Co-owner in joint possession need not pay ad valorem court fee at plaint stage, Supreme Court holds

A Division Bench sets aside a Punjab and Haryana High Court order requiring ad valorem court fees, ruling the question must await trial evidence.

The Supreme Court has allowed a civil appeal brought by co-owners of a house in Panchkula, setting aside a Punjab and Haryana High Court direction that conditioned the survival of their plaint on payment of ad valorem court fee within two weeks. The Court held that where plaintiffs plead joint possession in the plaint, a court examining an application for rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 cannot, at that threshold stage, demand ad valorem court fee based on market value. The Bench further held that the question of whether ad valorem or fixed court fee is payable must be deferred until evidence is led in the suit and determinative facts are established.

The suit and the dispute over court fee

The appellants — Neelam Sharma and others — filed Civil Suit No. 379 of 2017 before the Court of Additional Civil Judge (Senior Division), Panchkula. Their suit sought a declaration that they, along with defendant No. 1, were co-owners of House No. 417, Ground Floor, Sector 11, Panchkula, each holding a one-fourth share. They further prayed for a declaration that defendant No. 1 had obtained a transfer of the house through fraud and that the transfer was null and void. They also sought separate possession to the extent of their one-fourth share each, along with permanent injunction.

The factual substratum of the suit was that one late Pushpa Sharma, grandmother of several of the plaintiffs, had purchased the suit property from joint family funds and her Stridhan. After her death on 1 September 2007, the plaintiffs alleged that Rajeev Sharma had the property transferred in his name in August 2016 by forging documents and producing them before the Haryana Housing Board. A loan of Rs 1,50,00,000 was allegedly taken from Yes Bank by mortgaging the property. The plaintiffs asserted throughout that they were co-owners in joint possession as heirs of late Pushpa Sharma.

Defendant No. 2 moved an application under Order VII Rule 11, CPC seeking rejection of the plaint, arguing that the plaintiffs had claimed separate possession by partition, were neither owners nor in possession, and were therefore required to affix ad valorem court fee on the market value of the suit house. Defendant No. 2 contended that non-payment of the requisite court fee rendered the plaint liable to rejection.

Conflicting findings below

The Trial Court rejected defendant No. 2's application. It read the plaint averments — in particular, paragraph 4 of the plaint which stated that the plaintiffs and defendants had resided in the suit property together and had invested in its repair and extension — as pleading joint possession. Relying on the Supreme Court's decision in Suhrid Singh alias Sardool Singh v Randhir Singh and Others, (2010) 12 SCC 112, the Trial Court held that since the plaintiffs were not executants of the transfer deed they sought to challenge, they were not required to pay ad valorem court fee.

The High Court of Punjab and Haryana reversed this in its order dated 19 May 2025. It read the plaint's heading, prayers, and averments as showing that the plaintiffs were not in possession and had prayed for separate possession. On that reading, the High Court held that once possession had been prayed for, the plaintiffs were obliged to affix ad valorem court fee under the Court Fees Act, 1870. It set aside the Trial Court's order, conditionally allowed the application under Order VII Rule 11, CPC, and directed that the plaintiffs deposit the requisite court fee within two weeks, failing which the plaint would stand rejected.

What the Supreme Court held on the court fee question

The Supreme Court, in a judgment authored by Justice N.V. Anjaria, found that the High Court had misread the plaint. The Court pointed to paragraph 4 of the plaint, which it quoted precisely, as an unequivocal assertion of joint possession. That paragraph stated that after purchase, the plaintiffs and defendants started residing in the suit property together, treating it as joint property, and had invested in repairs and extensions. The Court found that “the whole suit and the prayers were based on the possession of the plaintiffs of the suit property.”

Starting from the settled rule that under Order VII Rule 11, CPC, a court can look only at the averments in the plaint and not at the defendant's pleadings, the Court said that no basis existed at the threshold stage to accept defendant No. 2's case that ad valorem court fee was payable. The Trial Court was correct to refuse rejection of the plaint.

The Court revisited Suhrid Singh at length. That case had dealt with the Court Fees Act, 1870, the same Act which governs court fees in Punjab and Haryana. The principle distilled in Suhrid Singh was that a non-executant of a deed who is in possession and sues for a declaration that the deed is null and void is required to pay only a fixed court fee under Article 17(iii) of the Second Schedule of the Act. Ad valorem court fee under Section 7(iv)(c) becomes payable only where the non-executant is not in possession and also seeks the consequential relief of possession.

The Supreme Court quoted the governing passage from Suhrid Singh at paragraph 6 of that decision, which laid out the distinction between a suit by an executant of a deed (requiring cancellation and ad valorem fee) and a suit by a non-executant (requiring only a declaration and fixed fee). The passage concluded: “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.”

Why the court fee issue cannot be resolved at the plaint stage in this case

The Court made an important additional holding that goes beyond simply applying Suhrid Singh. Even setting aside the plaint averments of joint possession, the Court held that the question of court fee payability — whether ad valorem or fixed — depends on facts that will only be established through evidence. Those facts include not only the possession aspect but also the nature of the deed claimed to have been executed and other surrounding circumstances. Those are issues to be resolved at trial, not at the stage of a plaint rejection application.

Accordingly, the Court directed that the question of payability of court fee be deferred and decided after, and on the basis of, the evidence that may be led in the suit. The High Court had erred in deciding the matter finally at the plaint rejection stage.

Outcome

The Supreme Court allowed the civil appeal. The High Court's order dated 19 May 2025 in Civil Revision Petition No. 2778 of 2022 (O&M) was set aside. The Trial Court's order dated 12 April 2022 refusing to reject the plaint under Order VII Rule 11, CPC was upheld, subject to the modification that the question of payment of court fee — whether ad valorem or fixed — will be considered and decided after evidence is led in the suit. Any interlocutory applications pending in the appeal were held to not survive in view of the disposal of the main appeal.