MARG Limitedv.Sushil Limited & Ors

Legal Analysis: MARG Limited vs. Sushil Limited & Ors

Citation: 2026 INSC 402
Court: Supreme Court of India
Bench: Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe (Division Bench)
Judgment Author: The judgment is delivered by the Bench collectively (signed by both)
Date of Decision: April 21, 2026
Nature of Judgment: Civil Appeal under Article 136 against High Court order rejecting plaint under Order VII Rule 11 CPC.

Synopsis of the Judgment

The appellant (MARG Limited) entered into a composite commercial arrangement with the respondents for the sale of a property. The transaction involved execution of sale deeds for part consideration (₹32.50 crores paid to a bank) and a Memorandum of Agreement (MoA) providing for an additional ₹53 crores contingent upon leasing performance. The MoA was signed by the appellant but not by the respondents. After the sale deeds were executed, the respondents failed to pay the balance. The appellant filed a suit for mandatory injunction to enforce the MoA. The trial court rejected the respondents’ application under Order VII Rule 11 CPC. The High Court reversed, holding that the plaint disclosed no cause of action and was undervalued. The Supreme Court set aside the High Court’s order, holding that the plaint, read as a whole, disclosed a triable issue as to whether the MoA formed part of a binding composite arrangement. The Court also held that deficiency in court fees is a curable defect; the plaintiff must be given an opportunity to correct valuation before rejection under Order VII Rule 11(b) or (c).

1. Basic Information of the Judgment

Field Details Case Title MARG Limited vs. Sushil Limited & Ors. Civil Appeal No. Not specified (arising from SLP) Bench Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe Date of Decision April 21, 2026 Citation 2026 INSC (Unreported – not assigned in extract) Appeal From Order dated 28.07.2025 of the High Court of Judicature at Madras (as inferred) in revision against trial court’s order rejecting application under Order VII Rule 11 CPC

2. Legal Framework

Laws and Provisions Involved:

• Code of Civil Procedure, 1908 (CPC): Order VII Rule 11 (rejection of plaint – grounds: (a) no cause of action, (b) undervalued relief, (c) insufficient stamp paper, (d) barred by law, etc.), Order VII Rule 13 (rejection does not preclude fresh plaint).

• Indian Contract Act, 1872: Sections 2(h) (contract), 10 (consideration), 14 (free consent), 25 (agreement without consideration), principles of concluded contract and enforceability of oral agreements.

• Tamil Nadu Court Fees and Suits Valuation Act, 1955 (as amended): Section 27(c) (valuation for injunction suits).

Precedents Cited:

• T. Arivandandam v. T.V. Satyapal (1977) 4 SCC 467 – Courts must nip vexatious suits in bud; if clever drafting creates illusion of cause of action, examine under Order X.

• Sopan Sukhdeo Sable v. Assistant Charity Commissioner (2004) 3 SCC 137 – Object of Order VII Rule 11.

• Popat and Kotecha Property v. SBI Staff Association (2005) 7 SCC 510 – Legal ambit of Order VII Rule 11.

• Saleem Bhai v. State of Maharashtra (2003) 1 SCC 557 – Only averments in plaint are relevant; written statement irrelevant.

• R.K. Roja v. U.S. Rayudu (2016) 14 SCC 275 – Same principle.

• Kuldeep Singh Pathania v. Bikram Singh Jaryal (2017) 5 SCC 345 – Replication may be looked into for admissions.

• Roop Lal Sathi v. Nachhattar Singh Gill (1982) 3 SCC 487 – Plaint cannot be rejected in part.

• Sejal Glass Ltd. v. Navilan Merchants Pvt. Ltd. (2018) 11 SCC 780 – Same.

What the Judgment is About: The judgment clarifies the scope of Order VII Rule 11 CPC in commercial disputes involving composite arrangements where part of the agreement is in writing (sale deeds) and part is in an unsigned memorandum. It holds that the existence of a concluded contract is a triable issue; the court cannot reject the plaint on the ground that the MoA was not signed when the plaint alleges negotiations, partial performance, and a composite understanding. It also reiterates that deficiency in court fees is curable; the court must give an opportunity to correct valuation before rejecting the plaint under clauses (b) or (c) of Order VII Rule 11.

3. Relevant Facts

• Property and loan: The appellant owned a commercial IT building (“Digital Zone-I”) in Chennai. It availed loans from Standard Chartered Bank, creating an equitable mortgage. The account turned NPA.

