The Supreme Court’s judgment delivered on 22 May 2026 in Mallika v. R. Nallathambi & Ors. (Civil Appeal No. 9837 of 2017) is not merely another decision on facts. It is a timely and much-needed reaffirmation of a fundamental principle that has been diluted in practice since the landmark ruling in Suraj Lamps & Industries Pvt. Ltd. v. State of Haryana (2012).
The Persistent Reality Post-Suraj Lamps
In Suraj Lamps, the Supreme Court categorically held that a General Power of Attorney, Agreement to Sell, or Will — even when executed together — does not convey title to immovable property. Only a registered sale deed can transfer ownership. Yet, more than fourteen years later, the ground reality remains unchanged. Across the country, the following pattern continues to thrive:
- A person in need of money approaches a financier.
- Instead of a simple mortgage deed, the parties execute a GPA + registered sale deed (sometimes back-dated or executed immediately) in favour of the financier or his nominees/relatives.
- The original title deeds are handed over “as security”.
- The borrower is made to believe (or is assured) that this is only a “temporary arrangement” and the property will be reconveyed upon repayment.
These transactions are neither new nor rare. They are the default mode of lending in large parts of the country even today. The documents are drafted with deliberate ambiguity — sometimes styled as “sale”, sometimes as “security”, and often as a combination of both — precisely to create confusion when disputes arise.
The Core Question: Who Bears the Burden?
The real battle in such cases is not about the validity of the GPA itself (which Suraj Lamps already settled). The battle is about the character of the transaction: Was it a genuine sale or was it a mortgage by conditional sale / security arrangement?
In Mallika v. R. Nallathambi, the Supreme Court has now given a clear and categorical answer:
The party who asserts that the transaction was not a sale but merely a security for loan must prove it on his own merits with positive, cogent, and reliable evidence.
The Court refused to shift the burden onto the holder of the registered sale deed merely because a GPA was executed earlier. The following key observations are worth reproducing:
- The appellant (original owner) failed to produce any documentary evidence of the alleged loan, payment of interest, or repayment of principal.
- Even the Trial Court had recorded a categorical finding that repayment had not been proved.
- The appellant did not enter the witness box despite serious allegations of fraud and misuse of signed blank papers. The Court drew an adverse inference against her.
- Registered sale deeds were executed in 1998. Mutation entries stood in favour of the purchasers for nearly a decade without challenge. The Court held that such long, unchallenged revenue records become highly relevant.
The Supreme Court dismissed the appeal and upheld the concurrent findings of the First Appellate Court and the Madras High Court.
Why This Judgment Brings Much-Needed Certainty
This decision is significant for several reasons:
- It closes the “mere allegation” route Post-Suraj Lamps, many litigants (especially borrowers or their legal heirs) file suits years later alleging that “the GPA was only for security” or “the sale deed was sham”. Mallika makes it clear that such bald assertions, unsupported by contemporaneous evidence of loan and repayment, will not suffice.
- It protects the sanctity of registered documents and revenue records Once a sale deed is registered and mutation is effected, the burden shifts heavily onto the person who wants to go behind the registered document and prove a different intention.
- It reiterates the principle of adverse inference When a party levels serious allegations of fraud, forgery, or misuse of fiduciary position (GPA holder occupies a fiduciary position), but chooses not to enter the witness box, the Court is entitled to draw an adverse inference. This is particularly important because in most such cases, the original owner is the best person to depose about the true nature of the transaction.
- It discourages belated challenges A delay of nearly ten years in challenging the transaction, without any plausible explanation, was held against the appellant. This sends a strong message to those who sleep over their rights and later try to unsettle settled titles.
Practical Takeaways for the Bar
As a practicing advocate, this judgment should guide our strategy in the following manner:
- For the party claiming “it was only security”: You must come prepared with positive evidence — loan agreement (even if unregistered), contemporaneous receipts of interest, bank statements showing repayment, oral evidence of witnesses who were present at the time of alleged loan transaction, etc. Mere production of the GPA and title deeds is no longer enough.
- For the party defending the registered sale: Rely heavily on (a) the registered sale deed itself, (b) mutation entries and revenue records, (c) long possession, and (d) the failure of the opposite party to lead evidence of loan and repayment.
- Pleading strategy: In such suits, it is advisable to specifically plead the absence of any loan agreement, the absence of any contemporaneous record of repayment, and the conduct of the parties after the alleged “security” transaction.
Conclusion
The judgment in Mallika v. R. Nallathambi does not break new ground — it reinforces existing principles with renewed vigour. In an era where land transactions through the route of GPA + Sale Deed continue to proliferate despite Suraj Lamps, this decision serves as a timely reminder:
If you want the Court to treat a registered sale deed as a mere mortgage or security arrangement, you must prove it. The Court will not presume it.
This is the certainty that the legal system badly needed. Litigants and advocates who ignore this principle do so at their own peril.