Deficiency in valuation or court fee does not, by itself, render the suit non-maintainable at the threshold – Supreme Court
In a recent judgment, Hon’ble Supreme Court has held that 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.
ABCAUS Case Law Citation:
5118 (2026) (04) abacus.in SC
The appellant is a company engaged in real estate development. The appellant availed of loan 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 Bank.
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 under SARFAESI Act, 2002.
The bank and appellant however entered into a one time settlement (OTS) scheme. Simultaneously, the appellant on the basis of a draft Memorandum of Agreement (MOA) entered in a commercial arrangement, whereby respondent structured the transaction through multiple entities by incorporating several special purpose vehicles (SPVs) intended to act as nominees for purchasing different proportions of the subject property. The MoA was finalized and executed by the appellant, however, it was not signed by respondents.
As per MOA, bank received the agreed amount directly and the Bank handed over the title deeds to respondents. Thereafter, the appellant and the respondents executed eight separate sale deeds which were registered.
Subsequently, the appellant instituted a civil suit seeking the relief of mandatory injunction directing the respondents to execute MoA on the ground that respondents had failed to fulfil their obligations regarding payment of balance consideration.
The respondents filed an application 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.
The Trial Court admitted the suit. Aggrieved, the respondents filed a revision before the High Court.
The High Court inter alia held that though the suit was framed as one for mandatory and permanent injunctions, it was, in substance, a claim for recovery. 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.
The Hon’ble Supreme Court observed that the rejection of the plaint on the ground of improper valuation and non-payment of appropriate court fee cannot be sustained in law.
The Hon’ble Supreme Court further observed that Rule 11 of the CPC makes it abundantly clear thatthe power 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.
The Hon’ble Supreme Court held that 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 Hon’ble Supreme Court opined that in such case, proper action would be to set aside the rejection of the plaint on this ground and to direct the trial court to afford the appellant an 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.
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