2026 INSC 529 Page 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9837 OF 2017

MALLIKA … APPELLANT

VERSUS

R. NALLATHAMBI & ORS. … RESPONDENTS

J U D G M E N T

VIPUL M. PANCHOLI, J.

1. The present appeal arises out of the judgment and order dated

03.01.2017 passed by the High Court of Judicature at Madras in

Second Appeal No. 714 of 2016, whereby the High Court dismissed

the second appeal preferred by the appellant and affirmed the

judgment and decree of the First Appellate Court reversing the decree

granted by the Trial Court.

2. The dispute concerns two items of agricultural land situated at

Kalapatty Village, Coimbatore Taluk, purchased by the appellant in

1996 through registered sale deeds, being:

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A. Item No. 1 - Punja Acre 1.66 (Doc. No. 6369/1996, Ex. A1/B2)

B. Item No. 2 - Punja Acre 0.37½ (Doc. No. 6370/1996, Ex.

A2/B3)

The appellant claimed absolute ownership over approximately 2.03½

acres in S.F. Nos. 437/2B and 438/3B.

3. According to the appellant, in 1997 and 1998, she executed two

registered General Powers of Attorney (for brevity “GPAs”), being Doc.

No. 416/1997, Ex. A3/B5 and Doc. No. 465/1998, Ex. A4/B4), in

favour of Respondent Nos. 1 and 2 (brothers), solely as security for

loans of Rs. 2 lakhs and Rs. 5 lakhs carrying 18% interest,

respectively. Original title deeds of the suit properties were handed

over only as collateral security.

4. It is stated that Respondent Nos. 1 and 2 misused the GPAs and

executed sale deeds, being Doc. No. 29/1998, Ex. A5/B8 and Doc.

No. 3189/1998, Ex. A6/B6, in favour of close relatives and family

members. The receipts acknowledging consideration, being Ex. B7

and Ex. B9, did not mention the amount paid, were not proved

through attesting witnesses and contained stereotyped language.

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5. The suit properties were repeatedly transferred among relatives

through various sale deeds, being Ex. A7/B11, Ex. A8/B13 and Ex.

A9, ultimately reaching members of the respondents’ own family and

later third parties.

6. It is stated by the appellant that 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 despite repeated assurances. The appellant discovered the

transactions only in 2008 after inspecting records in the Sub-

Registrar’s office. It is further stated that the respondents alongwith

a few men attempted to forcibly enter the suit properties and were

obstructed by the appellant and her neighbours.

7. The respondents’ case is that the transactions in question were

genuine sale transactions and not loan-security arrangements as

alleged by the appellant.

8. According to the respondents, the appellant executed two registered

GPAs in favour of Respondent Nos. 1 and 2 and also handed over

possession. Respondent Nos. 1 and 2 sold the suit properties and

executed two sale deeds, whereby full sale consideration was paid

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and acknowledged by the appellant through two receipts.

Subsequent transactions took place in 2006 and 2007 through

further powers of attorney and sale deeds among family members

and purchasers.

9. In August 2008, the appellant instituted Original Suit No. 472 of

2008 before the Principal Subordinate Court, Coimbatore, seeking

declaration that the impugned sale deeds executed pursuant to the

GPAs, being Ex. A5 to Ex. A9, are null and void and seeking a

permanent injunction protecting possession and against further

alienation. The case of the appellant was that the GPAs had been

executed only as security for loan transactions and that the

respondents had misused the said GPAs to execute sale deeds in

favour of themselves and their relatives.

10. The respondents contested the suit contending that the transactions

were genuine, valid consideration had passed under Exs. B7 and B9,

possession had also been delivered and the subsequent purchasers

had derived valid title. It was further contended that the suit was

hopelessly barred by limitation and that the appellant had failed to

establish either discharge of the loan or continued possession over

the suit properties.

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11. The Trial Court decreed the suit by judgment dated 22.03.2012

principally holding that the GPAs had been executed only as security

for loan and that the respondents had failed to satisfactorily

establish Exs. B7 and B9, thereby declaring all five sale deeds, being

Ex. A5 to Ex. A9, null and void and permanent injunction was

granted.

