MARG Limited v. Sushil Lalwani 2026 INSC 402 CPC - Rejection Of Plaint

Code of Civil Procedure 1908 - Order VII Rule 11(b,c) - 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. 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. (Para 33-35)

Code of Civil Procedure 1908 - Order VII Rule 11 - The principles governing the exercise of power (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 . (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 . (iii) Whether a plaint discloses a cause of action is essentially a question of fact, to be determined on a holistic reading of the plaint itself. It is impermissible to isolate a sentence 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 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 something merely illusory . (vi) The power under Order VII Rule 11 of the Code may be exercised at any stage of the suit. (Para 18)