"The cause of action for the counter claim arose
12.10.2022 when the Plaintiff assured that the
excess amounts paid by Defendants would be
reconciled by them and on 17.03.2023 when
the when the Plaintiff acknowledged the receipt
of the excess amounts i.e., USD 642,250"
5. Add para 47 as follows:
6. In the Prayer, add as follows:
10. That, there is no new cause of action that has
been set up and these defendants are not seeking to retract
any admissions that may have been made in the written
statement. That, amendment is being introduced at the
earliest opportunity before the commencement of the trial.
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11. That, no hardship, loss and irreparable injury will
be caused to the plaintiff if the accompanying application is
allowed. Per contra, the defendant will be put to undue
hardship, loss and irreparable injury and will lead to
multiplicity of suits if this application is not allowed. By
contending so, the defendants prayed to allow the
application.
12. On the other hand the plaintiff has filed the
objections contending that the present application filed by
the defendants seeking amendment of the written statement
to introduce a counter claim is wholly misconceived, malafide
and deserves to be dismissed with exemplary costs. That,
the application is nothing but a deliberate attempt to delay
the proceedings and circumvent the summary procedure
prescribed under Order XXXVII of the CPC.
13. That the present suit was originally filed under
Order XXXVII CPC which provides for summary procedure in
commercial matters where there exists an admitted liability.
The very purpose of Order XXXVII is to ensure expeditious
disposal of commercial matters and prevent delays through
procedural tactics. The introduction of a counterclaim at this
belated stage would defeat the entire purpose of the
summary procedure and convert this summary suit into a
regular suit, causing serious prejudice to the Plaintiff.
14. That the Defendants were allowed conditional
leave to defend and have filed their written statement on
02.09.2024. Thereafter, the Plaintiff has filed their Affidavit in
lieu of examination in chief and the matter con was fixed for
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cross examination of the Plaintiff's witness No.1. It was only
then that the Defendant belatedly chose to me the present
application seeking amendment to includes counterclaim.
The timing of this application itself reveals its malafide nature
and dilatory practice adopted by the Defendants. If the
Defendants had a genuine counterclaim nothing prevented
them from including it in their written statement.
15. The proposed introduction of Para 21A regarding
proceedings in Tanzania is completely irrelevant to the
present proceedings and appears to be inserted only to
prejudice this Court. The Defendants themselves admit that
the said order is subject to appeal. Moreover, the
proceedings in Tanzania involve BZM Logistics, a separate
legal entity that is not even a party to the present
proceedings. The attempt to import proceedings from a
foreign jurisdiction into this summary suit be through the
backdoor of amendment cannot permitted.
16. The most egregious aspect of the present
application is the attempt to introduce a counterclaim through
paras 44 and 45. This proposed counterclaim suffers from
multiple fatal defects. Firstly, it is based on unsubstantiated
claims of excess payment without any concrete, evidence.
The alleged email communications referred to are neither
properly proved nor the calculations forming the basis of the
claim of USD 642,250.00 are neither explained nor
supported by any documentary evidence. The attempt to
convert foreign currency transactions into Indian Rupees
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without proper basis or exchange rate calculations further
demonstrates the casual approach of the Defendants.
17. That the Defendants themselves have
unequivocally confirmed the outstanding liability of
Rs.2,83,78,966/ through their Ledger Confirmation dated
28.12.2023. This admission of liability has never been
disputed or challenged by the Defendants. The nine invoices
raised by the Plaintiff have been accepted without any
protest or objection. It is only after the institution of this suit
that the Defendants have suddenly discovered this alleged
excess payment. This conduct clearly demonstrates that the
counterclaim is nothing but an afterthought to delay the
proceedings. By contending so, the plaintiff prays to dismiss
the application with exemplary cost.
18. I have heard the arguments addressed by the
learned counsel for the plaintiff and defendants.
19. The counsel for plaintiff relied upon the decisions
reported in 2020 (2) SCC 394, 2009(10) SCC 84.
20. Now the points that arise for my consideration are
as under:
01. Whether the applicant/defendants have made out
a ground so as to allow IA No.3?
