Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
2026 INSC 402
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
Signature Not Verified
a registered sale deed dated 27.04.2002, the appellant
Digitally signed by
KAPIL TANDON
Date: 2026.04.21
18:30:12 IST
Reason:
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 or
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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
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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
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decisions of this Court .
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
7
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
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occupy the judicial time .
(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
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court is bound to reject the plaint .
(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
4
or a passage and to read it out of context .
(iv) If the averments made in the plaint prima facie show the
cause of action, the court cannot embark upon an enquiry
5
whether averments are correct .
(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
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something merely illusory .
(vi) The power under Order VII Rule 11 of the Code may be
7
exercised at any stage of the suit .
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.
11
(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.
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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
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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 Permanent 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
22
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
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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.
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