Gastech Process Engineering ... vs M/S Saipem
2009 Latest Caselaw 2106 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                        IA No.989/2009 in CS(OS)
                No.2242/2007 & Counter Claim No.5/2009.

%                                            Date of decision:18.05.2009

GASTECH PROCESS ENGINEERING
(INDIA) PVT. LTD.           ....... Plaintiff
                                Through: Mr. Jayant Bhushan, Sr. Advocate,
                                         Mr. Anurag Dubey, Mr. Neelesh
                                         Dubey & Mr. D.P. Pandey, Advocates

                                          Versus

 M/S SAIPEM                                             ....... Defendant/Counter
                                                                        Claimant
                                Through:      Mr. Sanjay Jain, Sr. Advocate with
                                              Mr. Manish Bhatnagar & Ms. Prachi
                                              Vashist, Advocates


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.      Whether reporters of Local papers may
        be allowed to see the judgment?   Yes

2.      To be referred to the reporter or not?                    Yes

3.      Whether the judgment should be reported
        in the Digest?                                                  Yes


RAJIV SAHAI ENDLAW, J.

1. The maintainability of a counter claim against a non party to

the suit and the application of the counter claimant/defendant in the

suit for impleading the said party as a party to the suit are for

consideration.

2. The plaintiff instituted the suit for recovery of Euro 2,80,632/-

from the defendant together with pendente lite and future interest

and for permanent injunction restraining the defendant from

encashing the bank guarantee. The defendant filed a written

statement contesting the suit. It was inter-alia stated in the written

statement that the defendant had sent its proposal for supply of

various equipment for Fuel Gas Treatment Package to M/s Gastech

USA being the parent company of the plaintiff herein; that M/s

Gastech USA thereafter forwarded the said proposal to the plaintiff;

the plaintiff subsequently accepted the said proposal of the

defendant by issuing a letter of intent along with quotation for

supply of equipment as per the specifications envisaged by the

defendant. After so stating, the written statement thereafter

proceeds to talk of the relationship/agreement between the plaintiff

and the defendant. The defendant has of course in para 7 (viii), after

reproducing the relevant terms and conditions of the purchase order

placed by the defendant on the plaintiff, stated that during the

negotiations between the defendant, M/s Gastech USA and the

plaintiff, M/s Gastech USA had expressly assured to the defendant

that there will be a full time involvement of one Mr. Museeb Sharif of

M/s Gastech USA who was identified as the Project Manager under

Article 10 of the purchase order and assurances were given by M/s

Gastech USA that he shall be deputed for taking care of the entire

project. It is further the averment of the defendant in the written

statement that the said Mr. Museeb Sharif was never deputed and in

his place one Mr. V.P. Sharma was incharge of the entire project.

3. The defendant after filing the written statement preferred the

counter claim aforesaid against not only the plaintiff but also against

M/s Gastech Engineering Corporation USA (M/s. Gastech USA) for

recovery of Euros 44,01,929/- along with pendente lite and future

interest from the plaintiff and M/s Gastech USA jointly and severally.

The defendant along with the said counter claim also filed the

application aforesaid under Order 1 Rule 10 of the CPC for

impleading M/s Gastech USA as a party to the suit. The counter

claim and the application came up first before the court on 23rd

January, 2009 when this court recorded reservation regarding

maintainability of counter claim against a person other than the

plaintiff. Arguments were heard thereafter on the maintainability of

the counter claim as well as on the application for impleadment of

the said M/s Gastech USA as a party to the suit.

4. M/s Gastech USA is sought to be impleaded as a party to the

suit inter-alia on the ground that it was an integral part of the entire

transaction, subject matter of the suit since the inception of

negotiation which finally emerged in the contractual relationship

forming the subject matter of the suit. It is further pleaded that the

plaintiff is a 100% owned subsidiary of M/s Gastech USA; that M/s

Gastech USA had been involved in the transaction and all purchase

and deviation alleged of the plaintiff are as much attributable to M/s

Gastech USA as to the plaintiff. It is thus alleged that M/s Gastech

USA ought to have been joined as co-plaintiff and is a necessary

party for adjudication of the suit. It is further pleaded that since the

counter claim has been preferred by the defendant not only against

the plaintiff but also against M/s Gastech USA, for the said reason

also it is also desirable that M/s Gastech USA be added as a co-

plaintiff in the suit.

