Karnataka High Court
Shri.K.M.Cariappa vs Shri C.K.Subbaiah on 30 September, 2022
Bench: Jyoti Mulimani
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 30TH DAY OF SEPTEMBER, 2022
BEFORE
THE HON'BLE MS. JUSTICE JYOTI MULIMANI
REGULAR FIRST APPEAL NO.540 OF 2014 (MON)
BETWEEN:
SHRI. K.M.CARIAPPA,
S/O SHRI K.K.MOTAIAH,
AGED ABOUT 49 YEARS,
R/AT 93/1, SUDHARSHAN,
NANJAPPA LAYOUT,
VIDYARANYAPURA,
BANGALORE - 560 097. ... APPELLANT
(BY SRI.R.PUSHPAHASA, ADVOCATE)
AND:
SHRI C.K.SUBBAIAH,
S/O SHRI C.K.KUTTAPPA,
AGED ABOUT 54 YEARS,
R/AT 11/3, III STAGE,
NANJAPPA LAYOUT,
VIDYARANYAPURA,
BANGALORE - 560 097. ...RESPONDENT
(BY SRI.AIYANNA T.M., ADVOCATE
FOR M.T.NANAIAH ASSTS. FOR C/R)
THIS RFA IS FILED UNDER SECTION 96 READ WITH
ORDER 41 OF CIVIL PROCEDURE CODE, 1908.
2
THIS RFA HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT, COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THIS DAY, THIS COURT DELIVERED THE FOLLOWING:
JUDGMENT
Sri.R.Pushpahasa., learned counsel for appellant and
Sri.Aiyanna.T.M., learned counsel on behalf of M.T.Nanaiah
Associates for caveator/ respondent have appeared in
person.
2. For the sake of convenience, the status of
parties is referred to as per their rankings before the Trial
Court.
3. The facts are stated as under:
It is stated that the plaintiff and the defendant hail
from the same place and were known to each other for
quite some time. The plaintiff was involved in doing
business and was running a small-scale industry under the
name and style of M/s Locus Machine Tools Private Limited
and he was the Managing Director of the same. The
company was registered under the Indian Companies Act.
The company was involved in the manufacture of tools and
Jigs. It is stated that the Company was running well and
was in sound financial position.
The defendant was employed with M/s ABB Company
and expressed his willingness to join in running the
Company and in order to know about the working etc., the
Company was being run jointly. Subsequently, when the
defendant on being satisfied about the viability of the
company, offered to take over the same by buying the
shares held by the plaintiff and in this connection, to put
down the terms and conditions of take over, a
MEMORANDUM OF UNDERSTANDING (MOU) dated 12th of
June 2008 was entered into between plaintiff and the
defendant.
Takeover of the Company by the defendant was
based on the Audited Final Account as on 31st of March
2008 and the takeover arrangement to come into effect as
from 12th of June 2008. The defendant had to pay the
consideration as under:
Amount
Amount payable as
Sl. Amount
Particulars payable as on or before
No. (in Rs.)
on 12.06.08 12.07.08
(Rs.) (Rs.)
1. Share 5,00,000.00 1,25,000.00 3,75,000.00
capital
2. Loans 5,00,000.00 1,25,000.00 3,75,000.00
3. Share of 3,70,639.20 92,659.80 2,77,979.40
Profit
4. Goodwill 4,49,360.80 1,07,340.20 3,42,020.60
Total 18,20,000.00 4,50,000.00 13,70,000.00
Out of the total amount of Rs.18,20,000/-, the
plaintiff acknowledged having received a total sum of
Rs.13,70,000/- which was paid by the defendant by means
of Three cheques. The defendant has also paid a sum of
Rs.4,10,000/- in cash. It is said that during the course of
business, the plaintiff had mortgaged his house property
while availing loan from Corporation Bank, Peenya branch,
Bangalore. As per the terms of the MOU, the defendant
had undertaken to get the Document pledged as above
released by providing alternative collateral security with
the Bank on or before 12.07.2008. The defendant had also
agreed that on his failure to get the documents released as
above, he would pay an interest @ 1% simple interest
along with the due amount of Rs.13,70,000/-. The
defendant failed to get the documents released as above
thereby failed to comply the terms of the MOU.