12. In the first appeal, the Court of IVth Additional District Judge,

Coimbatore, by judgment dated 08.03.2016 in Appeal Suit No. 52 of

2012, reversed the decree of the Trial Court. The First Appellate

Court held that the burden had been wrongly cast upon the

respondents and that the appellant had failed to prove loan

repayment or her continued possession and consequently failed to

establish that the GPAs were executed merely as security for loans.

Reliance was also placed upon mutation entries and revenue records

standing in the names of the respondents and the purchasers.

13. Thereafter, the appellant filed Second Appeal No. 714 of 2016 before

the High Court of Madras under Section 100 of the Code of Civil

Procedure, 1908 (for brevity “the CPC”).

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14. The High Court, in the impugned judgment dated 03.01.2017, while

dismissing the second appeal under Section 100 CPC, held that no

substantial question of law arose for consideration. The High Court

observed that the appellant had not entered the witness box, had

failed to prove discharge of the loan and had approached the Court

after a considerable lapse of time despite the execution of registered

documents and mutation in revenue records.

15. Aggrieved by the impugned judgment, the appellant filed the present

appeal.

16. Mr. Sivagnanam Karthikeyan, learned counsel appearing on behalf

of the appellant assailed the judgments of the First Appellate Court

and the High Court.

17. It is contended that the First Appellate Court failed to comply with

the mandatory requirements of Order XLI Rule 31 of the CPC. The

appellate court did not frame proper points for determination and

merely reproduced the reliefs sought in the suit without

independently analysing the issues arising in appeal. It was argued

that Order XLI Rule 31 of the CPC prescribes the manner in which a

first appeal must be decided and non-compliance vitiates the

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appellate judgment. Reliance was placed on H. Siddiqui (dead) by

LRs v. A. Ramalingam .

1 It is therefore submitted that the First

Appellate Court judgment itself was liable to be set aside on this

ground alone.

18. It is argued that the GPAs were executed only as collateral security

for loans advanced by Respondent Nos. 1 and 2 as the respondents

were professional money lenders who routinely obtained registered

documents and signed blank papers as security and no independent

agreement for sale existed between the parties. It is highlighted that

the respondents executed multiple conveyances within their own

family circle and thus the transactions lacked bona fides and were

structured only to create encumbrances and defeat the title of the

appellant. The Trial Court correctly appreciated these surrounding

circumstances and held that the transactions were not genuine sale

transactions.

19. It is submitted that the respondents failed to prove receipts, being

Ex. B7 and Ex. B9, which were relied upon as acknowledgments of

consideration. According to the appellant, neither receipt mentioned

1

2011 (4) SCC 240

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the amount paid, attesting witnesses were never examined, both

receipts contained identical stereotyped language and the

documents appeared to have been created using signed blank papers

obtained earlier from the appellant. It was contended that the High

Court erred in affirming the First Appellate Court despite these

defects.

20. It is argued that Respondent Nos. 1 and 2, holding GPAs, occupied a

fiduciary position and were bound to render proper accounts to the

appellant, establish bona fide exercise of authority and prove

payment of consideration through clear and cogent evidence.

Instead, the respondents conveyed the properties among close

relatives, no accounts were rendered, consideration passed only on

paper and the respondents routed the property back into their own

family. The appellant emphasized that such conduct itself

demonstrated fraud and misuse of authority. Reliance was placed on

Subhra Mukerjee v. Bharat Coking Coal Ltd. ,

2 to urge that where

fraud and fiduciary abuse are alleged, the burden lies heavily upon

the beneficiary of the transaction to establish bona fides.

2

(2000) 3 SCC 312

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21. It is contended that mere mutation entries, patta, chitta and adangal

records do not confer title, revenue entries are relevant only for fiscal

purposes and possession remained with the appellant, which was

independently proved through PW-2 (appellant’s neighbour). It was

argued that the High Court wrongly treated mutation records as

proof of possession and title.

22. It is submitted that the sale deeds, being Ex. A5 to Ex. A9, were never

acted upon, the appellant continued in possession and enjoyment of

the lands, agricultural operations were continuously carried out by

the appellant and attempts by respondents and their henchmen to

forcibly enter the property were resisted by the appellant and

neighbouring landholders. The appellant relied heavily on the

testimony of PW-2, which had been accepted by the Trial Court.