5. As would be noticed from above the defendant in the written

statement as originally filed did not plead that the suit was bad for

non impleadment of M/s Gastech USA or that the suit could not be

adjudicated in the absence of M/s Gastech USA or that M/s Gastech

USA was a necessary or a proper party to the suit. During the

course of hearing also it was put to the senior counsel for the

defendant whether there was any such averment in the written

statement. The answer was in the negative. In the absence of any

plea to the said effect in the written statement, I find the application

to be guided more for the reason of the defendant in the counter

claim having made a claim against the said M/s Gastech USA also

rather than for the reason of M/s Gastech USA being a necessary or

a proper party to the suit. The claim of the plaintiff against the

defendant is out of a contractual relationship reduced into writing

and admittedly between the plaintiff and the defendant. It is the case

of defendant itself in the written statement that the proposal sent by

defendant to M/s. Gastech USA was forwarded by Gastech USA to

the plaintiff and the plaintiff accepted the said proposal of defendant

by issuing letter of intent. The agreement between the parties after

detailed negotiations alleged, be that with plaintiff or be that with

M/s Gastech USA, having been recorded in writing, the rights of the

parties thereafter are to be determined by the said document only.

If the defendant was desirous of having the agreement with M/s

Gastech USA, nothing prevented the defendant from at the time of

executing agreement in writing insisting so. The defendant having

entered into the agreement with the plaintiff, cannot now be

permitted to ask for impleadment of M/s Gastech USA as a co-

plaintiff. Even otherwise M/s Gastech USA cannot be compelled to

sue the defendant when it has not chosen to do so. Thus the

application for impleadment of M/s Gastech USA in the suit is found

to be beyond the pleadings of the defendant and even otherwise no

case for impleadment is made out and the application is dismissed.

Merely because M/s Gastech USA may be a witness does not make

them a necessary or a proper party to the suit.

6. That brings me to the core question addressed i.e. of

maintainability of counter claim against a non party to the suit. The

provision for counter claim is made in Order 8 Rule 6 A to 6 G of the

CPC which are as under:-

[6A. Counter-claim by defendant. -(1) A defendant in a suit may, in addition to his right of pleading a set-off under rule 6, set up, by way of counter-claim against the claim of the plaintiff, any right or claim in respect of a cause of action accruing to the defendant against the plaintiff either before or after the filing of the suit but before the defendant has delivered his defendant or before the time limited for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not.

Provided that such counter-claim shall not exceed the pecuniary limits of the jurisdiction of the Court.

(2) Such counter-claim shall have the same effect as a cross- suit so as to enable the Court to pronounce a final judgment in the same suit, both on the original claim and on the counter-claim.

(3) The plaintiff shall be at liberty to file a written statement in answer to the counter-claim of the defendant within such period as may be fixed by the Court.

(4) The counter-claim shall be treated as a plaint and governed by the rules applicable to plaints.

6B. Counter-claim to be stated. - Whether any defendant seeks to rely upon any ground as supporting a right of counter-claim, he shall, in his written statement, state specifically that he does so by way of counter-claim.

6C. Exclusion of counter-claim. - Where a defendant sets up a counter-claim and the plaintiff contends that the claim thereby raised ought not to be disposed of by way of counter-claim but in an independent suit, the plaintiff may, at any time before issues are settled in relation to the counter-claim, apply to the Court for an order that such counter-claim may be excluded, and the Court may, on the hearing of such application make such order as it thinks fit.

6D. Effect of discontinuance of suit. - If in any case in which the defendant sets up a counter-claim, the suit of the plaintiff is stayed, discontinued or dismissed, the counter-claim may nevertheless be proceeded with.

6E. Default of plaintiff to reply to counter-claim. - If the plaintiff makes default in putting in a reply to the counter-claim made by the defendant, the Court may pronounce judgment against the plaintiff in relation to the counter-claim made against him, or make such order in relation to the counter-claim as it thinks fit.

6F. Relief to defendant where counter-claim succeeds.- Where in any suit a set-off or counter-claim is established as a

defence against the plaintiffs claim, and any balance is found due to the plaintiff or the defendant, as the case may be, the Court may give judgment to the party entitled to such balance.

6G. Rules relating to written statement to apply. - The rules relating to a written statement by a defendant shall apply to a written statement filed in answer to a counter-claim.]

