2026 INSC 402 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. OF 2026

(@ SLP (C) No. 25132 OF 2025)

M/s. MARG LIMITED ... APPELLANT

VERSUS

SUSHIL LALWANI & ORS. … RESPONDENTS

J U D G M E N T

ALOK ARADHE, J.

1. Leave granted.

2. This appeal emanates from an order dated 28.07.2025 by High

Court of Judicature at Madras (‘the High Court’) whereby the

revision preferred by the respondents was allowed and the

order dated 24.09.2024, rejecting the application under Order

VII Rule 11 of the Code of Civil Procedure (‘the Code’), was set

aside and the plaint was rejected.

FACTUAL BACKGROUND:

3. Facts giving rise to filing of this appeal are as follows. The

appellant is a company engaged in real estate development. By

a registered sale deed dated 27.04.2002 , the appellant

purchased land admeasuring 1 acre and 85 cents, situated at

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Karapakkam Village, Sholinganullur Taluk, Chengalpattu

District, Chennai (‘the subject land’), for a consideration of Rs.3

crores. On 28.08.2006, the appellant obtained necessary

statutory approval including building permission from the local

authority, and constructed a multistoried commercial IT

building known as “Digitial Zone-I” (‘the subject property’),

comprising of multiple floors with a total built up area of

approximately 2,55,050 sq. ft.

4. On 14.03.2011, the appellant availed of loan of approximately

72 crores for its business and financial requirements. To

secure the aforesaid loan, the appellant created an equitable

mortgage over the subject property by depositing the original

title deeds with the Standard Chartered Bank (‘the Bank’).

Subsequently, on 13.02.2015, the appellant availed an

additional loan of Rs.7.19 crores from the Bank and again

created an equitable mortgage over the subject property by

executing another memorandum of deposit of title deeds in

favour of the Bank.

5. Due to financial difficulties, the appellant was unable to service

its loan obligations. Consequently, the Bank classified the loan

account as Non-performing Assets (NPAs), and issued a

demand notice on 11.01.2018 under Section 13 (2) of the

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Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest ( SARFAESI) Act, 2002.

Thereafter, in 2021 the Bank filed an Original Application

before the Debts Recovery Tribunal, Chennai, seeking recovery

of Rs.72.63 crores. On 16.06.2022, the appellant and the Bank

entered into a one time settlement (OTS) whereby the appellant

was required to pay a sum of Rs.55 crores. A joint compromise

memo was filed before the DRT. The appellant paid a sum of

Rs. 27 crores, but failed to pay the balance of Rs. 28 crores

within the stipulated time. The Bank on 14.10.2022, extended

the payment deadline up to 19.10.2022.

6. In January, 2023, the appellant and the Bank entered into a

fresh settlement, whereby the appellant was required to pay

Rs.32.50 crores instead of Rs.28 crores. Simultaneously, the

appellant entered into negotiations with the respondent. On

17.02.2023, a Memorandum of Agreement (MoA) was drafted

by respondent’s counsel. The parties remained in continuous

communication, particularly through WhatsApp exchanges,

actively negotiating and refining the terms, structure, and

language of the MoA.

7. In furtherance of the commercial arrangement , already

finalized between the parties, the respondent No.1 structured

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the transaction through multiple entities by incorporating

several special purpose vehicles (SPVs) between 09.03.2023

and 15.03.2023, intended to act as nominees for purchasing

different proportions of the subject property. The MoA was

finalized on 07.03.2023 and executed by the appellant,

however, it was not signed by respondents. Under the MoA, the

subject property was to be sold through eight separate sale

deeds for a consideration of Rs.58.60 crores, including Rs.6.60

crores towards stamp duty. Out of this amount, Rs.32.50

crores was payable directly to the Bank. On 03.04.2023, the

Bank issued a consent letter agreeing a sum of Rs.32.50

crores.

8. On 03.04.2023, upon receipt of Rs.32.50 crores, the Bank

handed over the title deeds to respondents. Thereafter, the

appellant and the respondents executed eight separate sale

deeds on 03.04.2023, which were registered on 19.04.2023.