02. What Order?
21. My findings on the above Points are as under:
POINT No.1: In the NEGATIVE
POINT No.2: As per final Order for the following
REASONS
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22. POINT No.1: Keeping in mind the application
averments and the amendment which is intended to be
carried out by the defendants, I would like to bestow my
attention to the provisions under Order VI Rule 17 of CPC
and the well settled principle of law laid down by the Hon'ble
Apex Court relating to the amendments of pleadings.
ORDER VI Rule 17 of CPC reads as under:
[17. Amendment of pleadings. The Court may
at any stage of the proceedings allow either party to
alter or amend his pleadings in such manner and on
such terms as may be just, and all such amendments
shall be made as may be necessary for the purpose of
determining the real questions in controversy between
the parties:
Provided that no application for amendment
shall be allowed after the trial has commenced, unless
the Court comes to the conclusion that in spite of due
diligence, the party could not have raised the matter
before the commencement of trial.
23. The Hon'ble Apex Court recently in an unreported
decision in SLP (Civil) No.30324/2019 dated 24.09.2024 in
between Dinesh Goyal @ Pappu Vs. Suman Agarwal
(Bindal) & Ors., has reiterated the well settled law of
amendments and observed as follows:
11. At this juncture, before proceeding to the
merits of the case, let consider the law relating to
the us amendments of pleadings.
11.1 The settled rule is that the Courts should
adopt a liberal approach in granting leave however,
to amend pleadings, the same cannot be in
contravention of the statutory boundaries placed
on such power.
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In North Eastern Railway Administration,
Gorakhpur v. Bhagwan Das it was held as under:
"16. Insofar as the principles which govern the
question of granting or disallowing amendments
under Order 6 Rule 17 CPC (as it stood at the
relevant time) are concerned, these are also well
settled. Order 6 Rule 17 CPC postulates
amendment of pleadings at any stage of the
proceedings.
In Pirgonda Hongonda Patil v. Kalgonda
Shidgonda Patil [AIR 1957 SC 363] which still holds
the field, it was held that all amendments ought to
be allowed which satisfy the two conditions: (a) of
not working injustice to the other side, and (b) of
being necessary for the purpose of determining the
real questions in controversy between the parties.
Amendments should be refused only where the
other party cannot be placed in the same position
as if the pleading had been but the correct,
originally amendment would cause him an injury
which could not be compensated in costs. [Also
see Gajanan Jaikishan Joshi v. Prabhakar Mohanlal
Kalwar (1990) 1 SCC 166.]"
11.2 Over the years, through numerous judicial
precedents certain factors have been outlined for
the application of Order VI Rule 17. Recently, this
Court in Life Insurance Corporation of India v.
Sanjeev Builders Pvt. Ltd. & Anr., after considering
numerous precedents in regard to the amendment
of pleadings, culled out certain principles:-
(i) All amendments are to be allowed which are
necessary for determining the real question in
controversy provided it does not cause injustice or
prejudice to the other side. This is mandatory, as is
apparent from the use of the word "shall", in the
latter part of Order VI Rule 17 of the CPC.
(ii) In the following scenario such applications
should be ordinarily allowed if the amendment is
for effective and proper adjudication of the
controversy between the parties to avoid
multiplicity of proceedings, provided it does not
result in injustice to the other side.
(iii) Amendments, while generally should be
allowed, the same should be disallowed if
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(a) By the amendment, the parties seeking
amendment does not seek to withdraw any clear
admission made by the party which confers a right
on the other side.
(b) The amendment does not raise a time-
barred claim, resulting in the divesting of the other
side of a valuable accrued right (in certain
situations)
(c) The amendment completely changes the
nature of the suit;
(d) The prayer for amendment is malafide,
e) By the amendment, the other side should not
lose a valid defence.
(iv) Some general principles to be kept in mind
are -
(I) The court should avoid a hyper-technical
approach; ordinarily be liberal, especially when the
opposite party can be compensated by costs.
(II) Amendment may be justifiably allowed
where it is intended to rectify the absence of
material particulars in the plaint or introduce an
additional or a new approach.
(III) The amendment should not change the
cause of action, so as to set up an entirely new
case, foreign to the case set up in the plaint.
24. Keeping in mind the well settled principle of law I
have carefully perused the amendment which is intended to
be carried out by the defendants herein. Admittedly, the
defendants herein intends to amend some of the facts
pertaining to one of the entity viz., BZM which is not at all a
party to this proceedings.