• One‑time settlement with bank: The appellant entered into an OTS requiring payment of ₹55 crores. It paid ₹27 crores but defaulted on the balance. A fresh settlement was reached for ₹32.50 crores.

• Negotiations with respondents (January‑March 2023): The appellant and respondents negotiated a composite commercial arrangement through WhatsApp exchanges. The respondents incorporated multiple SPVs to purchase the property.

• Memorandum of Agreement (MoA) – 17.03.2023: Drafted by respondents’ counsel. The MoA provided for sale of the property through eight sale deeds for total consideration of ₹58.60 crores (including stamp duty), out of which ₹32.50 crores was payable directly to the bank and ₹19.50 crores to the appellant. Additionally, ₹53 crores was payable contingent upon leasing performance after refurbishment, bringing total transaction value to approximately ₹105 crores. The MoA was signed by the appellant but not by the respondents.

• Payment to bank and execution of sale deeds (03.04.2023): The respondents paid ₹32.50 crores to the bank, which released title deeds. Eight registered sale deeds were executed by the appellant in favour of the respondents’ SPVs. The sale deeds did not expressly mention the MoA or the additional ₹53 crores.

• Suit by appellant (June 2024): Appellant filed a suit seeking mandatory injunction directing respondents to execute the MoA and to pay the balance ₹53 crores, and permanent injunction restraining alienation of the property.

• Application under Order VII Rule 11: Respondents sought rejection of plaint on grounds of no cause of action, undervaluation, and insufficient stamp paper.

• Trial court order (24.09.2024): Rejected the application, holding that plaint disclosed a cause of action and required trial.

• High Court order (28.07.2025): Allowed revision, rejected the plaint. Held that the MoA was not a concluded contract (not signed by respondents); that upon execution of sale deeds, rights stood transferred and no independent cause of action survived; and that the suit, though framed for injunction, was in substance a claim for recovery of ₹53 crores requiring ad valorem court fees, which was not paid.

• Appeal to Supreme Court: Appellant challenged the High Court order.

4. Issues

1. Whether the plaint, read as a whole, discloses a cause of action for the reliefs claimed (mandatory injunction to enforce the MoA and recovery of balance consideration).

2. Whether the High Court was justified in rejecting the plaint under Order VII Rule 11(a) on the ground that the MoA was not a concluded contract (not signed by respondents) and that no cause of action survived after execution of sale deeds.

3. Whether the High Court could reject the plaint under Order VII Rule 11(b) or (c) for undervaluation and insufficient court fee without first giving the plaintiff an opportunity to correct the valuation.

5. Ratio Decidendi

• Plaint must be read as a whole – cause of action is bundle of facts: The Court reiterated that for the purpose of Order VII Rule 11(a), the averments in the plaint must be taken as true. The plaint in this case pleaded a sequence of material facts: negotiations through WhatsApp, drafting of MoA by respondents’ counsel, partial performance (payment to bank, release of title deeds, execution of sale deeds), and the respondents’ failure to sign the MoA or pay the balance ₹53 crores. These facts, if proved, would constitute a triable issue as to whether the parties had a concluded composite arrangement. Therefore, the plaint disclosed a cause of action (Para 22-29).

• Existence of a concluded contract is a triable issue – cannot be decided at Order VII Rule 11 stage: The High Court erred by holding that the MoA was not a concluded contract because it was not signed by the respondents. The Court held that under contract law, a contract may be concluded by conduct, partial performance, or through electronic communications (WhatsApp). Whether the MoA represented a binding agreement, whether the parties intended to be bound, and whether the sale deeds were part of a larger composite arrangement are all matters for trial. The court cannot conduct a “mini‑trial” at the threshold (Para 27-28).

• Execution of sale deeds does not automatically extinguish prior obligations: The High Court’s view that upon execution of the sale deeds, no independent cause of action survived was erroneous. The plaint specifically alleged that the sale deeds were part of a larger commercial arrangement that included post‑sale obligations (refurbishment, leasing, additional consideration). Whether such obligations were incorporated by reference or by separate agreement is a question of fact for trial (Para 26).

• Deficiency in court fees is curable – opportunity must be given: Under Order VII Rule 11(b) and (c), the court cannot reject the plaint for undervaluation or insufficient stamp paper without first giving the plaintiff an opportunity to correct the valuation and pay the requisite court fee. The High Court did not issue any such notice or direction; it merely concluded that the suit was undervalued. This is a procedural error. The proper course is to set aside the rejection and remand to the trial court for affording an opportunity to cure the defect (Para 30-35).

