As the novel opens, life in colonial Chandrapore is segregated, racially and geographically. The British colonial administrators and their families live at the civil station, which is set on a hill overlooking the lower, more sordid section of Chandrapore. Adela and Mrs. Moore's arrival disrupts this segregated life as they seek and establish relationships with Indians.
There's a lot of build-up to the conflict of the novel, with a number of failed social occasions where the English and the Indians have trouble connecting, including the Bridge Party and Fielding's tea party. The picnic at the Marabar Caves brings all of these tensions to a head. Significantly, what actually happens at the caves is left out of the narrative, leaving the novel with its own version of a literary cave.
By committing himself to Aziz's cause, Fielding exposes a rift within British society. Instead of proceeding directly to punishing a man whose guilt they assume, the British find themselves being challenged by the values that Fielding represents – civilized discourse, tolerance, and the rule of law. Fielding's actions also spur Adela to question her interpretation of events.
When Adela takes the stand, the novel stresses that she feels as though she were being led along the "paths of truth." At last, you might think, the truth. But the climax isn't the revelation of the truth of what happened in the cave. The novel just says that Adela remembers nothing. Which means no Aziz. Adela's withdrawal of her charge is the real climax of the story, sending the courtroom and the rest of Chandrapore into turmoil.
Adela's retraction doesn't, however, solve all the issues raised by the trial. Her honesty doesn't make her a heroine; to everyone with the exception of Fielding at this point, Adela's retraction only shows that she is a silly girl who made a terrible mistake. Moreover, Aziz's victory doesn't solidify his friendship with Fielding, as it opens up a host of new issues surrounding his lawsuit against Adela for damages.
The denouement is hardly satisfactory for any of the parties involved. Adela goes back to England, still single and without any real answers about what happened in the cave. Aziz decides not to sue Adela, but bitterly resents Fielding for persuading him not to. Fielding leaves for England before he can clear up the misunderstanding with Aziz.
In the last section of the novel, Aziz and Fielding reunite and finally clear up the misunderstanding about Fielding's relationship with Adela. While they are anxious for the whole Marabar Cave incident to be washed away from their lives forever, they come to recognize that as an Englishman and an Indian in British India, they cannot stay friends.