Supreme Court's Crucial Ruling on GPAs: A Wake-Up Call for Property Transactions

This week, the Supreme Court delivered a significant judgment impacting property transactions involving General Powers of Attorney (GPAs). Professionals in real estate, law, and finance should take note of the Court's clarification on the burden of proof, the implications of delayed action, and the critical role of evidence presentation in disputes concerning GPA-backed sales.

Featured Case: Legitimacy of Sale Deeds Executed Under General Powers of Attorney Alleged as Loan Security

In a case with profound implications for property law and litigation strategy, the Supreme Court recently addressed the legitimacy of sale deeds executed under General Powers of Attorney (GPAs) that were allegedly intended solely as security for loans. The appellant claimed she executed GPAs in favor of the respondents as loan security, which were subsequently misused to execute sale deeds to their relatives. Her suit, filed years after the alleged transactions, sought to declare these sale deeds null and void.

The Supreme Court, upholding the judgments of the High Court and the First Appellate Court, dismissed the appeal. This ruling provides crucial insights for legal practitioners, real estate professionals, and financial advisors:

• Burden of Proof for Loan Security Claims: The Court firmly established that the party alleging that transactions based on registered GPAs and subsequent sale deeds were merely security for loans, and not genuine sales, bears the heavy burden of proof. Allegations of fraud or misuse require substantiated evidence beyond mere assertions.
• Adverse Inference for Non-Appearance: A critical aspect highlighted by the judgment is the legitimacy of drawing an adverse inference against a party who, despite possessing special knowledge of facts and making serious allegations, abstains from entering the witness box to provide evidence. This underscores the strategic importance of direct testimony in such disputes.
• Timeliness in Challenging Registered Documents: The Court emphasized that an unexplained and prolonged delay in challenging registered documents and mutation entries is inconsistent with the conduct expected from a person alleging fraudulent alienation of property. This reinforces the imperative for prompt legal action upon discovering such alleged discrepancies.
• Relevance of Mutation Entries: While mutation entries do not confer title, the judgment noted their relevance as factors when considering possession and the conduct of parties, particularly when supported by registered sale transactions that have remained unchallenged for an extended period.

This judgment serves as a vital reminder of the meticulous evidentiary standards required in property disputes, the risks associated with loosely defined GPAs, and the significant consequences of delayed legal action. Professionals advising clients on property matters must ensure rigorous documentation, clear intent, and timely recourse to uphold legal standing.

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MALLIKA VS R. NALLATHAMBI & ORS., decided on 22-05-2026