The defendant failed to comply with the terms of
Memorandum of Understanding. It is averred that the
defendant intentionally delayed settlement of the amounts
and releasing the documents from the Bank. As a result of
the same, the plaintiff was put to huge financial loss. It is
said that the defendant got released the documents after
six months. It is also said that the defendant threatened
that he will get the collateral security documents released
only if the goodwill of Rs.1,75,000/- paid by him is paid
back to him, which the plaintiff did and the documents
were released and hence defendant is liable to pay back
the Goodwill amount.
The defendant having paid sum of Rs.17,80,000/-,
out of Rs.18,20,000/-, he was still due of Rs.40,000/-
besides the other amount as shown below:
1. Amount due as above 40,000.00
2. Goodwill amount paid to
1,75,000.00
C.K.Subbaiah - now due
3. Interest @ 1% p.a. on the Balance
20,000.00
amount payable.
4. Loss in business due to late release
of documents by Six months @ the 3,00,000.00
rate of Rs.50,000/- p.m.
Total amount due Rs. 5,35,000.00
The plaintiff got issued a legal notice dated
26.02.2009 calling upon the defendant to pay the amount.
The defendant gave evasive reply on 17.03.2009. Hence
plaintiff was constrained to file a suit to recover a sum of
Rs.5,35,000/- with cost and future interest @ 12% p.a.
from the date of filing of suit till realization.
The defendant put in his appearance and filed
written statement stating that the suit of the plaintiff is not
maintainable either in law or on facts. He contended that
he has purchased 50% of the shares of M/s. Locus Machine
Tools Pvt. Ltd., for a sum of Rs.18,20,000/- and
accordingly, Memorandum of Understanding was executed
on 12.06.2008. As per the Memorandum of Understanding,
the defendant paid Rs.4,50,000/- on 12.06.2008 and
balance amount of Rs.13,70,000/- shall be paid on or
before 12.07.2008 and accordingly, the defendant has paid
Rs.4,50,000/- by way of cheque bearing No.970681 dated:
12.06.2008 drawn on Vijaya Bank, Vidyaranyapuram
Branch, Bangalore. As per clause 10 of Memorandum of
Understanding, the plaintiff has to work as a Consultant for
the company for a maximum of 6 months from 12.06.2008
and assist the defendant in production, marketing and in
all other areas for smooth running of the company to meet
the requirements of the customers, the defendant agreed
to pay a consolidated remuneration of Rs.20,000/- p.m to
the plaintiff. During the tenure of working of the plaintiff in
the company of the defendant, the plaintiff started a
similar business in the name and style of "Magnum
Industry" for manufacturing of same components without
the consent and knowledge of the existing directors as well
as present take over director of the defendant. The plaintiff
has diverted majority of the orders of the defendant's
company as well as 6 workers and one supervisor to his
company and caused damages and loss to the defendant
of more than Rs.25,00,000/-. As per Clause 6 of
Memorandum of Understanding, the plaintiff under takes
to recover the advances paid to the suppliers and all the
payments from the customers on or before 12.07.2008,
but the plaintiff has not acted upon and he did not recover
the said amount and as a result of the same, the
defendant was put to severe loss in his business.
It is contended that the plaintiff approached
Mr.B.M.Aiyanna, the President of Kodava Samaj, Bangalore
and C.B.Bollappa with regard to the same and at the
intervention of elders and well wishers, the settlement was
arrived and defendant has to pay a sum of Rs.13,70,000/
to the plaintiff. The defendant has paid Rs.31,236/-
through cheque bearing No.451766 dated: 09.08.2008,
Rs.18,879/- through cheque bearing No.451767 dated:
09.08.2008, Rs.2,45,885/ through cheque bearing
No.801906 dated: 09.08.2008 and Rs.4,10,000/- was paid
in cash on 08.08.2008 and Rs.4,50,000/- through cheque
of SBM bearing No.001916 dated: 11.08.2008,
Rs.2,70,000/- through cheque bearing No.970683 dated:
15.08.2008 and Rs.2,00,000/- through cheque of SBI
bearing No.919878 dated: 25.08.2008 totally to the tune
of Rs.16,26,000/-. The defendant had paid Rs.16,26,000/-
and thereby he has made excess payment of
Rs.2,56,000/-. The plaintiff is liable to pay the said amount
with interest at 18% p.a.
The defendant has paid the entire amount and
therefore, there is no due of any amount to the plaintiff.
On the contrary, the plaintiff had taken away the air
conditioner and one computer of M/s. Locus Machine Tools
Pvt. Ltd., without the notice of the defendant and
defendant had filed the complaint and thereafter, the
police recovered and handed over the same to the
defendant.