SUIT AND PROCEEDINGS:

9. In June, 2024, the appellant instituted a civil suit seeking the

relief of mandatory injunction directing the respondents to

execute MoA dated 17.03.2023, on the ground that

respondents had failed to fulfil their obligations arising out of

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commercial arrangement, particularly with regard to execution

of MoA and payment of balance consideration linked to

refurbishment and leasing of the property. In the alternative,

the appellant sought the relief of reconveyance of the subject

property. A permanent injunction restraining the respondents

from alienating or interfering with the possession of the

appellant over the subject property was also sought.

10. The respondents filed an application under Order VII Rule 11

of the Code, seeking rejection of the plaint, on the grounds that

it did not disclose a cause of action, and that the relief claimed

was undervalued and the plaint was insufficiently stamped.

11. By an order dated 24.09.2024, the trial court held that the

plaint disclosed a cause of action and the issues raised by the

respondents required adjudication on merits after a full trial.

The application was accordingly rejected. Aggrieved, the

respondents filed a revision before the High Court.

12. By an order dated 28.07.2025, the High Court held that

appellant’s case was founded on MoA which did not constitute

a concluded contract enforceable in law. It further held that

upon execution of the sale deeds on 03.04.2023, the rights in

the subject property stood transferred and no independent

cause of action survived for enforcement of any prior o r

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collateral arrangement. The High Court concluded that

pleadings did not disclose a legally sustainable cause of action.

It was further held that, though the suit was framed as one for

mandatory and permanent injunctions, it was, in substance, a

claim for recovery of approximately Rs.53 to Rs.55 crores .

Accordingly, the appellant was required to pay the ad valorem

court fees, which was not paid. The High Court thus held that

the suit was not maintainable and allowed the revision, setting

aside trial court’s order and rejected the plaint. In the aforesaid

factual background, this appeal arises for our consideration.

SUBMISSIONS

13. Learned senior counsel for the appellant submitted that the

entire transaction was a composite commercial arrangement,

consisting of two inseparable components, namely (i) execution

of sale deeds, and (ii) payment of the balance consideration of

approximately Rs.53 crores under the MoA. It was contended

that the High Court erred in treating the transaction as a

concluded sale, while ignoring the broader understanding

between the parties. It is further submitted that although the

MoA, was not signed by the respondents, it was finalized and

acted upon, as evidenced by negotiations, WhatsApp

7

communications, and subsequent conduct , including

incorporation of SPVs and execution of sale deeds.

14. It was urged that such conduct clearly demonstrated

consensus ad idem and binding obligations. It is argued that

the High Court wrongly held that the plaint disclosed no cause

of action, and impermissibly undertook a detailed examination

of facts, amounting to a mini-trial at the stage of Order VII Rule

11. It was contended that deficiency in court fees, if any, was a

curable defect. Accordingly, it was submitted that the

impugned order deserves to be set aside. In support of the

aforesaid submissions, reliance has been placed on the

decisions of this Court

1

.

15. Learned senior counsel for the respondents, on the other hand,

submitted that the sale transaction stood concluded upon

execution of the sale deeds and no enforceable rights survived

in favour of the appellant. It was contended that MoA was not a

concluded contract, having never been signed by the

respondents and, therefore, could not be enforced. It was

further submitted that the suit, though framed as one for

injunction, is in reality a claim for recovery of approximately

Rs.53 to Rs.55 crores, requiring payment of proper ad valorem

1

Dahiben v. Arvindbhai Kalyanji Bhanusali (Gajra) & Ors.; (2020) 7 SCC 366

8

court fees, which had not been paid. It was also argued that

the plaint did not disclose a valid cause of action and was

barred in law, as it sought to go behind registered sale deeds

and introduce obligations not reflected therein.

ANALYSIS

16. We have considered the submissions advanced by learned

counsel for the parties and have perused the material on

record.

