Bhisham Mehta v. Mrs. Gita Vig & Ors., 2026

Kusum Mehta jointly purchased agricultural land with three other co-owners in 1985 and held a one-fourth undivided share.

In 2011, the appellant sold the property for ₹6,95,11,500 while acting as the GPA holder of Kusum and two other co-owners.

Kusum's share in the sale consideration amounted to ₹1,73,77,875.

The appellant transferred only ₹71,99,801 to Kusum and retained ₹1,01,78,074.

After Kusum's death, her daughters initiated proceedings seeking recovery of the remaining sale consideration.

The appellant claimed that the property had actually been acquired by him and his wife and that the irrevocable GPAs had conferred rights in the property upon him.

He further claimed that the amount deposited into Kusum's account was an interest-free friendly loan, rather than her share of the sale proceeds.

The Trial Court decreed the recovery claim, following which the appellant preferred an appeal before the High Court.

The Delhi High Court dismissed the appeal and upheld the decree directing the appellant to pay ₹1,01,78,074 to the legal heirs of Kusum Mehta.

The Court held that a GPA is an instrument of agency and does not itself transfer ownership or any right, title or interest in immovable property.

Even an irrevocable Power of Attorney does not, by itself, transfer title to the attorney holder.

The GPAs executed by Kusum merely authorized the appellant to manage and deal with her undivided share on her behalf.

The Court found that the GPAs were neither executed for consideration nor coupled with any proprietary interest of the appellant.

Having received the sale proceeds in his capacity as agent, the appellant was required under Section 218 of the Indian Contract Act to account for and pay the money received on Kusum's behalf.

The Court rejected the alleged friendly-loan explanation as a “moonshine defence”, particularly because similar amounts had been deposited into the accounts of the other co-owners.

The appellant's admissions were found sufficiently clear to justify the decree under Order XII Rule 6 CPC.

The judgment reinforces the fundamental distinction between a power to act on behalf of an owner and ownership itself. A GPA authorizes the attorney to perform specified acts but does not automatically make the attorney the owner of the property.

The Court's reasoning is particularly important where parties attempt to rely upon the word “irrevocable” in a Power of Attorney. Irrevocability of agency does not, by itself, create proprietary rights.

The appellant had acted in the capacity of an agent when executing the sale deed. Consequently, the sale proceeds received by him were held on account of the principal and could not simply be retained.

Section 218 of the Indian Contract Act provides an important basis for requiring an agent to account for money received on behalf of the principal.

The Court also examined the appellant's alternative explanation that the payment represented a loan. The fact that corresponding amounts were deposited into the accounts of the other co-owners substantially undermined this defence.

The characterization of the loan defence as a “moonshine defence” demonstrates the Court's assessment that the explanation was merely an attempt to avoid the obligation to account for the sale proceeds.

The application of Order XII Rule 6 CPC is also significant. Where material admissions are clear and unequivocal, a court need not subject an admitted liability to unnecessary prolonged trial.

Overall, the judgment protects the interests of property owners who authorize another person to deal with their property and reinforces the fiduciary character of the principal-agent relationship.