Without prejudice to the above contentions, the
defendant denied all the plaint averments except the fact
that plaintiff and defendant were known to each other and
plaintiff was running M/s.Locus Machine Tools Pvt. Ltd., as
Managing Director. The plaintiff was running the said
M/s.Locus Machine Tools Pvt. Ltd., with 50%:50% share of
him and wife of the defendant by name C.G.Vani. The
defendant had given his own building for the meager rent
Rs.10,000/ though it was fetching rent of Rs.30,000/-.
The defendant admits that Memorandum of
Understanding was entered into on 12.06.2008. He also
admits that as per Memorandum of Understanding, the
amount was payable as stated in para 5 of the plaint. But
he submits that he has paid the entire amount of
Rs.13,70,000/- and in fact, he has paid excess amount of
Rs.2,56,000/-. The defendant denies that he had agreed to
get release the pledged documents on or before
12.07.2008 and he caused delay and therefore, the
plaintiff was put to loss. He also denies that he is liable to
pay interest at 1% p.a. on the delayed payment of
Rs.13,70,000/-. The defendant further denies that he was
due of Rs.40,000/- and he had to pay goodwill amount of
Rs.1,75,000/- and interest at 1% p.a. on the balance
amount due and loss in business due to late release of
documents by 6 months at the rate of Rs.50,000/- to the
tune of Rs.3,00,000/- totally to the tune of Rs.5,35,000/.
The defendant filed counter claim stating that he had
paid Rs.16,26,000/- though he was liable to pay
Rs.13,70,000/- and therefore, he has paid excess amount
of Rs.2,56,000/- and plaintiff is liable to pay the said
amount of Rs.2,56,000/-. The defendant has also paid
Court Fee on the said amount. On these grounds, the
defendant has sought to dismiss the suit of the plaintiff
and request to decree his counter-claim to the tune of
Rs.2,56,000/-.
Based on the above pleadings, the Trial Court has
framed the issues as under:
1. Whether the plaintiff proves that the
defendant has failed to comply with the
terms and conditions of the Memorandum of
Understanding dated:12.06.2008 entered
into between them?
2. Whether the plaintiff proves that the
defendant is liable to pay a sum of
Rs.5,35,000/- together with the interest at
12% p.a. as detailed in para 7 and 8 of the
plaint towards his failure to comply with the
terms of Memorandum of Understanding?
3. Whether the defendant proves that he has
paid an excess amount of Rs.2,56,000/- to
the plaintiff over and above the agreed
amount of Rs.13,70,000/- as claimed?
4. Whether the plaintiff is entitled for a
judgment and decree as sought for?
5. To what order or decree?
ADDITIONAL ISSUE
1. Whether the defendant is entitled for
Rs.2,56,000/- by way of counter claim as
prayed for?
In support of his case, the plaintiff - K.M.Cariappa
was examined as PW1 and produced 6 documents which
were marked as Ex.P-1 to Ex. P-6. The defendant got
examined himself as DW-1 and examined one
Mr.B.M.Aiyanna as DW2 and produced 07 documents
which were marked as Ex.D-1 to Ex.D-7.
On the trial of action, the Trial Court vide judgment
and decree dated:19.02.2014 dismissed the suit and the
counter claim of the defendant came to be partly allowed
with proportionate costs. It is this judgment and decree
which is challenged in this appeal is filed on several
grounds as set out in the Memorandum of Appeal memo.
4. Learned Counsel for appellant and respondent
have urged several contentions.
5. Heard the contentions urged on behalf of the
respective parties and perused the records with care.
6. The questions which require consideration are:
1) Whether the plaintiff has proved that the
defendant is liable to pay a sum of Rs.5,36,000/-
together with interest at 12% p.a.?
2) Whether the Trial Court is justified in permitting
the defendant to set-up counter-claim?
The facts have been sufficiently stated. This is a
simple case of recovery of money. It is said that plaintiff
and defendant were known to each other and plaintiff was
running a small-scale industry in the name and style of
M/s.Locus Machine Tools Pvt. Ltd., and he was the
Managing Director of the same. The defendant was
working in M/s.ABB Company and he expressed his
willingness to join in running the company of the plaintiff
jointly. Further, on being satisfied about the viability of the
company, the defendant offered to take over the same by
buying the shares held by the plaintiff and in that
connection, to put down the terms and conditions of take
over, a Memorandum of Undertaking (MOU) was entered
into between them on 12.06.2008. Takeover of the
Company by the defendant was based on the Audited Final
Account as on 31st of March 2008. The defendant agreed to
pay total amount of Rs.18,20,000/- .