17. Order VII Rule 11 of the Code empowers the court to

summarily reject the plaint at the threshold on the grounds

specified therein. The provision reads as follows:

“11. Rejection of plaint. — The plaint shall

be rejected in the following cases: —

(a) where it does not disclose a cause of

action;

(b) where the relief claimed is undervalued,

and the plaintiff, on being required by

the Court to correct the valuation within

a time to be fixed by the Court, fails to

do so;

(c) where the relief claimed is properly

valued, but the plaint is written upon

paper insufficiently stamped, and the

plaintiff, on being required by the Court

to supply the requisite stamp -paper

within a time to be fixed by the Court,

fails to do so;

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(d) where the suit appears from the

statement in the plaint to be barred by

any law;

(e) where it is not filed in duplicate;

(f) where the plaintiff fails to comply with

the provisions of rule 9.

Provided that the time fixed by the Court for

the correction of the valuation or supplying of

the requisite stamp-paper shall not be

extended unless the Court, for reasons to be

recorded, is satisfied that the plaintiff was

prevented by any cause of an exceptional

nature for correcting the valuation or supplying

the requisite stamp-paper, as the case may be,

within the time fixed by the Court and that

refusal to extend such time would cause grave

injustice to the plaintiff.”

Thus, the Court is obligated to reject the plaint in the following

circumstances: (i) where it does not disclose a cause of action,

(ii) where the relief claimed is undervalued and plaintiff, on

being required by the court to correct the valuation within the

time fixed by the court, fails to do so (iii) where the relief

claimed is properly valued but the plaint is written upon paper

insufficiently stamped, and the plaintiff on being required by

the court the requisite stamp paper within the time fixed by the

court, fails to do so (iv) where from the statement made in the

plaint, the same appears to be barred by any law (v) where the

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plaint is not filed in duplicate and (vi) where the plaintiff fails

to comply with the provisions of Rule 9.

18. The principles governing the exercise of power under Order VII

Rule 11 of the Code can be culled out as follows:

(i) The object underlying Order VII Rule 11 is to ensure that

a litigation which is frivolous or is bound to fail does not

occupy the judicial time

2

.

(ii) The test for exercise of power under Order VII Rule 11 is

whether the averments made in the plaint are taken in

entirety, in convention with documents relied upon, would

result in a decree being passed. The Court must examine

the averments in the plaint in conjunction with the

documents relied upon, and the pleas taken in the written

statement would be wholly irrelevant . If any of the

grounds specified in clauses (a) to (e) are made out, the

court is bound to reject the plaint

3

.

(iii) Whether a plaint discloses a cause of action is essentially

a question of fact, to be determined on a holistic reading

2

Azhar Hussain v. Rajiv Gandhi; 1986 Supp SCC 315, Liverpool & London SP & I Association Ltd. v.

MV Sea Success I and Anr.; (2004) 9 SCC 512

3

Dahiben v. Arvindbhai Kalyanji Bhanusali (supra) (See also; Indian Evangelical Lutheran Church

Trust Association v. Sri Bala & Co.; 2025 SCC OnLine SC 48, P. Kumarakurubaran v. P. Narayanan &

Ors.; 2025 SCC OnLine SC 975).

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of the plaint itself. It is impermissible to isolate a sentence

or a passage and to read it out of context

4

.

(iv) If the averments made in the plaint prima facie show the

cause of action, the court cannot embark upon an enquiry

whether averments are correct

5

.

(v) The exercise of power under Order VII Rule 11 of the Code

is mandatory in nature and the court must ascertain

whether the plaint discloses a real cause of action or

something merely illusory

6

.

(vi) The power under Order VII Rule 11 of the Code may be

exercised at any stage of the suit

7

.