23. It is argued that the First Appellate Court wrongly drew an adverse

inference merely because the appellant did not personally enter the

witness box. The respondents relied upon Vidhyadhar v.

Manikrao,

3 to urge the Court to draw adverse inference for non-

examination of the appellant. However, it is submitted that sufficient

3

(1999) 3 SCC 573

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evidence had already been adduced through PW-1 (appellant’s

husband) and PW-2, documentary and circumstantial evidence

independently established the case of the appellant and non-

examination could not override the inherent suspicious nature of the

transactions.

24. It is contended that the High Court dismissed the second appeal

without framing substantial questions of law despite several

substantial legal issues arising, including improper reversal of

burden of proof, non-compliance with Order XLI Rule 31 of the CPC,

validity and proof of the receipts (Ex. B7 and Ex. B9), evidentiary

value of mutation entries and fiduciary obligations of GPAs holders.

It is therefore submitted that the High Court failed to properly

exercise jurisdiction under Section 100 of the CPC.

25. It is emphasized that almost every subsequent transfer was among

close relatives of Respondent Nos. 1 and 2, one transferee was a

medical student and another a close family member, the

transactions were sham and collusive, consideration recitals were

merely paper entries and the transfers demonstrated a coordinated

attempt to defeat the appellant’s ownership rights.

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26. Therefore, learned counsel appearing for the appellant prayed for

setting aside the judgments of the High Court and First Appellate

Court and for restoration of the Trial Court decree.

27. Per contra, Mr. V. Chitambaresh alongwith Mr. Jayanth Muth Raj,

learned senior counsels appearing on behalf of the respondents

opposed the present appeal and supported the judgments of the First

Appellate Court and the High Court on the ground that the appellant

had failed to establish any substantial question of law warranting

interference under Section 100 of the CPC or by this Court.

28. It is contended that the dispute is entirely factual in nature, the First

Appellate Court, being the final court on facts, had thoroughly

reappreciated the evidence and the High Court correctly held that no

substantial question of law arose. It was submitted that the appellant

merely sought reassessment of factual findings, which is

impermissible in second appeal jurisdiction under Section 100 of the

CPC. It is emphasized that the High Court nevertheless examined the

findings of both courts below and independently affirmed the First

Appellate Court’s conclusions and thus there was no perversity or

legal infirmity warranting interference.

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29. In answer to the appellant’s principal challenge, it is argued that the

First Appellate Court had framed issues/points for determination in

paragraph 7 of its judgment and the appellate court thereafter

discussed oral and documentary evidence in detail and rendered

findings issue-wise. Accordingly, the contention regarding violation

of Order XLI Rule 31 of the CPC was described as false and

misleading. It is submitted that substantial compliance with Order

XLI Rule 31 of the CPC was present and no prejudice had been

caused.

30. It is submitted that the appellant voluntarily executed the GPAs,

possession was handed over to Respondent Nos. 1 and 2, the

respondents erected fencing around the suit properties, the sale

deeds were executed pursuant to authority granted under the GPAs

and the entire sale consideration was paid to the appellants.

According to the respondents, the receipts, being Ex. B7 and Ex. B9

acknowledged payment, the appellant never denied her signatures

on those receipts and despite alleging forgery, the appellant failed to

enter the witness box or examine attesting witnesses who were

admittedly her own relatives. It is therefore argued that the

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appellant’s allegation of fraud remained entirely unproved and the

receipts and sale deeds stood admitted and acted upon.

31. It is repeatedly stated that the appellant produced no evidence

proving the loan transactions, payment of interest, repayment of

principal amounts and discharge of debt. It was pointed out that

even the Trial Court had found that the appellant failed to prove

repayment/discharge, vital documents were withheld and the

appellant herself abstained from entering the witness box. It is

therefore argued that the burden never shifted to the respondents

and that the appellant failed to discharge the initial onus.

32. It is submitted that the appellant intentionally avoided the witness

box despite serious allegations of fraud and forgery and attesting

witnesses to the receipts and the GPAs, who were appellant’s

relatives, were also withheld. The First Appellate Court therefore

rightly drew an adverse inference against the appellant. Reliance was

placed upon the principle laid down in Vidhyadhar v. Manikrao

(supra) holding that where a party abstains from entering the

witness box, an adverse inference may legitimately be drawn.

