The Supreme Court has dismissed a civil appeal filed by Mallika and upheld the Madras High Court’s decision refusing to interfere with a First Appellate Court judgment.
A Bench comprising Justice Ujjal Bhuyan and Justice Vipul M. Pancholi found no substantial question of law that justified interference under Section 100 of the Code of Civil Procedure (CPC).
Dispute Over Agricultural Lands and Power of Attorney
The dispute concerned agricultural lands in Coimbatore that Mallika purchased through registered sale deeds in 1996.
According to Mallika, she executed two registered General Powers of Attorney (GPAs) in favour of the respondents only as security for loans of ₹2 lakh and ₹5 lakh. She claimed that the respondents were money lenders and had no authority to sell the properties.
Mallika alleged that the respondents misused the GPAs and executed sale deeds in favour of their relatives and family members.
She further claimed that she had repaid the loans with interest. However, the respondents allegedly failed to cancel the GPAs or return her original title documents.
According to her, she discovered the transactions only in 2008 after inspecting records at the Sub-Registrar’s office.
Respondents Claimed Transactions Were Genuine
The respondents denied the allegations of fraud.
They argued that the transactions were genuine sales supported by valid consideration. They also relied on receipts acknowledging payment and maintained that possession of the properties had been lawfully transferred.
Trial Court and Appellate Findings
The Trial Court accepted Mallika’s case and declared the sale deeds void. It held that the GPAs were executed only as security for loans.
However, the First Appellate Court reversed the decree. It found that Mallika had failed to prove either repayment of the loans or her claim that the GPAs served only as security documents.
The Madras High Court later dismissed her second appeal. It held that the case did not raise any substantial question of law.
Challenge Before the Supreme Court
Before the Supreme Court, Mallika raised two principal arguments.
First, she argued that the First Appellate Court had failed to frame specific points for determination as required under Order XLI Rule 31 CPC.
Second, she contended that the burden of proof should have shifted to the respondents because the case involved allegations of fraud and fiduciary misuse.
Court Finds Substantial Compliance with Order XLI Rule 31
The Supreme Court rejected the procedural challenge.
The Bench clarified that Order XLI Rule 31 requires substantial compliance and not strict adherence to form.
The Court noted that the First Appellate Court had thoroughly examined both oral and documentary evidence. It had also considered issues relating to loan transactions, possession, mutation entries, limitation, and the conduct of the parties.
Therefore, the Court held that the appellate judgment satisfied the requirements of the provision.
Mutation Entries Relevant as Circumstantial Evidence
The Court also examined the significance of mutation entries.
It reiterated that mutation records do not create or transfer title. However, the Court held that such entries may serve as relevant circumstantial evidence in appropriate cases.
In the present case, revenue records reflected the names of the purchasers for nearly ten years. The entries remained unchallenged and were supported by registered sale deeds.
The Court therefore found no error in treating them as an important circumstance while assessing possession and conduct.
Adverse Inference Drawn Against Plaintiff
The Court placed considerable emphasis on the principle of adverse inference.
Relying on Vidhyadhar v. Manikrao (1999) 3 SCC 573, the Bench reiterated that courts may draw an adverse inference when a party with special knowledge of the facts chooses not to testify.
The Court noted that Mallika had made serious allegations of fraud, forgery, and misuse of documents. Despite this, she did not enter the witness box.
The Bench also observed that she produced no documentary evidence to prove the alleged loans, their repayment, or payment of interest.
As a result, the Court held that the adverse inference drawn by the lower courts was justified.
Delay Weakened the Fraud Allegations
The Supreme Court also considered the delay in filing the suit.
The disputed sale transactions took place in 1998, but Mallika filed the suit only in 2008.
During this period, the GPAs remained in force. Revenue records continued in the purchasers’ names, and further transactions occurred without objection.
The Court found this prolonged silence inconsistent with the conduct of a person claiming fraudulent alienation of property.
It also declined to interfere with the lower courts’ finding that her explanation for discovering the transactions only in 2008 lacked credibility.
Appeal Dismissed
The Supreme Court concluded that the High Court had correctly refused to interfere in second appeal.
Finding no substantial question of law, the Bench dismissed the appeal and upheld the judgment of the First Appellate Court.
Case Details
Case Title: Mallika v. R. Nallathambi & Ors.
Neutral Citation: 2026 INSC 529