FACTS OF THE PRESENT CASE

19. In the backdrop of the aforesaid well-settled legal principles, we

may advert to the facts of the case in hand. The parties

negotiated for transaction of subject property through chat on

WhatsApp, which culminated in execution of MoA dated

17.03.2023. The sum and substance of the WhatsApp chat

between the parties which commenced on 28.01.2023 are as

follows:

4

Hardesh Ores (P) Ltd. v. Hede & Company; (2007) 5 SCC 614, Sejal Glass Limited v. Navilan

Merchants Private Limited; (2018) 11 SCC 780

5

D. Ramachandran v. R.V. Janakiraman & Ors.; (1999) 3 SCC 267

6

T. Arivandandam v. T.V. Satyapal & Anr.; (1977) 4 SCC 467

7

Saleem Bhai & Ors. v. State of Maharashtra & Ors.; (2003) 1 SCC 557.

12

(i) The WhatsApp chat dated 28.01.2023 reflects initiation of

negotiations for the proposed transaction relating to the

subject property. The WhatsApp chat discloses that initial

discussion centred around broad contours of the deal,

overall structure of the transaction, the role of respondent

in clearing the outstanding dues of the bank and possible

terms on which the property could be transferred.

(ii) The chat on 30.01.2023, 01.02.2023 and 04.02.2023

reflect continuous follow up regarding letter of intent and

legal documentation. The respondents side confirm that

their legal team was involved.

(iii) On 17.02.2023, a spreadsheet containing transaction

details was shared and a request was made to provide

letter of intent, sale deed and supplementary agreements.

(iv) Between 18.02.2023 and 22.02.2023, progress was made

on multiple fronts, including approval of SPVs and

preparation of agreements. On 22.02.2023, the names of

multiple entities were approved and confirmation was

given that draft of the agreements would be sent.

(v) On 24.02.2023, readiness was indicated by respondents

to proceed, by stating that once the documents were

signed, the funds transferred could be planned. On

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27.02.2023, the respondents acknowledged that there

were issues in the draft MoA and the same would be

discussed in detail.

(vi) On 28.02.2023, the discussions continued regarding

finalization of letter of intent and Memorandum of

Understanding (MoU). On 01.03.2023, detailed discussion

took place regarding financial arrangements including

confirmation of availability of funds of approximately Rs.

32.50 crores.

(vii) On 03.03.2023 and 04.03.2023, the parties engaged in

detailed negotiations regarding financial structure of the

transaction, including the total value of approximately

105 crores comprising consideration, loan components

and staged payments linked to leasing.

(viii) Between 10.03.2023 and 11.03.2023, it was confirmed

that draft MoA had been shared by the legal team and

queries were raised regarding the expected date of signing,

with a response that execution of MoA was expected

shortly.

(ix) On 17.03.2023, the legal team of the respondents shared

the final version of MoU and stated that document was

ready for signing.

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20. On 17.03.2023, the MoA, drafted by the respondents’ counsel,

was signed by the appellant. Its salient features are as follows:

(i) The MoA records a composite commercial arrangement

comprising (a) sale of property and (b) post -sale

obligations relating to refurbishment, leasing and

additional consideration.

(ii) The total consideration was approximately 58.60 crores

inclusive of stamp duty and registration charges. Out of

this, Rs.32.50 crores was paid directly to the bank

towards the discharge of its liabilities, and Rs.19.50

crores to the appellant.

(iii) The sale was to be effected through multiple sale deeds in

favour of nominee entities of respondent no.1.

(iv) Additionally, an amount of Rs.53 crores was payable

contingent upon leasing performance, post refurbishment

with payments structured proportionately, based on the

leasing achieved.

(v) The MoA also contemplated final adjustments related to

encumbrances and liabilities, reflecting a total transaction

value of approximately Rs.105 crores.

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21. In furtherance of MoA, the respondents on 03.04.2023, paid a

sum of Rs.32.50 crores to the Bank, resulting in release of title

deeds. On 19.04.2023, the appellant executed eight sale deeds

in favour of the respondents in relation to the subject property.

These facts unequivocally demonstrate that MoA was

implemented.