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33. It is contended that mutation entries, patta, chitta and adangal stood

in the names of purchasers for many years, the appellant never

challenged such mutations before competent authorities and the

respondents and subsequent purchasers remained in possession

continuously. It is further argued that PW-2’s testimony was

unreliable, PW-2 did not even know the survey numbers, no

neighbouring landowner was examined and the suit properties were

vacant land. Thus, the First Appellate Court rightly concluded that

possession stood proved in favour of the respondents.

34. One of the principal submissions for the respondents was that the

suit was filed nearly ten years after execution of the GPAs, sale deeds,

mutation entries and receipts acknowledging consideration. It is

emphasized that the appellant never cancelled the GPAs, no

objection was raised for nearly a decade and third-party rights had

intervened through subsequent transactions. It is therefore argued

that the suit was hopelessly barred by limitation, the appellant had

slept over her rights and the suit was instituted only to harass the

respondents and extract money. The First Appellate Court’s finding

that the suit ought to have been filed within three years of execution

of the sale deeds was specifically relied upon.

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35. It is argued that the appellant’s case was internally contradictory, on

one hand she admitted executing the GPAs and on the other she

alleged forgery of receipts from signed blank papers. According to the

respondents, such inconsistent pleadings undermined the credibility

of the appellant and the allegations of collusion and forgery were

unsupported by evidence. It is asserted that the sale deeds were

genuine, consideration had been paid and the transactions were

acted upon long ago.

36. Learned counsel appearing on behalf of the respondents emphasized

that the First Appellate Court and High Court had concurrently held

against the appellant on possession, limitation, burden of proof,

genuineness of transactions and absence of proof of loans. It was

therefore submitted that interference by this Court was wholly

unwarranted and the present appeal sought merely to reopen factual

findings recorded by the appellate courts.

37. We have considered the rival submissions advanced by the learned

counsel appearing for the parties and carefully perused the material

placed on record.

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38. The principal contention urged on behalf of the appellant is that the

judgment of the First Appellate Court stands vitiated for non-

compliance with the mandatory requirements of Order XLI Rule 31

of the CPC. It has been argued that the appellate court merely

reproduced the reliefs sought in the suit and failed to frame proper

points for determination as required in law. The relevant paragraph

of the judgment, which is in question, is reproduced as under:

“7. On consideration of the Plaint. Written Statement, evidence,

documents, judgments and decree of the trial court and the

appeal grounds the point arises for consideration is;

1) Whether the Trial Court is right in declaring the sale deeds

executed by the D1 and D2 is null and void and not binding

upon the plaintiff?

2) 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?

3) To what relief the parties are entitled for?

In this appeal suit, no evidence was let in and no document was

marked on either side.”

39. Order XLI Rule 31 of the CPC is reproduced, for convenience, as

under:

“31. Contents, date and signature of judgment.— The

judgment of the Appellate Court shall be in writing and shall

state—

(a) the points for determination;

(b) the decision thereon;

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(c) the reasons for the decision; and

(d) where the decree appealed from is reversed or varied, the

relief to which the appellant is entitled,

and shall at the time that it is pronounced be signed and dated

by the Judge or by the Judges concurring therein.”

40. There can be no dispute with the proposition that the First Appellate

Court, being the final court on facts, is duty bound to independently

assess the entire evidence on record and assign reasons while

reversing the judgment of the Trial Court. In paragraph 21 of H.

Siddiqui (dead) by LRs v. A. Ramalingam, (supra) , this Court

reiterated that compliance with Order XLI Rule 31 of the CPC is

mandatory and the appellate court must formulate points for

determination and record findings thereon supported by reasons.

41. However, it is pertinent to note that the requirement of Order XLI

Rule 31 of the CPC is one of substantial compliance and not one of

mere technical formality. The substance of the judgment and the

manner in which the appellate court has dealt with the controversy

are of greater significance than the form in which points are framed.

