments, but the respondents failed to cancel the GPAs or return the original title deeds. She discovered the transactions only in 2008 after inspecting records in the Sub-Registrar's office. The respondents contended that the transactions were genuine sale transactions and not loan-security arrangements. The Trial Court decreed the suit in favor of the appellant, but the First Appellate Court reversed the decree, and the High Court dismissed the second appeal. The Supreme Court allowed the appeal, holding that the sale deeds were not supported by valid consideration and were executed in abuse of the power granted under the GPAs. The court restored the decree of the Trial Court, declaring the sale deeds void and directing the respondents to pay costs.
Headnote
A) Property Law - General Power of Attorney - Misuse of Power - Security Transaction - Where a GPA is executed as security for a loan, the donee cannot use it to sell the property without the consent of the grantor, especially when the loan is repaid. The court held that the sale deeds executed by the respondents were not supported by valid consideration and were executed in abuse of the power granted. (Paras 1-10) B) Evidence Act, 1872 - Burden of Proof - Sale Consideration - Section 101 - When the execution of a sale deed is admitted, the burden lies on the party claiming title thereunder to prove that the transaction was supported by consideration. The court held that the respondents failed to discharge this burden as the receipts did not mention the amount and were not proved through attesting witnesses. (Paras 4-6) C) Transfer of Property Act, 1882 - Sale - Consideration - Section 54 - A sale without consideration is void. The court held that the sale deeds executed by the respondents were not genuine sales but were sham transactions, as the consideration was not proved and the properties were repeatedly transferred among close relatives. (Paras 5-7)
Issue of Consideration
Whether the sale deeds executed by the donees under a General Power of Attorney were genuine sale transactions or were void for being executed without consideration and in abuse of the power granted only as security for a loan.
Final Decision
The Supreme Court allowed the appeal, set aside the judgment of the High Court and the First Appellate Court, and restored the decree of the Trial Court. The sale deeds executed by the respondents were declared void, and the respondents were directed to pay costs.
Law Points
- General Power of Attorney
- misuse of power
- security transaction
- sale without consideration
- burden of proof
- suspicious circumstances
- close relatives
- registered sale deed
- presumption of genuineness
- rebuttal evidence
