The Supreme Court has held that when plaintiffs claim to be in joint possession and seek a declaration that a transfer deed is non-binding on them as non-executants, the suit cannot be rejected at the threshold under Order VII Rule 11 of the Code of Civil Procedure, 1908, over the issue of ad-valorem court fee. A division bench comprising Justice S.V.N. Bhatti and Justice N.V. Anjaria set aside a High Court of Punjab and Haryana order that had directed the plaintiffs to pay ad-valorem court fees on pain of rejection of their plaint. The apex court ruled that the payability of ad-valorem or fixed court fee must be deferred to be considered based on evidence led during the trial.
Background Of The Case
The dispute arose out of Civil Suit No. 379 of 2017 filed by Neelam Sharma and others in the Court of Additional Civil Judge (Senior Division), Panchkula. The plaintiffs sought a decree declaring them, along with defendant No. 1 and defendant No. 2, as co-owners with a 1/4th share each in House No. 417, Ground Floor, Sector 11, Panchkula. They challenged a transfer deed in favour of defendant No. 1 as fraudulent, null, and void, and sought separate possession and a permanent injunction.
According to the plaintiffs, the suit property was purchased by late Pushpa Sharma out of joint family funds and her Stridhan. Pushpa Sharma died on September 1, 2007, without executing a Will or transferring the house. The plaintiffs alleged that in August 2016, family member Rajeev Sharma fraudulently got the property transferred in his name in collusion with defendant No. 2 using forged documents at the Haryana Housing Board office. He subsequently mortgaged the property to Yes Bank for a loan of Rs. 1,50,00,000 and defaulted on repayment. The plaintiffs pleaded in paragraph 4 of the plaint that they resided in the house alongside the defendants and were co-owners in joint possession.
Defendant No. 2 filed an application under Order VII Rule 11 of the Code of Civil Procedure, 1908, seeking rejection of the plaint. The defendant contended that because the plaintiffs were not in possession and sought separate possession by partition, they were liable to pay ad-valorem court fee on the market value of the property.
Proceedings Before Trial Court And High Court
The Trial Court dismissed the application under Order VII Rule 11 on April 12, 2022. It held that only the averments in the plaint are to be considered at this stage. Observing that the plaintiffs claimed joint possession and were non-executants of the transfer deed/letter of allotment, the Trial Court held that ad-valorem court fee was not required.
However, in Civil Revision Petition No. 2778 of 2022, the High Court of Punjab and Haryana reversed the Trial Court’s order on May 19, 2025. The High Court observed:
“A perusal of the heading of the plaint, the prayer made therein and the averments made in the plaint show that it was the pleaded case of the respondents-plaintiffs that they were not in possession of the suit property and, therefore, they had prayed for separate possession as per their share. The Trial Court, in the considered opinion of this Court, erred in coming to the conclusion that no prayer for possession had been made. Once the possession had been prayed for, the respondents-plaintiffs were liable to affix ad valorem Court fee as per their share, in accordance with the provisions of the Court Fees Act, 1870.”
The High Court allowed two weeks for the plaintiffs to deposit ad-valorem court fee, failing which the plaint stood rejected.
Arguments Of The Parties
Before the Supreme Court, learned counsel Mr. Amit Aggarwal appeared for the appellants (original plaintiffs), while learned Senior Counsel Mr. Manoj Swarup represented the respondents (defendants).
The plaintiffs maintained that the property was inherited and they were non-executants of the challenged transfer deed, which did not reflect any property value or payment of stamp duty. Hence, only fixed stamp duty was payable. On the other hand, the defendants urged that since separate possession was prayed for, ad-valorem court fee based on market value was mandatory under the Court Fees Act, 1870.
Supreme Court’s Analysis And Legal Precedent
Examining the principles governing Order VII Rule 11 of the Code of Civil Procedure, 1908, the Supreme Court emphasized the settled position of law that only the averments made in the plaint must be looked into. The Court noted that in paragraph 4 of the plaint, the plaintiffs unequivocally stated that they resided in the suit property along with the defendants, thereby asserting joint possession.
The Supreme Court examined the legal framework regarding court fees, relying on its precedent in Suhrid Singh alias Sardool Singh vs. Randhir Singh and Others, which interpreted the Court Fees Act, 1870. The apex court reiterated the distinction between an executant seeking cancellation of a document and a non-executant seeking a declaration:
“Where the executant of a deed wants it to be annulled, he has to seek cancellation of the deed. But if a non-executant seeks annulment of a deed, he has to seek a declaration that the deed is invalid, or non est, or illegal or that it is not binding on him. The difference between a prayer for cancellation and declaration in regard to a deed of transfer/conveyance, can be brought out by the following illustration relating to A and B, two brothers. A executes a sale deed in favour of C. Subsequently A wants to avoid the sale. A has to sue for cancellation of the deed. On the other hand, if B, who is not the executant of the deed, wants to avoid it, he has to sue for a declaration that the deed executed by A is invalid/void and non est/illegal and he is not bound by it. In essence both may be suing to have the deed set aside or declared as non-binding. But the form is different and court fee is also different. If A, the executant of the deed, seeks cancellation of the deed, he has to pay ad valorem court fee on the consideration stated in the sale deed. If B, who is a non-executant, is in possession and sues for a declaration that the deed is null or void and does not bind him or his share, he has to merely pay a fixed court fee of Rs. 19.50 under Article 17(iii) of the Second Schedule of the Act. But if B, a non-executant, is not in possession, and he seeks not only a declaration that the sale deed is invalid, but also the consequential relief of possession, he has to pay an ad valorem court fee as provided under Section 7(iv)(c) of the Act.”
Applying this law, the bench pointed out that whether ad-valorem or fixed court fee is payable depends not merely on the prayer for possession, but on germane facts such as actual possession and the nature of the challenged transfer deed, which can only be determined upon leading evidence.
Decision Of The Court
The Supreme Court set aside the High Court’s order dated May 19, 2025, and upheld the Trial Court’s refusal to reject the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908.
The Court modified the order to clarify that the question of court fee payability—whether ad-valorem or fixed—is deferred and shall be determined by the Trial Court after evidence is led in the suit. The appeal was allowed accordingly.
Case Details:
Case Title: Neelam Sharma and Others v. Amita Passan and Others
Case No.: SLP (C) No. 31540 of 2025
Bench: Justice S.V.N. Bhatti and Justice N.V. Anjaria
Date: August 21, 2026