42. In the present case, the First Appellate Court has undertaken

detailed reappreciation of oral and documentary evidence. The

appellate court examined the issues relating to the loan transactions

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in question, the evidentiary value of Exs. B7 and B9, possession over

the suit properties, mutation entries, limitation and the conduct of

the parties. The appellate court thereafter recorded independent

findings while reversing the decree of the Trial Court. We are

therefore unable to hold that the judgment of the First Appellate

Court is liable to be set aside solely on the ground of non-compliance

with Order XLI Rule 31 of the CPC.

43. The next and more substantial issue concerns the nature of the

transactions between the parties. According to the appellant, the

GPAs executed in favour of Respondent Nos. 1 and 2 were merely

collateral securities for loans advanced by the respondents and that

the said GPAs were subsequently misused for executing sale deeds

in favour of close relatives and family members.

44. It is an admitted position that the appellant executed registered GPAs

in favour of Respondent Nos. 1 and 2. It is equally undisputed that

original title deeds were handed over and registered sale deeds were

thereafter executed pursuant to the said GPAs, followed by mutation

entries in favour of purchasers and subsequent transferees.

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45. The burden of establishing that the transactions were not genuine

sale transactions, but merely security arrangements for loans, rested

upon the appellant and mere allegations of fraud or misuse of

fiduciary position are not sufficient unless supported by reliable and

cogent evidence. Learned counsel for the appellant relied upon the

decision of this Court in Subhra Mukerjee v. Bharat Coking Coal

Ltd. (supra), to contend that where fraud and fiduciary misuse are

alleged, the beneficiaries of the transactions must establish their

bona fides. The principle laid down therein is well settled. However,

before the burden can shift upon the respondents, the appellant was

required to first establish foundational facts constituting fraud or

fiduciary misuse. In the absence of such foundational evidence, the

initial burden continued to remain upon the appellant.

46. In the present case, the appellant failed to produce any documentary

material substantiating the alleged loan transactions, payment of

interest or repayment of principal amounts. Significantly, even the

Trial Court recorded a categorical finding that neither repayment nor

discharge of the alleged loans had been proved. Consequently, the

appellant failed to establish that the GPAs were executed merely as

security for loans. The said finding is reproduced as under:

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“9. … Thereafter, she repaid the principal and interest to the 1st

and 2nd defendants. It was denied by the defendants. While so

it is the bounden duty of the plaintiff to prove that she repaid

the interest and principal amount to the 1st and 2nd

defendants. Whereas the plaintiff has not produced any piece

of evidence with regard to payment of interest and principal.

Further, the plaintiff would say that the 1st and 2nd defendants

maintaining accounts with regard to receipt of principal and

interest in a pocket note book kept by them and the same has

been under the custody of the 1st and 2nd defendants. While

so, the plaintiff has not taken steps to direct the 1st and 2nd

defendants to produce the pocket note book in the Court.

Further, the plaintiff has not appeared before this Court and

given evidence with regard to payment of interest and principal.

Her husband only examine as PW 1 and deposed that the entire

loan was repaid with interest, which is not satisfactory. Hence,

the contention (end of 12th page of this original) of the plaintiff

that she repaid the loan amount with interest as alleged to be

obtained from the 1st and 2nd defendant is not sustainable.”

47. At this stage, it is pertinent to observe that the appellant has not

challenged the above reproduced finding of the Trial Court before the

appellate courts.

48. Another important circumstance which cannot be ignored is that the

appellant herself did not enter the witness box. In the present case,

even though serious allegations of fraud, forgery of receipts, misuse

of signed blank papers and collusive transfers have been levelled by

the appellant against the respondents, the appellant abstained from

examination. Learned counsel for the respondents has rightly placed

reliance on the case of Vidhyadhar v. Manikrao (supra) , wherein

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this Court held that where a party possessing special knowledge of

facts fails to enter the witness box, an adverse inference may

legitimately be drawn against such party.

49. In the facts of the present case, the adverse inference drawn by the

First Appellate Court and the High Court cannot be said to be

unjustified. The relevant extract of the impugned judgment reads as

under:

“9. … P.W.1 is aware of the power deed. The plaintiff has not

chosen to come before this Court by examining herself. Even as

per the evidence of P.W.1, both the plaintiff and P.W.1 are doing

real estate business. Therefore, it is not as if she is an illiterate.