It is the specific case of the plaintiff that he had
availed loan from the bank by mortgaging his house
property. As per the terms of the MOU, the defendant had
undertaken to get the Document pledged as above
released by providing alternative collateral security with
the Bank on or before 12.07.2008. The defendant had also
agreed that on his failure to pay the above sum to get the
documents, he undertakes to pay the above sum along
with simple interest of 1% per month. The defendant failed
to get the documents released, thereby failed to comply
the terms of the MOU. The plaintiff also has pleaded that
he has suffered loss of income for six months which
worked out to Rs.50,000/- per month which in all
amounted to Rs.3,00,000/-. Hence it is the specific case
of plaintiff that the defendant in all liable to pay a sum of
Rs.5,35,000/-.
It is relevant to note that the defendant took a
specific contention that he is not liable to pay any amount
on contrary he has paid excess amount of Rs.2,56,000/-.
The below mentioned payments are made by
personal cheques of the defendant except cash payment
under Sl.No.4.
1. Under the MOU dated 12.06.2008
the plaintiff was to be paid on or
before 12.07.2008 in terms of
CL7 Rs.18,20,000/-
2. The plaintiff was paid on
12.06.2008 by the personal
cheque of the defendant of Vijaya
Bank Rs. 4,50,000/-
3 Balance due Rs.13,70,000/-
4. The plaintiff was paid on
08.08.2008 in cash by the
defendant Rs. 4,10,000/-
5. The plaintiff was paid on
11.08.2008 by the personal
cheque of the defendant of State
Bank of India Rs.4,50,000/-
6 The plaintiff was paid on
15.08.2008 by the personal
cheque of the defendant of Vijaya
Bank Rs.2,70,000/-
7. The plaintiff was paid on
25.08.2008 by the personal
cheque of the defendant of Vijaya
Bank Rs.2,00,000/-
8. Total 5 + 6 + 7 Rs.9,20,000/-
9. Sl.No.3 - 9 Balance Rs.4,50,000/-
10. Amount paid in cash under
Sl.No.4. Rs.4,10,000/-
11. Balance due Rs. 40,000/-
As per the above table, the defendant was due in a
sum of Rs.40,000/-. The defendant also admits that he
was in due of sum of Rs.40,000/-. The defendant also
admits that he was liable to pay a sum of Rs.40,000/-.
Hence, it can safely be concluded that plaintiff has
established that he is entitled for a sum of Rs.40.000/-
from the defendant.
Ex. D-1 is the Memorandum of Understanding. It is
dated 12.06.2008. I have perused the same with care. In
the MOU, the defendant undertook to pay the salary,
conveyance and other dues to Mr.K.M.Kariyappa i.e., the
plaintiff from April 2008 to 12th June 2008.
As already noted above, in so far as Goodwill is
concerned, it is the specific case of the plaintiff that he had
mortgaged his house property and had secured loan and
the defendant undertook that he would get release the
documents. The plaintiff has specifically pleaded that the
defendant had threatened that he will get the collateral
security documents released, only if the Good Will of
Rs.1,75,000/- paid by him is paid back to him, which the
plaintiff did so.
Ex.P-4 is the acknowledgement receipt. It is dated
10.01.2009. It is signed by C.K.Subbiah who is none other
than the defendant. It clearly depicts that defendant has
received Rs.1,75,000/- towards first installment of
Goodwill. Hence, in my view plaintiff has established that
the defendant is liable to pay a sum of Rs.1,75.000/-.
It is relevant to note that the Trial Court considering
the material on record concluded that a sum of
Rs.1,75,000/- was received by the defendant forcibly
under Ex.P-4, and the Trial Court has erroneously
proceeded to deduct the same out of the total amount of
Rs.2,56,000/-. In my view, the finding of the Trial Court is
not justified.
Suffice it to note that Plaintiff was examined as PW-1
and defendant was examined as DW-1.
I may extract the relevant portion of the evidence as
under:
PW1:- "It is true that as per Ex.D-1 I had
received Rs.4,50,000/-. It is true the defendant
was still due in a sum of Rs.13,70,000/- which is
payable on or before 12.07.2008. It is true as
per Ex.D-1 I had to work for 6 months and I was
entitled for Rs.20,000/- per month during that
period."
