The Delhi High Court has held that a General Power of Attorney is merely a document of agency that does not convey ownership rights, and an agent executing a sale deed on behalf of a co-owner is statutorily bound under Section 218 of the Indian Contract Act, 1872, to remit the full sale consideration to the principal. Dismissing a regular first appeal filed against a decree passed on admissions under Order XII Rule 6 of the Code of Civil Procedure, 1908, Justice Neena Bansal Krishna upheld the trial court’s direction ordering the appellant to pay over Rs. 1.01 crore in retained sale consideration along with 8% interest per annum to the legal heirs of his deceased sister-in-law.
Background of the Case
On March 29, 1985, Late Smt. Kusum Mehta along with her three sisters-in-law (Smt. Nirmal Mehta, Smt. Renu Mehta, and Smt. Bina Mehta) purchased agricultural land measuring 26 Bighas in Village Paprawat, Tehsil Najafgarh, New Delhi, through four registered sale deeds executed by one Shri Jagat alias Roshan. The property was mutated jointly in the revenue records, granting Smt. Kusum Mehta a 1/4th undivided share.
On April 11, 2011, the appellant, Bhisham Mehta (husband of Bina Mehta and brother-in-law of Kusum Mehta), acting as the registered General Power of Attorney holder for the co-owners, sold the entire property to M/s Agile Properties Limited for a total sale consideration of Rs. 6,95,11,500. Smt. Kusum Mehta’s 1/4th share amounted to Rs. 1,73,77,875. However, the appellant deposited only Rs. 71,99,801 into her bank account in March 2012, which she discovered in April 2012, while retaining the balance amount of Rs. 1,01,78,074.
Following repeated unheeded demands and the demise of Smt. Kusum Mehta in December 2013, her three daughters and legal heirs—Mrs. Gita Vig, Mrs. Hemlata Chanda, and Mrs. Dipti Dhingra—instituted a recovery suit in April 2014. The Additional District Judge, New Delhi, decreed the suit on February 7, 2020, under Order XII Rule 6 CPC for Rs. 1,01,78,074 with 8% interest per annum from April 11, 2011, until realisation. The appellant challenged this decree before the High Court.
Arguments of the Parties
The appellant contended that:
- Smt. Kusum Mehta had executed irrevocable General Powers of Attorney in 1985 and 1995 conferring the power of “Gift,” thereby relinquishing all rights, title, and interest in the property.
- The land was originally acquired out of his and his wife’s personal funds, and the names of the sisters-in-law were inserted merely for convenience.
- The sum of Rs. 72,00,000 deposited in Smt. Kusum Mehta’s bank account was not sale consideration but an interest-free friendly loan advanced to her, for which he had filed a separate counter-claim.
- The trial court erred in decreeing the suit without deciding the counter-claim and that the suit was barred by limitation as it was filed beyond three years from the execution of the sale deed.
In response, the respondents maintained that:
- The General Power of Attorney was executed purely for the management of the Delhi property since Smt. Kusum Mehta resided in Siliguri, and it neither transferred title nor was coupled with interest.
- The appellant had deposited the identical sum of Rs. 72,00,000 in the accounts of all three co-owners during the same period in March 2012, as admitted by him in his reply to the police at PS Lajpat Nagar.
- Smt. Kusum Mehta had declared the amount in her Income Tax Return for Assessment Year 2012–13 as long-term capital gains from part sale consideration and paid tax accordingly.
Court’s Analysis and Observations
The High Court examined the recitals of the registered Sale Deed dated April 11, 2011, observing that the document categorically described all four co-owners as “Vendors” and absolute owners of their self-acquired property. The Court noted that the appellant had executed the deed specifically as the “General Attorney” of Smt. Kusum Mehta and the other two co-owners.
Rejecting the appellant’s plea that he had funded the initial purchase, the Court ruled:
“A registered instrument speaks for itself, and general and unsubstantiated averments, contrary to the recitals in the registered Sale Deed, is not admissible under S.91 and S.92 Indian Evidence Act (corresponding to Sections 94 and 95 of the Bharatiya Sakshya Adhiniyam, 2023) and no contrary assertions can be permitted to displace the covenants of a registered document, executed by the very party who now seeks to resile from it.”
Addressing the legal effect of a Power of Attorney and citing the Supreme Court’s landmark ruling in Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana and Another, (2012) 1 SCC 656, the Court observed:
“A General Power of Attorney is not an instrument of transfer of right, title or interest in an immovable property, but is a document of agency. Even an irrevocable Power of Attorney does not have the effect of transferring title to the attorney. The Supreme Court in Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana and Another, (2012) 1 SCC 656, has categorically held that transactions of the nature of “GPA sales” do not convey title and do not amount to transfer.”
The Court emphasized that under Section 218 of the Indian Contract Act, 1872, “an agent is bound to pay to his principal all sums received on his account.”
On the defence that the payment of Rs. 72,00,000 was a friendly loan, the Court noted that the appellant had deposited the identical amount into the accounts of all three co-owners in March 2012 without any written loan agreement, contemporaneous entry, or income tax disclosure. The Court termed the plea an afterthought, stating:
“The defence of an interest-free friendly loan, being wholly unsupported by any documentary material and being contradicted by the Appellant’s own contemporaneous written Reply before the police authorities, is a moonshine defence, and cannot detain the Court from passing a decree on admissions under Order XII Rule 6 of the Code.”
Regarding the pendency of the counter-claim, Justice Krishna noted that it was registered as a distinct and separate suit based on an independent cause of action, which did not preclude passing a decree on admissions. Furthermore, the Court rejected the limitation objection, holding that limitation began when Smt. Kusum Mehta gained knowledge of the transaction in April 2012, rendering the suit instituted in April 2014 well within the three-year statutory period.
Decision
Finding no infirmity in the trial court’s judgment and decree dated February 7, 2020, the Delhi High Court dismissed the appeal along with all pending applications.
Case Title: Bhisham Mehta v. Mrs. Gita Vig & Ors.
Case No.: RFA 645/2022, CM APPL. 53984-53986/2022
Bench: Justice Neena Bansal Krishna
Date: August 31, 2026
