Neelam Sharma and Others v. Amita Passan and Others | 2026 INSC 913 | 21 August 2026
What the case was about
The dispute centred on a house in Panchkula that the plaintiffs described as joint family property. In Civil Suit No. 379 of 2017, Neelam Sharma and her relatives claimed they were co-owners along with the defendants and asked the court to declare that a transfer of the property by defendant No. 1, in collusion with defendant No. 2, was fraudulent and void. They also sought separate possession of their one-fourth shares and a permanent injunction. Before the suit could proceed on its merits, defendant No. 2 moved an application under Order VII Rule 11 of the Code of Civil Procedure, 1908, seeking outright rejection of the plaint on the ground that the plaintiffs had not paid ad-valorem court fee on the market value of the house. The trial court dismissed that application, but the High Court of Punjab and Haryana allowed a revision petition, set aside the trial court’s order, and directed the plaintiffs to deposit the higher fee within two weeks, failing which the plaint would stand rejected. Against that conditional order, the plaintiffs appealed to the Supreme Court.
The key facts
In their plaint, the plaintiffs asserted that the house at Sector 11, Panchkula, had been bought with joint family funds and that they and the defendants had lived there together. Paragraph 4 of the plaint stated that “after the purchase of the said house, the plaintiffs and defendants started residing in the MIG-A, House No. 417, Sector 11, Panchkula … as the said property was the joint properties of the plaintiffs and defendants,” and that both sides had invested in repairs and extensions from time to time (para 4.2). The plaintiffs were not executants of the transfer deed they challenged. Relying on their status as non-executants and on their claim of joint possession, they paid a fixed court fee under Article 17(iii) of the Second Schedule to the Court Fees Act, 1870, rather than the substantially larger ad-valorem fee under Section 7(iv)(c) of the Act. Defendant No. 2 argued that because the plaintiffs prayed for separate possession, they must necessarily be out of possession and therefore liable to pay ad-valorem court fee immediately.
The questions before the Court
The Supreme Court had to decide three connected issues. First, was the plaint liable to be rejected at the very threshold under Order VII Rule 11 of the CPC merely because the plaintiffs had not paid ad-valorem court fee on the market value of the property? Second, on a true reading of the plaint—especially the assertion of joint possession and the prayer for a declaration that the transfer deed was fraudulent and void—were the plaintiffs liable for ad-valorem court fee under Section 7(iv)(c) of the Court Fees Act, 1870, or only the fixed court fee under Article 17(iii) of the Act’s Second Schedule? Third, should the question of payability be deferred until the parties led evidence on disputed facts such as possession and the validity of the deed?
What the Court decided and why
A bench of Justices S.V.N. Bhatti and N.V. Anjaria allowed the appeal. It set aside the High Court’s order dated 19 May 2025 and upheld the trial court’s refusal to reject the plaint, but with an important modification: the question of the correct court fee would be considered and decided only after evidence was led in the suit (para 6.3).
The Court relied on Suhrid Singh alias Sardool Singh v. Randhir Singh and Others, (2010) 12 SCC 112, to draw the critical distinction between an executant and a non-executant of a deed. It explained that an executant who wants a deed annulled must sue for cancellation and pay ad-valorem court fee on the consideration stated in the deed. A non-executant, however, must sue for a declaration that the deed is invalid or not binding. If that non-executant is in possession and seeks only such a declaration, he is liable merely for the fixed court fee prescribed under Article 17(iii) of the Second Schedule. But if the non-executant is not in possession and also seeks the consequential relief of possession, he must pay ad-valorem court fee under Section 7(iv)(c) of the Act (para 5.3).
Applying this framework to the averments on record, the Court found that the plaintiffs had unequivocally asserted they were residing in the property along with the defendants, thereby pleading joint possession (para 4.2). Since they were also non-executants of the challenged transfer deed, there was no ground at the threshold to reject the plaint under Order VII Rule 11 for non-payment of ad-valorem court fee. The trial court was therefore justified in dismissing the application, and the High Court erred in issuing the conditional rejection (para 6).
At the same time, the Court made it clear that the ultimate determination of whether fixed or ad-valorem fee was payable could not be sealed before evidence was adduced. The correct fee would depend on “determinative facts” such as whether the plaintiffs were actually in joint possession and whether the transfer was indeed fraudulent—issues that could only be resolved after the parties led evidence. Therefore, the question of payability had to be deferred (para 6.2). The trial court’s order was upheld only subject to the modification that the fee question would be decided after and on the basis of the evidence led in the suit (para 6.3).
Why it matters
The judgment reinforces the narrow scope of Order VII Rule 11 of the CPC at the threshold stage. It signals that a court cannot terminate a suit merely because the defendant disputes the plaintiff’s description of possession or claims a different fee provision applies. For co-owners challenging an alienation of property, the ruling ensures that a suit will not be thrown out at the outset on the technical ground that the wrong court fee was paid, provided the plaint on its face asserts facts consistent with fixed-fee liability. The decision also offers practical guidance on the Court Fees Act, 1870: while a non-executant who claims possession may begin with a fixed fee, the final liability—ad-valorem or fixed—will be settled in light of the evidence actually led during the trial. By separating the procedural fee dispute from the merits at the threshold, the Court has ensured that substantive property disputes are decided on evidence rather than being derailed by premature technical objections.