DW-1:- "£Á£ÀÄ ªÁ¢AiÀÄ eÉÆvÉ £Àr.1gÀ ªÉÄÃgÉUÉ
PÀgÁgÀ£ÀÄß ªÀiÁrPÉÆArgÀÄvÉÛÃ£É JAzÀÄ ¸ÀÆa¸ÀĪÀÅzÀÄ ¸Àj.
¤r.1£ÀÄß ºÉÆgÀvÀÄ¥Àr¹ £ÀªÄÀ ä £ÀqÄÀ ªÉ ¨ÉÃgÁªÀÅzÉà PÀgÁgÀÄ DV®è
JAzÀÄ ¸ÀÆa¸ÀĪÀÅzÀÄ ¸ÀjAiÀÄ®è. ¤r.1gÀ ¥ÀæPÁgÀ gÀÆ.18,20,000
UÀ¼À£ÀÄß ªÁ¢UÉ ¢.12.7.2008 gÀ M¼ÀUÁV ¥ÁªÀw¸À¨ÉÃPÁVgÀÄvÀÛzÉ
ªÀÄvÀÄÛ ¨sÀzÀævÉUÁV ¤ÃrgÀĪÀ zÁR¯ÉUÀ¼À£ÄÀ ß ¸ÀºÀ ªÁ¢UÉ
¨ÁåAQ¤AzÀ ©qÀÄUÀqÉ ªÀiÁr¹PÉÆqÀ¨ÉÃPÁVgÀÄvÀÛzÉ JAzÀÄ
¸ÀÆa¸ÀĪÀÅzÀÄ ¸Àj.
...... ªÁ¢AiÀÄÄ £À£Àß PÀA¥À¤AiÀÄ°è MAzÀÄ wAUÀ¼ÄÀ
ªÀiÁvÀæ PÉ®¸À ªÀiÁrgÀÄvÁÛgÉ. ¸ÀzÀj wAUÀ½UÉ ªÁ¢UÉ ªÉÃvÀ£À
¥ÁªÀw ªÀiÁrgÀÄvÉÛãÉ. D §UÉÎ AiÀiÁªÀÅzÉà zÁR¯É EgÀĪÀÅzÀÄ
£À£ÀUÉ UÉÆwÛ®è. ......"
It is noticed that the witness i.e., the defendant was
recalled as per order on IA No.12 and 13 dated 20.02.2013
and he was duly sworn on 10.07.2013 and he was
subjected to cross examination by advocate for plaintiff.
The relevant portion of the cross examination is as
under:
"It is true to suggest that we have paid
Rs.2,56,000/- under cheque bearing No.451766,
451767, 451758".
"As per Ex.D.1 agreement, Clause 8 we
have to pay salary of Rs.20,000 per month".
He was re-examined and he has deposed that as per
the agreement, the plaintiff did not work for six months
and he worked only for one month. The defendant has
further deposed that he had paid amount towards salary
conveyance. Hence, there is a clear admission on the part
of the defendant. Hence, it can be safely held that the
defendant has not paid any excess amount as it is alleged
by him.
As already noted above, defendant has admitted that
he undertook to get the documents released from the bank
on or before 12.07.2008 but he did not do so. On the
contrary there is a delay of six months in getting release of
the documents. Hence, plaintiff has established that the
defendant is liable to pay a sum of Rs.3,00,000/-.
Let me examine whether the Trial Court is justified in
allowing the counter claim. The defendant filed counter
claim stating that he had paid a sum of Rs.16,26,000/-
though he was liable to pay only a sum Rs.13,70,000/-
and hence he has paid excess of Rs.2,56,000/- and
accordingly sought for counter claim.
Sri.R.Pushpahasa, learned counsel in presenting his
argument submitted that the learned Judge has totally
erred in allowing the counter claim. Learned counsel also
submitted that the defendant shall in the written
statement specifically state so. In the present case, the
defendant has not specifically taken the contention
regarding counter claim in the written statement hence the
learned Judge has erred in allowing the counter claim.
To support his contention, learned counsel
Sri.Pushpahasa., has relied on the decision in
PARVATAMMA VS LOKANATH reported in ILR 1991
KARNATAKA 695.
Order VIII Rules 6A to 6G relating to counter claim
came to be inserted by the Amendment Act 104/1976.
Prior to that different states had their different
amendments to the CPC. The State of Karnataka also had
introduced sub rule (1) in Rule 6 of Order 8.