25. The proposed amendment is pertaining to a legal
proceedings which took place before the High Court of
Tanzania and also sought counter claim stating that they
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have paid the plaintiffs in excess and therefore the
defendants claim refund of the same.
26. On face of it, the proposed amendments are not at
all tenable in the eye of law as the defendants failed to
assign any reason as to why the said facts were not
introduced at the earliest point of time. Admittedly, the
present suit filed by the plaintiff is under Order XXXVII of
CPC seeking for summary judgment based upon the liability
which is admitted by the defendants.
27. In this case the defendants were permitted to file a
written statement subject to condition. If the defendants
genuinely had their right to claim the counter claim they
would have filed the counter claim along with written
statement itself. In this case, Issues have already been
framed on 16.11.2024 and the law laid down by Hon'ble
Apex Court reported in 2020 (2) SCC 394 in Ashok Kumar
Kalra relied upon by the counsel for plaintiff makes it clear
that the counter claim cannot be CIVIL AND crry allowed
alter framing of Issues.
28. It is pertinent to take note that the Hon'ble High
Court of Karnataka recently relied upon the ratio laid down in
Ashok Kumar Kalra case and held that counter claim is not
maintainable once Issues are framed by the Court. In view of
the above well settled principle of law, I am of the firm
opinion that the defendants herein cannot amend the written
statement averments by incorporating the counter claim.
Admittedly, even though the defendants in the proposed
amendment has mentioned that they have paid Court Fee
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upon the counter claim, however on perusal of the order
sheet it appears the defendants have not paid any Court Fee
upon the counter claim. Hence, the defendants have not
made out any ground to seek proposed amendment in their
written statement.
29. The available pleading on record in the written
statement is sufficient to adjudicate the dispute amongst the
parties. Hence, the application filed by the defendants
deserves to be dismissed. Accordingly, I answer the above
point No.1 in the NEGATIVE.
30. POINT No.2: In view of the above discussions on
Point No.1, I proceed to pass the following:
ORDER
The IA No.3 filed by the defendants under Order VI
Rule 17 of CPC R/w Section151 of CPC is hereby
dismissed."
2. Heard learned counsel for the petitioner and learned
counsel for 1st respondent and perused the material on record.
Though the notice of this petition has been served on respondents
2 and 3, they remained absent and unrepresented.
3. A perusal of the material on record will indicate that in the
aforesaid suit, the petitioner filed the written statement and is
contesting the suit. The issues were framed on 16.11.2024 and the
matter was posted for trial on 07.01.2025, on which date, the 1st
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respondent - plaintiff commenced his evidence by filing an Affidavit
in lieu of examination-in-chief of PW-1 and the matter was posted
for cross-examination of PW-1 and the petitioner - 1st defendant
having partially cross-examined PW-1 and when the matter was set
down for cross-examination of PW-1 on 04.02.2025, on which date,
the petitioner - 1st defendant filed the instant application under
Order 6 Rule 17 CPC seeking amendment of the written statement
by introducing the counter claim. Accordingly, the commercial
court took note of the aforesaid judgment of the Apex Court
wherein, the majority view held that the upper / outer limit for
seeking counter claim would come to an end upon framing of
issues but the minority view held that the time would be extendable
up to the maximum limit / time of commencement of plaintiff's
evidence which also stood expired in the instant case and
accordingly, the commercial court dismissed the application.
4. In Ashok Kumar Kalra's case supra, the Apex Court
held as under:-
" N.V. RAMANA, J. (for himself, Shantanagoudar and
Rastogi, JJ.; Shantanagoudar partly supplementing and
partly dissenting as well)-- Questions about procedural
justice are remarkably persistent and usual in the life of
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Common Law Courts. However, achieving a perfect
procedural system may be feasible or affordable, rather more
manageable standards of meaningful participation needs to
be aspired while balancing cost, time and accuracy at the
same time.