• High Court conducted a mini‑trial – impermissible: The High Court examined the enforceability of the MoA, weighed the evidence (WhatsApp chats, signing of MoA, sale deeds), and concluded that no cause of action survived. This is precisely the kind of fact‑intensive adjudication that must await trial. At the Order VII Rule 11 stage, the court must assume the plaint allegations to be true and determine whether they, if proved, would entitle the plaintiff to a decree. The High Court overstepped its jurisdiction (Para 27-28).

6. New Legal Principles Established / Reiterated

• Unsigned agreement can still be a concluded contract – triable issue: The judgment reiterates that the absence of a signature does not ipso facto render an agreement unenforceable. The parties’ conduct, negotiations, and partial performance may establish a binding contract. This is a question of fact to be decided at trial, not a ground for rejection of plaint.

• Composite commercial arrangements – sale deeds and separate memorandum may together form one transaction: Even if the sale deeds do not expressly mention the MoA, the plaint may still disclose a cause of action if it alleges that the MoA was part of the same composite transaction. The court cannot at the threshold hold that the sale deeds supersede the MoA.

• Opportunity to correct valuation is mandatory before rejection under Order VII Rule 11(b) or (c): The Court clarified that the power to reject the plaint for undervaluation or insufficient stamp paper is conditional upon the plaintiff failing to comply with the court’s direction to correct the defect within the time fixed. Without such a direction and failure, the plaint cannot be rejected.

• Revision under Article 227 does not permit re‑appreciation of plaint allegations: The High Court, in exercise of its supervisory jurisdiction, cannot convert a revision into a trial on merits and reject the plaint by weighing the evidence. The limited scope is to correct jurisdictional errors or perversity.

7. Court’s Analysis and Examination of Concepts

• Examination of the WhatsApp chats: The Court noted that the WhatsApp communications between the parties from 28.01.2023 to 17.03.2023 showed active negotiation, sharing of drafts, formation of SPVs, and finalisation of terms. This indicated a serious commercial understanding, not merely a preliminary discussion. The High Court ignored these factual averments (Para 19-21).

• Salient features of the MoA: The MoA recorded a total transaction value of ₹105 crores, with ₹58.60 crores as immediate sale consideration (including stamp duty) and ₹53 crores as deferred consideration linked to leasing. This was not a simple sale; it was a structured deal. The plaint specifically pleaded that the MoA was drafted by the respondents’ lawyers and that the respondents retained both copies. These allegations, if true, would show that the respondents were in breach (Para 20).

• Cause of action paragraph (para 19 of plaint): The Court extracted paragraph 19, which listed specific dates and events (17.03.2023, 18.03.2023, 03.04.2023, and ongoing communications). This was sufficient to constitute a bundle of facts giving rise to a right to sue. The High Court erred in holding otherwise (Para 26).

• Valuation and court fee – procedural irregularity: The Court noted that the suit was filed as one for mandatory injunction (to enforce the MoA) and permanent injunction. The appellant valued the suit at ₹10,02,000 and paid court fee under Section 27(c) of the Tamil Nadu Court Fees Act (for injunctions). The High Court held that the suit was, in substance, a claim for recovery of ₹53 crores requiring ad valorem court fees. Without expressing any final opinion, the Supreme Court held that this issue could be examined by the trial court after giving the appellant an opportunity to correct valuation. The High Court’s rejection without such opportunity was illegal (Para 30-35).

8. Critical Analysis

Strengths: The judgment is a classic reaffirmation of the principle that Order VII Rule 11 is not a substitute for trial. It correctly cautions courts against conducting “mini‑trials” at the threshold. The distinction between a concluded contract and an unenforceable agreement is a matter of evidence; the plaint alleged sufficient material (WhatsApp negotiations, partial performance, drafting by respondents’ counsel) to cross the threshold. The procedural error regarding court fees is also correctly identified – rejection for undervaluation without giving an opportunity to rectify is a clear violation of the statutory scheme.

Potential concerns: The judgment may be seen as too liberal – it allows a suit to proceed where the central document (MoA) was never signed by the respondents, and the sale deeds (registered documents) do not mention any additional consideration. The respondents could argue that the sale deeds represent the entire contract (merger clause by implication). However, the Supreme Court’s response is that the plaint alleges a composite arrangement; whether the sale deeds constitute the whole contract is a question of fact for trial. This is legally sound.