AVERMENTS IN THE PLAINT

22. Now, we may advert to the averments made in the plaint. Paras

9, 13, 15 and 19 are extracted below for the facility of

reference: -

“9. The plaintiff submits that accordingly

the plaintiff and first defendants have

agreed to reduce in writing in a

Memorandum of Agreement (MOA) by

incorporating the above said condition

mutually agreed between them. The first

defendant external lawyers namely Mr.

Shanthosh of TATVA -LEGAL CHENNAI,

and Ms. Jothy (internal counsel of the

Defendants) had drafted MOA with the

terms above stated. The MOA drafting has

commended from 17.02.2023 and

concluded on 14.03.2023 between these

periods the information was exchanged

between the first defendant & its

representatives, and his lawyer and

plaintiffs by way of WhatsApp group.

XXX XXX XXX

13. The plaintiff submit that, in fact, the

plaintiff even has not received entire sale

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consideration as per the sale deed for

Rs.51,92,56,375/-out of total MOS

structured transaction consideration of

Rs.105,00,00,000/- (besides tentative

payment of stamp duty / registration fee to

be paid by Defendants for approx. Rs.6.60

Crs). Besides the sale considering pending,

even the 1st defendant has not yet paid the

MOA structured Transaction balance of

Rs.53,00,00,000/- also. The plaintiff has

executed 8 (eight) sale deeds to Ist

defendant nominees (3rd Defendant to

10th Defendant). But 1st defendant did not

deliver the signed MOA dated 17-03-2023

to the plaintiff for carrying out

refurbishment work if at all required, for

leasing the entire building to fetch a

minimum rental of Us,40 per sq ft pm.

XXX XXX XXX

15. The plaintiff was not in position to

carryout refurbishment work required for

leasing the entire building to fetch a

minimum rent of Rs.40 per sq ft pm. In

fact Plaintiff got Letter of Intent signed

from RELIANCE SMART to take retail

space in the building with a rental of

Rs.62+persq ft pm but was unable to

conclude due to failure in due diligence

process for want of physical verification of

the Title documents by the Tenants which

Defendants were unable to provide. The

1st defendant and its nominees has

categorically admitted and acted upon

based on the MOA terms and which was

finalised by their own lawyers and

subsequently brought in the same in the

MOA. It was signed by the plaintiff and

delivered to 1st defendant and its

representative for signing by 2nd

Defendant Director Ms Aarthi Lalwani w/o

Ist Defendant, but both the original

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agreement copies are still retained with

him. The 1st defendant having received the

MOA in writing in NJ Stamp value of

Rs.100/ dated 17-03-2023 and he has

tried to avoid the performance of his part

of contact. The 1st defendant has pre -

planned to get sale deed from the plaintiffs

to in favour of the 3 to 10 defendants to

deprive and deceive the plaintiff from not

paying the balance of Rs.53,00,00,000/ in

respect of sale of the suit property.

XXX XXX XXX

19. The cause of action arose, on

17.03.2023 when the Plaintiff forwarded

the Memorandum of Agreement to the Ist

Defendant & 2nd Defendant for affixing

signature, on 18th March 2023 when the

Plaintiff asked for the said duly signed

Memorandum of Agreement, on

03.04.2023 when (the Plaintiff has

executed 8 Sale Deeds in favour of the 3rd

to 10th Defendants when the Plaintiff and

the Defendants communicated through

WhatsApp and email communications

from Jan. 23 to till date, when the

Plaintiff demanded all the Defendants to

re-convey the Suit Schedule Property in

favour of the Plaintiff.”

A careful and holistic reading of paragraphs 9, 13, 15 and 19 of

the plaint, as extracted above, would indicate that the plaintiff

has not set out any vague or bald assertions, but has pleaded a

sequence of material facts which, if taken at face value,

disclose a live and subsisting dispute requiring adjudication,

which is evident from the following facts :-

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23. Firstly, the plaint specifically pleads that the parties had

arrived at a mutually agreed commercial understanding, which

was sought to be reduced into writing in the form of a MoA.

The drafting process, as averred, was undertaken by the

counsel of the defendants themselves, and the exchange of

drafts and negotiations through WhatsApp communications

has been set out as part of the factual matrix. These averments

are not inconsequential; they are material facts which go

towards establishing the existence of a pre-existing consensus

and a structured commercial arrangement.

