Commercial Law

Supreme Court Judgment on Validity of Power of Attorney and Sale Deeds

In a Supreme Court case, plaintiffs contested a Madras High Court decision that favored a defendant regarding a disputed 110-cent land in Tamil Nadu. The land was initially owned by the plaintiffs’ father, who executed a gift deed transferring 50 cents to his first wife. The dispute arose when the defendant, acting under a Power of Attorney from the plaintiffs, executed sale deeds for the land, which plaintiffs argued was beyond the authorized scope.

The plaintiffs, largely illiterate, claimed they only authorized the defendant for development purposes, not for sales or other transactions. A First Appellate Court had ruled in favor of plaintiffs, finding that the Power of Attorney’s content was misrepresented. The High Court, however, disagreed, stating that the issue of non est factum (the document is not what it appears) was not explicitly pleaded.

The Supreme Court analyzed the case, considering the concept of non est factum, which allows invalidation of a document if signed under mistaken understanding. The Court found that plaintiffs had sufficiently pleaded and presented evidence for non est factum. The High Court’s assertion that the plea was not explicitly stated was dismissed, as long as parties understood its relevance.

The Supreme Court emphasized that pleadings and issues exist to ensure both sides are fully informed, preventing surprises during trials. It also highlighted that a registered document’s validity presumption can be rebutted by proof of non est factum. Therefore, the First Appellate Court’s decision in favor of plaintiffs was upheld, and the Supreme Court ruled in their favor, declaring the Power of Attorney and subsequent sale deeds void.

Overall, the Supreme Court affirmed that proper pleading and evidence can support a plea of non est factum, even if not explicitly mentioned, ensuring a fair and just trial outcome.

.decided by the Supreme Court of India on August 17, 2023.