2. The present reference placed before us arises out of the
order dated 10-9-2018 passed by a two-Judge Bench of this
Court, wherein clarification has been sought as to the
interpretation of Order 8 Rule 6-A of the Civil Procedure
Code (hereinafter referred to as "CPC"), regarding the filing
of counterclaim by a defendant in a suit. The reference order
dated 10-9-2018 is extracted below:
"3. The papers to be placed before the Hon'ble Chief
Justice of India for constitution of a three-Judge Bench to
look into the effect of our previous judgments as well as
whether the language of Order 8 Rule 6-A of the Civil
Procedure Code is mandatory in nature."
3. Before we proceed further, we need to allude to the
brief factual background necessary for the disposal of this
reference. A dispute arose between the petitioner (Defendant
2) and Respondent 1 (plaintiff) concerning performance of
agreement to sell dated 20-11-1987 and 4-10-1989.
Respondent 1 (plaintiff) filed the suit for specific performance
against the petitioner (Defendant 2) on 2-5-2008. Petitioner
(Defendant 2) herein filed a written statement on 2-12-2008
and counterclaim on 15-3-2009, in the same suit. By order
dated 15-5-2009, the trial court rejected the objections,
concerning filing of the counterclaim after filing of the written
statement and framing of issues. Order dated 15-5-2009 was
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challenged before the High Court, in Civil Revision No. 253
of 2009 the High Court allowed [Surendra Agnihotri v. Moti
Ram Jain, 2018 SCC OnLine All 991] the same and quashed
the counterclaim. Aggrieved by the aforesaid order of the
High Court, the petitioner (Defendant 2) herein approached
the Division Bench of this Court, which has referred [Ashok
Kumar Kalra v. Surendra Agnihotri, 2018 SCC OnLine SC
3497] the matter to a three-Judge Bench.
4. The learned counsel appearing on behalf of the
petitioner submitted that the intent behind Order 8 Rule 6-A
CPC is to provide an enabling provision for the filing of
counterclaim so as to avoid multiplicity of proceedings,
thereby saving the time of the courts and avoiding
inconvenience to the parties. Therefore, no specific statutory
bar or embargo has been imposed upon the court's
jurisdiction to entertain a counterclaim except the limitation
under the said provision which provides that the cause of
action in the counterclaim must arise either before or after
the filing of the suit but before the defendant has delivered
his defence. The learned counsel also submitted that if
permitting the counterclaim would lead to protracting the trial
and cause delay in deciding the suit, the court would be
justified in exercising its discretion by not permitting the filing
of the counterclaim. Relying on the judgments of this Court in
Salem Advocate Bar Assn. (2) v. Union of India [Salem
Advocate Bar Assn. (2) v. Union of India, (2005) 6 SCC 344 :
AIR 2005 SC 3353] , and Jai Jai Ram Manohar Lal v.
National Building Material Supply [Jai Jai Ram Manohar Lal
v. National Building Material Supply, (1969) 1 SCC 869] , the
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learned counsel lastly submitted that rules of procedure must
not be interpreted in a manner that ultimately results in
failure of justice.
5. On the other hand, the learned Senior Counsel for
the respondent submitted that the language of the statute,
and the scheme of the Order, indicates that the counterclaim
has to be a part of the written statement. The learned Senior
Counsel strengthened the above submission by relying on
the statutory requirement that the cause of action relating to
a counterclaim must arise before the filing of the written
statement, and submitted that the counterclaim must
therefore form a part of the written statement. The learned
Senior Counsel also relied on the language of Order 8 Rule 6
CPC, which requires a defendant's claim to set-off to be a
part of the written statement, to suggest that the same rules
should also apply to the filing of a counterclaim, keeping in
mind the placement of the provision relating to counterclaim
in Order 8 Rule 6-A CPC.
6. We have heard the learned counsel on either side
at length and perused the material available on record. In the
light of the reference and the arguments advanced on behalf
of the parties, the following issues arise for consideration
before this Court:
6.1.(i) Whether Order 8 Rule 6-A CPC mandates an
embargo on filing the counterclaim after filing the written
statement?
6.2.(ii) If the answer to the aforesaid question is in the
negative, then what are the restrictions on filing the
counterclaim after filing of the written statement?
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7. At the outset, there is no gainsaying that the
procedural justice is imbibed to provide further impetus to the
substantive justice. It is this extended procedural fairness
provided by the national courts, which adds to the legitimacy
and commends support of the general public. On the other
hand, we must be mindful of the legislative intention to
provide for certainty and clarity. In the name of substantive
justice, providing unlimited and unrestricted rights in itself will
be detrimental to certainty and would lead to the state of
lawlessness. In this regard, this Court needs to recognise
and harmoniously stitch the two types of justice, so as to
have an effective, accurate and participatory judicial system.