24. Secondly, the plaintiff has categorically pleaded that the

transaction was not confined to the execution of sale deeds

alone, but formed part of a larger, composite arrangement

involving staged payments and post -sale obligations. The

assertion that a substantial portion of the consideration –

namely the sum of Rs.53 crores - remains unpaid, coupled

with the allegation that the MoA embodying such obligations

was deliberately not executed by the defendants, constitutes a

clear assertion of breach. Whether such a claim ultimately

succeeds is a matter of trial. However, at this stage, it cannot

be said that the plaint is bereft of material particulars.

19

25. Thirdly, the averments in paragraph 15 further reinforce the

plaintiff’s case by asserting acts done in furtherance of the

alleged arrangement, including attempts to secure tenants and

undertake refurbishment, which were allegedly frustrated due

to the defendants’ conduct. These pleadings indicate not only

the existence of obligations but also their partial performance

and the consequent prejudice suffered by the plaintiff. Such

facts, if proved, would have a direct bearing on the relief

claimed.

26. Most significantly, paragraph 19 of the plaint delineates the

cause of action with sufficient clarity and specificity. It traces

the accrual of cause of action to identifiable events, including:

(i) forwarding of the MoA for execution, (ii) failure of the

defendants to return the signed MoA, (iii) execution of the sale

deeds, and (iv) continued communications and subsequent

refusal to honour obligations. This articulation satisfies the

legal requirement that a cause of action must comprise a

bundle of facts giving rise to a right to sue. In this backdrop, it

cannot be said that the plaint fails to disclose a cause of action.

On the contrary, the pleadings disclose a triable issue as to

whether the MoA formed part of a binding and enforceable

20

commercial arrangement and whether the defendants have

failed to perform obligations arising therefrom.

27. It is equally well settled that at the stage of Order VII Rule 11

CPC, the Court can neither embark upon an inquiry into the

enforceability or validity of the MoA, nor can it assess the

sufficiency of evidence or the probability of success of the

claim. The question whether the MoA constitutes a concluded

contract, or whether it is rendered unenforceable for want of

signatures, are matters which fall squarely within the domain

of trial. Any finding on such issues at the threshold would

amount to a premature adjudication, transgressing the limited

scope of Order VII Rule 11.

28. The approach adopted by the High Court, in proceeding to

examine the enforceability of the MoA and to conclude that no

cause of action survives, amounts to conducting a mini-trial,

which is impermissible in law. The Court, at this stage, is

required to assume the averments in the plaint to be true and

determine whether they disclose a right to sue; it is not open to

the Court to test their correctness or to weigh them against the

defence.

29. Thus, when the plaint read in its entirety, clearly discloses:

(a) the existence of a negotiated commercial arrangement,

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(b) its partial implementation through execution of sale

deeds,

(c) the subsistence of reciprocal obligations,

(d) and the alleged breach thereof by the defendants.

The averments made in the plaint taken together, constitute a

complete and intelligible cause of action, warranting

adjudication in a full-fledged trial rather than summary

rejection.

RELIEF AND VALUATION

30. Paragraph 28 of the plaint indicates that the plaintiff has

prayed for the following reliefs in the suit: -

“28. It is therefore prayed that this

Hon'ble Court may be pleased to grant

Judgement and Decree.

a. For a Mandatory Injunction

directing the Defendants to execute

MOA dated 17-03-2023 in favour of

the Plaintiff to enforce the same for

recovery the balance of a sum of

Rs,53,00,00,000/ in respect of sale of

the suit property failing to do so, this

Hon'ble Court maybe pleased to

execute a reconveyance of the

property by 3 to 10 defendant in

favour of the Plaintiffs in respect of

the suit properties.

b. For a Permanent Injunction

restraining the Defendants, their

men, agents, or any other persons

claiming under them from alienating

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or encumbering suit properties in

favour of 3rd Parties.

c. For a Pe rmanent Injunction

restraining the Defendants, their

men, agents, or any other persons

from interfering the peaceful

possession and enjoyment of the suit

property by the plaintiff

d. For costs of the suit; and

e. Pass such further or other orders

as may be deemed fit and proper in

the circumstances of the case and

thus render justice.”