Karnataka.- In order VIII, in rule 6, in sub-rule (1),
at the end, insert the words "and the provisions of rules 14
to 16 of Order VII of this Code, shall mutatis mutandis,
apply to a defendant claiming set-off as if he were a
plaintiff".
Rules 6A to 6G reads thus.
"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 defence 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.-
Where 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 counterclaim, 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 counterclaim is established as a
defence against the plaintiff's 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."
As is well known that a counter-claim has to be
treated as a cross suit and it has to be tried along with the
original claim made in the suit. When the counter claim
has to be tried along with the original claim and all the
rules of pleading apply to a counter claim and it becomes a
plaint in the cross suit and the plaintiff is entitled to file a
written statement in answer to the counter claim of the
defendant, it necessarily follows that a counter claim, if not
set up in the written statement, it has to be set before the
issues are framed, at any rate, before recording of the
evidence commences. If a counter claim is permitted to be
set up after the evidence is adduced it would cause great
prejudice to the plaintiff in the suit because at the time of
adducing evidence, he will not be aware of the counter
claim, as it will not be on record. Therefore, he cannot be
expected to, and he is not required to, adduce evidence
having a bearing on the counter claim.
It is perhaps well to observe that allowing the
counter claim to be set up after the evidence is recorded,
would be doing nothing but ignoring Rules 6A to 6G of
Order 8 of the Code. Hence, reading of Rules 6A to 6G
together would make it clear that the counter claim cannot
be permitted to be filed when once recording of evidence
commences.
In the present case, the suit is filed on 25.06.2009.
The defendant filed written statement on 13.11.2009. The
Trial Court framed issues on 03.06.2010. The defendant
amended the written statement on 31.01.2011 and
additional issue was framed on 10.02.2011. PW1 filed
affidavit in lieu of main oral evidence on 29.06.2010 and
examination in chief of the plaintiff was on 09.11.2010 and
it is relevant to note that on 26.11.2010 the defendant
moved an application under Order 6 Rule 17 R/w Section
151 of CPC to amend the written statement and to permit
him to set-up a counter-claim. The Trial Court vide order
dated:31.01.2011 allowed the application and permitted
the defendant to amend the written statement as prayed
for.
From the above dates, it depicts that the recording
of the evidence had already commenced. The Trial Court
has erred in permitting the defendant to set up counter-
claim.
It is perhaps well to observe that the defendant
cannot be permitted to set-up a counter-claim once the
recording of evidence has commenced.
The law is well settled on this point that the
defendant is not permitted to set-up a counter claim after
commencement of recording of evidence. Hence, in my
considered view, the learned Judge has totally misdirected
himself in permitting the defendant to set up counter claim
and further erred in allowing the counter claim. The Trial
Court ought to have excluded the counter claim on the
ground that it has been filed after the commencement of
the recording of the evidence.
I may venture to say that the learned Judge has
failed to have regard to relevant considerations and
disregarded relevant matters. In my considered opinion,
permitting the defendant to set up counter claim is
unsustainable in law.
The plaintiff has established that the defendant is
due to pay a sum Rs.40,000/- as per Ex.D1 and a sum of
Rs.1,75,000/- as per Ex.P.4 and a sum of Rs.3,00,000/-
and a sum of Rs.20,000/- as per material evidence on
record.
To summarize, I can say only this much that plaintiff
has established that the defendant is liable to pay the
amount as under:
1. Balance due - Rs. 40,000/-
2. Goodwill - Rs.1,75,000/-
3. Damages - Rs.3,00,000/-
4. Balance amount - Rs. 20,000/-
Total - Rs.5,35,200/-
Resultantly, the suit filed by the plaintiff for recovery
of money of Rs.5,35,200/- (Rupees Five Lakh Thirty-Five
Thousand and Two Hundred only) deserves to be decreed
with interest at 12% p.a from the date of suit till
realization with cost throughout and it is decreed
accordingly. The counter claim is rejected.
Accordingly, points for consideration are answered.
The Regular First Appeal is allowed. The Judgment
and Decree dated:19.02.2014 passed by the Court of XIX
Addl.City Civil & Sessions Judge, Bangalore City (CCH-18)
in O.S.No.4115/2009 is set aside.
The defendant is hereby directed to pay a sum
Rs.5,35,200/- (Rupees Five Lakh Thirty-Five Thousand and
Two Hundred only) with 12% interest per annum from the
date of suit till realization with costs throughout.
The Registry to draw decree accordingly.
Sd/-
JUDGE
TKN
