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2025 Supreme(Mad) 2577

THE HIGH COURT OF JUDICATURE AT MADRAS 
N. SATHISH KUMAR, J.
C.Kuppusamy - Appellant
Vs.
P.Vijaya - Respondent 
A.S.No.411 of 2022 
Decided On : 01-04-2025 

Advocates:
Advocate Appeared:
For the Appellants : Mr.K.S.Jeyaganeshan
For the Respondent: Mr.N.Manoharan

The burden of proof lies on the party in a dominant position to demonstrate the fairness of a transaction when the other party is in economic duress.

Headnote:

(A) Indian Evidence Act, 1872 - Section 111 - The plaintiff sought to cancel a sale deed executed under undue influence, claiming it was a loan transaction. The trial court found the sale deed null and void, confirming the plaintiff's position. (Paras 8, 11, 20, 21)

(B) Undue Influence - The court emphasized that a party in a dominant position must prove the fairness of the transaction when the other party is in a position of disadvantage. (Paras 16, 20)

(C) Limitation - The suit was filed within the statutory period, countering the defendants' claims of limitation. (Paras 19, 22)

Facts of the case:
The plaintiff, in dire financial need for her daughter's education, executed a Power of Attorney and sale agreement under pressure from the first defendant, a financier. The defendants later sold the property to third parties, prompting the plaintiff to seek cancellation of the sale deed. (Paras 3, 4, 12)

Findings of Court:
The trial court ruled the sale deed was executed under undue influence and was not intended as a sale, thus nullifying it. The plaintiff was ordered to repay the loan amount with interest. (Paras 8, 22, 23)

Issues: The court addressed whether the sale deed was a result of undue influence and whether the plaintiff proved her claims. (Paras 11, 12)

Ratio Decidendi: The court held that the burden of proof lies on the party in a dominant position to demonstrate the transaction's fairness, especially when the other party is in a position of economic duress. (Paras 20, 21)

Result: The appeal was partly allowed; the sale deed was set aside, and the plaintiff was ordered to repay the loan amount with interest.

JUDGMENT :

N. SATHISH KUMAR, J.

Challenging the judgment and decree of the trial Court decreeing the suit in favour of the plaintiff, the present appeal has been filed by the unsuccessful defendants.

2. The parties are arrayed as per their own ranking before the trial Court.

3. It is the case of the plaintiff that the first defendant is a financier and is doing finance business with the second defendant, third defendant is the wife of the second defendant and the fourth defendant is the wife of the first defendant. The suit property is situate in Coonoor, Nilgiris District. The plaintiff's daughter has joined MBBS at Armenia, an Eastern European country. In order to meet out the educational expenses, as the plaintiff was in dire need of funds, she approached the first defendant through one Prabhu for availing loan of Rs.10 lakhs. The first defendant has agreed to lend the amount on condition that General Power of Attorney in favour of the first defendant as well as an agreement for sale in favour of the second and third defendants are to be executed. As the plaintiff was in dire need of funds, due to undue influence exerted on her by the first defendant, she had executed Power of Attorney dated 09.04.2012 in favour of the first defendant as well as agreement for sale dated 09.04.2012 in favour of the second and third defendants. Besides, she has also given several signed blank papers, including cheques. It is agreed between the parties that interest at the rate of 24% per annum has to be paid. The plaintiff has also paid interest to the account of the first defendant. When the matter stood thus, the first defendant fraudulently registered the suit property in the name of the third and fourth defendants on 04.04.2014. Therefore, according to the plaintiff, the document is null and void. Hence, sought to cancel the document.

4. The first defendant filed the written statement which has been adopted by the defendants 2 to 4. The first defendant took up a plea that the suit has not been valued properly. The market value of the property is Rs.70 lakhs. It is his further case that he is not aware of the said Prabu and Mohammed Ali. Further Power of Attorney has not been cancelled from the year 2012 onwards The suit is hopelessly barred by limitation. According to the first defendant, they had entered into an agreement for sale of the property and total sale consideration is fixed at Rs.11 lakhs and paid an advance of Rs.10 lakhs and agreed to execute the document within a period of two years from the date of the agreement. Besides, the plaintiff also executed the Power of Attorney in favour of the first defendant to sell the suit property. The sale agreement was cancelled on 02.04.2014. Thereafter, the suit property has been sold to the third and fourth defendants and they became absolute owner of the suit property.

5. In the additional written statement, it is their contention that after the agreement, they approached the plaintiff to hand over vacant possession. At that time, the defendants came to know that the plaintiff had received a sum of Rs.10 lakhs from three tenants. Therefore, the defendants have decided to purchase the suit property in favour of the third and fourth defendants by paying a sum of Rs.10 lakhs to the tenants and received original Pokkiyam deeds. The plaintiff had also executed a receipt dated 09.03.2014 in favour of the first defendant confirming the receipt of pokkiyam amount.

6. On the basis of the above pleadings, the following issues have been framed by the trial Court :-

1. Whether the sale deed executed by the first defendant in favour of the defendants 3 and 4 on 04.04.2014 registered with Sub Registrar, Coonoor in document No.712/2014 has to be declared as null and void?

2. Whether the defendants 3 and 4 have to be restrained from in any manner encumbering the suit property in furtherance of the sale deed dated 04.04.2014 by way of permanent injunction?

3. To what other relief?

7. On the side of the plaintiff,

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