7. The counter claim is defined in shorter Oxford English Dictionary 6th Edition as a claim made to rebut a previous claim and as a claim made by defendant against the plaintiff.

8. Black's Law Dictionary 6th Edition defines a counter claim as a claim presented by a defendant in opposition to or deduction from the claim of the plaintiff; something which if established will defeat or diminish the plaintiff's claim.

In the 8th Edition, it is defined as a claim for relief asserted against an opposing party after an original claim has been made and especially a defendant's claim in opposition to or as a set off against the plaintiff's claim.

9. That is how in ordinary English language a counter claim is

understood. It is not understood as a claim by the defendant against

the person other than the plaintiff; such person having not made any

claim against the defendant, the question of the defendant having a

"counter" claim against such person does not arise and it would be a

claim of defendant against such person and not a counter claim.

10. What has to be adjudicated is whether the legislature in adding

Rule 6A to 6G aforesaid to the CPC by the amendment of the year

1976 intended the counter claim to be anything different than as

ordinarily understood as aforesaid. On a reading of the aforesaid

rules I am unable to hold that the legislature had intended to allow a

counter claim to be made against persons other than the plaintiff

also and who had not made any claim against the counter claimant.

11. Rule 6A(i) provides for counter claim of "right or claim

....................against the plaintiff". Thus the reference is to the cause

of action against the plaintiff only and not to the cause of action if

any against persons other than the plaintiff. The senior counsel for

the plaintiff has also drawn attention of Rule 6 A (3) where the right

of filing written statement to the counter claim has been given to the

plaintiff only and not to any other person and correctly contended

that it follows therefrom that counter claim cannot be against any

person other than the plaintiff.

12. Rule 6C vests the right of applying to the court for an order

that the counter claim be disposed of not by way of counter claim but

as an independent suit, only in the plaintiff. If the legislature had

intended the counter claim being made against persons other than

the plaintiff also, there is no reason for discriminating between the

plaintiff and such other person and by vesting the right for so

applying only in the plaintiff and not in such other person. This is

also indicative of the legislative intent being of a counter claim being

maintainable against a plaintiff only and not against persons other

than the plaintiff.

13. Rule 6E again provides for default by plaintiff only in putting

the reply to the counter claim and consequences thereof. If the

contention of the senior counsel for the defendant of the counter

claim being maintainable against persons other than the plaintiff is

to be accepted then it would lead to an anomalous situation that

while upon the default by the plaintiff of replying to the counter

claim the court is empowered to pronounce judgment against the

plaintiff but there being no power in the court to pronounce such

judgment upon default by persons other than the plaintiff to file

reply to the counter claim.

14. Rule 6F is against structured on the premise of the counter

claim being against the plaintiff only.

15. This Court on an interpretation of the aforesaid rules thus is of

the opinion that the counter claim is maintainable against the

plaintiff only and cannot be treated as a counter claim if including a

claim against persons other than the plaintiff.

16. The senior counsel for the defendant has referred to the

judgments of the Kerala, Madra & Bombay High Courts in support of

his contention of counter claim being maintainable against persons

other than the plaintiff also.

17. In Sarojini Amma Vs. Dakshyani Amma 1996 A I H C 5061

(Kerala) it was held that a counter claim has the same effect as a

cross suit and has to be disposed of along with the main suit in which

it is filed; the only limitation is that the court should be competent to

dispose of the counter claim and the main purpose of setting up a

counter claim is to prevent multiplicity of proceedings between the

parties. It was held that Order 8 Rule 6A CPC does not say as to who

shall be the parties to the counter claim and the provisions of Order

1 Rule 10 CPC would apply to a counter claim. It was noticed in this

judgment that the High Court of Bombay has by adding Rule 15 to

Order 8 provided for the counter claim being made against persons

other than the plaintiff. It was observed that a rule on similar lines

seemed to be necessary but even in its absence the court can permit

the counter claim against persons other than the plaintiff.

18. With respect, I am unable to subscribe to the said view. The

judgment aforesaid without discussing the aspects/language of

Order 8 Rule 6A set out herein above generally states that Rule 6A

does not say who shall be parties to the counter claim. I have

noticed above that the cause of action for the counter claim can be

against the plaintiff only and against no other person under Rule 6A.