Even the Trial Court has found that the plaintiff has not proved

the factum of discharge. For proving, Exs-B7 and B9, there is no

necessity to hear any other third party.”

50. The appellant strongly argued that the receipts, namely Exs. B7 and

B9, were doubtful because they did not mention the exact amount

paid and because the respondents did not examine the attesting

witnesses to those receipts. It is true that the receipts may not

represent ideal documentary evidence, however, the Court cannot

examine these documents in isolation and must consider them along

with the surrounding facts and circumstances of the case.

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51. The appellant admittedly executed the GPAs, registered sale deeds

were executed pursuant thereto in the year 1998 and mutation

entries thereafter stood in favour of purchasers for several years.

Multiple subsequent transactions were also entered into openly

through registered documents. Despite this, the appellant neither

cancelled the GPAs nor initiated any proceedings for almost a

decade. The explanation furnished by the appellant that she became

aware of the transactions only in the year 2008 upon inspection of

records in the office of the Sub-Registrar does not inspire confidence,

particularly when the evidence on record indicates that both the

appellant and PW-1 (appellant’s husband) were engaged in real

estate business.

52. Further, the appellant neither entered the witness box to

substantiate the allegations of forgery and misuse of blank signed

papers nor examined the attesting witnesses to the receipts and

GPAs, who were admittedly her own relatives. No expert evidence was

also adduced to establish forgery of signatures or interpolation in the

documents. In such circumstances, the contention that Exs. B7 and

B9 were forged documents, cannot be accepted.

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53. The High Court also recorded findings regarding possession. Though

the Trial Court relied upon the testimony of PW-2 (appellant’s

neighbour) to hold that possession remained with the appellant, the

First Appellate Court upon reappreciation of evidence found the

testimony unreliable. The High Court noted that the appellant failed

to prove her possession over the suit properties, whereas the

respondents had produced revenue records under Exs. B14 to B23,

which were rightly relied upon by the First Appellate Court. We are

conscious of the fact that mutation entries alone do not create or

transfer ownership rights. However, when such revenue records

continue for many years, are supported by registered sale

transactions and remain unchallenged for a long period (a decade in

the present case), they become relevant factors while considering

possession and the conduct of the parties. Therefore, the High Court

cannot be said to have committed any error in considering the

mutation entries as one of the important circumstances in the case.

54. One of the important circumstances against the appellant is the

unexplained delay of nearly ten years in instituting the suit. The

principal sale transactions were executed in the year 1998, whereas

the suit came to be filed only in 2008. During this long period, the

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GPAs remained uncancelled, mutation entries continued in the

names of purchasers and further sale transactions also took place

without any objection being raised by the appellant before any

authority. Such conduct is inconsistent with the conduct normally

expected from a person alleging fraudulent and unauthorized

alienation of immovable property. Even assuming limitation

commenced from the date of knowledge, the explanation offered by

the appellant regarding delayed discovery of the transactions was not

found credible by the courts below. Therefore, the prolonged silence

and inaction on the part of the appellant for almost ten years was

rightly taken into consideration by the High Court while assessing

the case.

55. The scope of interference by the High Court under Section 100 of the

CPC is well settled and unless the findings recorded by the courts

below give rise to a substantial question of law, the High Court

cannot interfere. In the present case, the First Appellate Court, being

the final court on facts, undertook a reappreciation of the oral and

documentary evidence on record and reversed the judgment and

decree of the Trial Court with reasoned findings. The High Court,

upon independent examination of the record, concluded that no

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substantial question of law arose for consideration. We find no

perversity, patent illegality or jurisdictional error in the said

conclusion warranting interference by this Court.

56. For the aforesaid reasons, we are of the considered view that the

appellant has failed to make out any case warranting interference

with the impugned judgment and order dated 03.01.2017 passed by

the High Court of Judicature at Madras in Second Appeal No. 714 of

2016.

57. The appeal is accordingly dismissed.

58. Pending application(s), if any, shall stand disposed of.

………………………………..J.

[UJJAL BHUYAN]

………………………………..J.

[VIPUL M. PANCHOLI]

NEW DELHI

22

nd

MAY, 2026