Practical impact: This judgment will be cited by plaintiffs to resist rejection of plaints in commercial disputes where there are multiple documents or where an unsigned agreement is alleged to form part of a composite transaction. It also serves as a warning to High Courts not to exceed their revisional/supervisory jurisdiction under Article 227 by re‑appreciating plaint allegations. It reinforces that deficiency in court fees is curable and the plaintiff must be given an opportunity.

9. Final Outcome

Appeal allowed. The impugned order of the High Court dated 28.07.2025 is set aside. The plaint in the original suit is restored. The trial court is directed to afford the appellant (plaintiff) an opportunity to correct the valuation and pay the requisite court fees within such time as the trial court may fix. The trial court shall thereafter proceed with the suit in accordance with law. No order as to costs.

10. Practical Application (Use in Court)

• By plaintiffs (in commercial disputes): If the defendant files an application under Order VII Rule 11(a) on the ground that an unsigned agreement is not a concluded contract, oppose the application by pointing to allegations of negotiations, conduct, and partial performance. Cite this judgment to argue that the existence of a concluded contract is a triable issue, not a ground for rejection of plaint. Also, if the defendant argues that the suit is undervalued, seek an opportunity to correct valuation; the court cannot reject the plaint without giving such opportunity.

• By defendants (in commercial disputes): To successfully obtain rejection of plaint under Order VII Rule 11(a), you must show that even if all plaint allegations are taken as true, no cause of action is disclosed. If the plaint alleges a composite arrangement with multiple documents, you cannot rely on the fact that one document is unsigned – that is a factual defence. Better strategy is to file a written statement and seek summary judgment or trial.

• By courts (trial and High Courts): When considering an application under Order VII Rule 11, do not go beyond the plaint. Do not weigh the evidence or assess the credibility of the plaintiff’s case. If the plaint, on a meaningful reading, discloses a bundle of facts that, if proved, would entitle the plaintiff to a decree, the application must be dismissed. If the defect is undervaluation or insufficient court fee, issue a notice to the plaintiff to correct the defect within a specified time; only if the plaintiff fails to comply, reject the plaint.

11.  Court Lines

“A careful and holistic reading of paragraphs 9, 13, 15 and 19 of the plaint, as extracted above, would indicate that the plaintiff has not set out any vague or bald assertions, but has pleaded a sequence of material facts which, if taken at face value, disclose a live and subsisting dispute requiring adjudication.” (Para 22)

“The question whether the MoA constitutes a concluded contract, or whether it is rendered unenforceable for want of signatures, are matters which fall squarely within the domain of trial. Any finding on such issues at the threshold would amount to a premature adjudication, transgressing the limited scope of Order VII Rule 11.” (Para 27)

“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.” (Para 35)

“The approach adopted by the High Court, in proceeding to examine the enforceability of the MoA and to conclude that no cause of action survives, amounts to conducting a mini-trial, which is impermissible in law.” (Para 28)

12. Legal Strategy Insight

For the plaintiff (appellant): When filing a suit based on a composite arrangement involving multiple documents (some signed, some not), ensure the plaint clearly pleads: (i) the negotiation process; (ii) the role of each document in the overall transaction; (iii) the conduct of the defendant that indicates acceptance (e.g., partial performance, retention of documents, formation of SPVs). Anticipate an Order VII Rule 11 application. In response, argue that the existence of a concluded contract is a triable issue; the court cannot decide enforceability at the threshold. Also, value the suit realistically – if the main relief is recovery of money, pay ad valorem court fees on that amount; do not attempt to frame it as a mere injunction suit to save costs. If the court finds undervaluation, seek an opportunity to pay the deficit; do not insist on the original valuation.

For the defendant (respondent): To challenge a plaint based on an unsigned agreement, do not rely solely on the absence of signature. Instead, argue that even if all allegations are taken as true, the plaintiff has not pleaded any fact that would make the unsigned document binding (e.g., no allegation of part performance of the specific terms of the MoA, or that the sale deeds expressly incorporate the MoA). Also, examine whether the suit is properly valued. If the plaintiff has undervalued, do not immediately seek rejection; instead, file an application pointing out the correct valuation and seek a direction to the plaintiff to pay the deficit. If the plaintiff fails to pay, then seek rejection. However, be aware that the court must give an opportunity; therefore, focus on getting a specific direction from the court. If the plaint survives, prepare a strong defence on merits (e.g., that the sale deeds represent the entire contract, or that the MoA was never intended to be binding).