The Kerala judgment also does not notice the impact/effect of the

other rules (supra). Further, it having been noticed that wherever

the legislature intended the counter claim to be maintainable against

persons other than the plaintiff amendment to the CPC has been

made, is also conclusive that without such amendment being carried

out it is not possible to hold a counter claim to be maintainable

against persons other than the plaintiff.

19. In my opinion the Madras High Court in Vediammal Vs.

M.Kandasamy 1997 (1) MLJ 529 cited by the senior counsel for

the plaintiff has merely referred to the judgment aforesaid of the

Kerala High Court but was not really concerned with the issue

aforesaid.

20. Similarly, the judgment of the Bombay High Court in Teofilo

Barreto Vs. Sadashiva G. Nasnodkar 2007 (6) Maharashtra Law

Journal also in view of the amendment to Order 8 of the CPC in

Mumbai is of no help in as much as there is no equivalent

amendment to the CPC in this court.

21. The senior counsel for the defendant/counter claimant also

drew attention to Shri Jag Mohan Chawla Vs. Dera Radha Swami

Statsang 1996 (5) JT SC 428 but the same is on general principle of

counter claim being in the nature of a fresh suit and being

maintainable in relation to claims of the defendant against the

plaintiff, not necessarily relating to transaction subject matter of the

suit. Said general propositions also in my view do not help in

adjudication of the controversy aforesaid. Merely because the apex

court has held that the cause of action for the counter claim can be

different from that for the suit does not mean cause of action against

persons other than plaintiff can also be the subject matter of counter

claim.

22. The senior counsel for the plaintiff per contra referred to Hem

Narain Thakur Vs. Deo Kant Mishra 2000 A I H C 945 of the

Patna High Court and to Allahuddin Kadri Vs. Devander Singh

RLW 1996 (1) Raj. 408 which seem to indicate that the counter claim

is not maintainable against persons other than the plaintiff.

23. I find that the Punjab & Haryana in High Court in Kulvant

Singh Vs. Gursharan Singh AIR 2003 Punjab & Haryana 1 has also

held that the counter claim cannot be made against the co-defendant

and can be made against the plaintiff only.

24. The counter claim is a weapon of defence and enables the

defendant to enforce a claim against the plaintiff and is allowed to be

raised to avoid multiplicity of proceedings. Reading of the rules

aforesaid shows that the counter claim has to be disposed of along

with the suit. If it is to be held that counter claim can be made

against persons other than the plaintiff also, it has the potential of

becoming a tool in the hands of an unscrupulous defendant to delay

the disposal of the suit indefinitely and by making a claim jointly and

severally against the plaintiff and a large number of other persons.

Such course has to be definitely avoided.

25. It is not as if the defendant/counter claimant by being so

prevented from making a counter claim would be prejudiced in any

manner whatsoever. It would always remain open to such defendant

to institute a suit against the plaintiff and others. In a given case,

theoretically, if the court finds that the two suits should be tried

together, the courts can always allow so.

26. I may notice that Rule 6C permits the plaintiff to even without

the counter claim being against persons other than the plaintiff, to

apply to the court for disposal of the counter claim, not as a counter

claim but by an independent suit. The reasons on which the courts

have allowed such prayers are of, such counter claim causing

embarrassment to the plaintiff or having potential to delay the suit of

the plaintiff. In my view, holding a counter claim to be maintainable

against plaintiff and others may lead to the same situation and rather

than the courts being required to exercising the powers under Rule

6, it is expedient to hold that counter claim by its very nature is by

way of counter to the claim of the plaintiff only and against the

plaintiff only and if it is made against the plaintiff and others then it

ceases to be a counter claim and is an independent suit.

27. The senior counsel for the plaintiff had also contended that

while the right to institute a suit is a common law right, the right to

file a counter claim is a statutory right under the provisions

aforesaid. However, that in my opinion is not the correct legal

position. Even prior to the amendment of 1976 to the CPC

incorporating Rule 6A to 6G it had been held that the defendant was

entitled to maintain a counter claim against the plaintiff.

28. I, therefore, hold the counter claim of the defendant to be

beyond the domain of counter claim within the meaning of Order 8

Rule 6A of the CPC and thus not entertainable as a counter claim to

the present suit. The same be returned to the defendant. The

defendant shall, of course, have liberty to maintain an independent

suit against the plaintiff and M/s Gastech USA aforesaid.

RAJIV SAHAI ENDLAW (JUDGE) May 18, 2009 PP