Thus, the appellant is inter alia seeking the relief of recovery of

Rs.53 crores.

31. In paragraph 20, the appellant has valued the reliefs and has

paid the court fee. The said paragraph reads as under: -

“20. The Plaintiffs value the suit at

Rs.10,02,000/- (Rupees Ten lakhs and

two Thousand Only) and pays a Court fee

of Rs.30,060/- under Section 27 (c) of

Tamil Nadu Court Fees and Suit

Valuation Act, (Amended) 20I7.”

32. Insofar as the rejection of the plaint on the ground of improper

valuation and non-payment of appropriate court fee is

concerned, the approach adopted by the High Court cannot be

sustained in law.

33. A plain and conjoint reading of clauses (b) and (c) of Order VII

Rule 11 of the Code makes it abundantly clear that the power

23

to reject a plaint on the grounds enumerated therein, is not to

be exercised in the first instance, without affording an

opportunity to the plaintiff. The statutory scheme contemplates

a two-step process. Firstly, the Court must form an opinion

that the relief claimed is undervalued or that the court fee paid

is insufficient. Secondly, upon such determination, the Court is

obligated to require the plaintiff to correct the valuation and/or

supply the requisite court fee within a time to be fixed by it. It

is only upon failure of the plaintiff to comply with such

direction within the stipulated time, that the consequences of

rejection of the plaint can ensue. Thus, the rejection of a plaint

under Order VII Rule 11(b) or (c) is not automatic upon a

finding of undervaluation or deficit court fee; rather, it is

conditional upon non-compliance with the opportunity so

granted by the Court.

34. Moreover, it is pertinent to note that the High Court has merely

recorded a conclusion that the suit is undervalued, without

undertaking the necessary exercise of determining what, in its

view, would constitute the proper valuation of the suit or the

court fee payable in accordance with law. In the absence of

such a finding, the direction, if any, to correct the valuation

could not have been meaningfully complied with by the

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plaintiff. The failure to record such a determination further

vitiates the impugned order. In the present case, even

assuming that the relief sought by the appellant was

undervalued and that the court fee paid was deficient, the High

Court, instead of directing the appellant to correct the

valuation and make good the deficit court fee, proceeded to

reject the plaint outrightly. Such a course of action is clearly

contrary to the express mandate of the provision.

35. The requirement to grant an opportunity is not a mere

procedural formality, but a substantive safeguard intended to

ensure that a litigant is not non-suited on a curable defect. The

deficiency in valuation or court fee does not, by itself, render

the suit non-maintainable at the threshold. It is a defect which

is capable of being remedied, and the law expressly provides a

mechanism for such rectification. The High Court, in

overlooking this statutory requirement, has effectively denied

the appellant an opportunity to cure the defect, thereby

defeating the very object underlying clauses (b) and (c) of Order

VII Rule 11. The impugned order, to this extent, therefore,

suffers from a manifest error of law. Accordingly, the proper

course would be to set aside the rejection of the plaint on this

ground and to direct the trial court to afford the appellant an

25

opportunity to correct the valuation of the suit and to pay the

requisite court fee within such time as may be fixed, in

accordance with law.

CONCLUSION

36. For the foregoing reasons, impugned order passed by the High

Court is quashed and set aside. The trial court is directed to

afford an opportunity to the appellant to correct the valuation

and to pay the requisite court fees within such time limit as

may be fixed by it.

37. The appeal is disposed of in aforesaid terms. There shall be no

order as to costs.

…..…….……………….………….……….J.

[PAMIDIGHANTAM SRI NARASIMHA]

…..…….……………….………….……….J.

[ALOK ARADHE]

NEW DELHI;

APRIL 21, 2026.