8. Having observed on nuances of procedural justice, we
need to turn our attention to the Order 8 of the CPC, which
deals with written statement, set-off and counterclaim. Rules
1 to 5 of Order 8 CPC deal with the written statement. This
Order dealing with the written statement was amended
extensively by the Code of Civil Procedure (Amendment)
Act, 2002 (22 of 2002) (hereinafter referred to as "Act 22 of
2002"), whereby the defendant shall, within thirty days from
the date of service of summons on him, present a written
statement of his defence. In case he fails to file the written
statement within the said period of thirty days, he shall be
allowed to file the same on such other day, as may be
specified by the court, for reasons to be recorded in writing,
but which shall not be later than ninety days from the date of
service of summons.
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9. Order 8 Rule 6 CPC specifies the particulars of set-
off to be given in written statement and the same reads as
under:
Order 8 Rule 6:
"6. Particulars of set-off to be given in written
statement.--(1) Where in a suit for the recovery of money
the defendant claims to set-off against the plaintiff's demand
any ascertained sum of money legally recoverable by him
from the plaintiff, not exceeding the pecuniary limits of the
jurisdiction of the court, and both parties fill the same
character as they fill in the plaintiff's suit, the defendant may,
at the first hearing of the suit, but not afterwards unless
permitted by the court, present a written statement
containing the particulars of the debt sought to be set off.
(2) Effect of set-off.--The written statement shall
have the same effect as a plaint in a cross-suit so as to
enable the court to pronounce a final judgment in respect
both of the original claim and of the set-off; but this shall not
affect the lien, upon the amount decreed, of any pleader in
respect of the costs payable to him under the decree.
(3) The rules relating to a written statement by a
defendant apply to a written statement in answer to a claim
of set-off."
10. Order 8 Rule 6-A, which pertains to the
counterclaim, reads as under:
Order 8 Rule 6-A:
"6-A. Counterclaim 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 counterclaim against the
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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
counterclaim is in the nature of a claim for damages or not:
Provided that such counterclaim shall not exceed the
pecuniary limits of the jurisdiction of the court.
(2) Such counterclaim 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 counterclaim.
(3) The plaintiff shall be at liberty to file a written
statement in answer to the counterclaim of the defendant
within such period as may be fixed by the court.
(4) The counterclaim shall be treated as a plaint and
governed by the rules applicable to plaints."
11. Thus, as per Order 8 Rule 6 CPC, the defendant
can claim set-off of any ascertained sum of money legally
recoverable by him from the plaintiff, against the plaintiff's
demand, in a suit for recovery of money. Whereas, Rule 6-A
deals with counterclaim by the defendant, according to which
a defendant in a suit may, in addition to his right of pleading
a set-off under Rule 6, set up, by way of counterclaim
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 filing of the suit but before the
defendant has delivered his defence or before the time
prescribed for delivering his defence has expired, whether
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such counterclaim is in the nature of a claim for damages or
not.
12. The counterclaim shall be treated as a plaint and
governed by the rules applicable to plaints. Order 8 Rule 6-G
says that the rules relating to a written statement by a
defendant shall apply to a written statement filed in answer to
a counterclaim. As per Rule 8, any ground of defence which
has arisen after the institution of the suit or the presentation
of a written statement claiming a set-off or counterclaim may
be raised by the defendant or plaintiff, as the case may be, in
his written statement. Rule 9 of Order 8 prohibits
presentation of pleadings subsequent to the written
statement of a defendant other than by way of defence to
set-off or counterclaim, except by the leave of the court, and
upon such terms as the court thinks fit; and the provision
further stipulates that the court may at any time require a
written statement or additional written statement from any of
the parties and fix a time of not more than thirty days for
presenting the same. This amendment with respect to
subsequent pleadings was made to CPC by way of Act 22 of
2002. At the cost of repetition, we may note the conditions
for filing a counterclaim under Order 8 Rule 6-A:
(i) Counterclaim can be for claim of damages or
otherwise.
(ii) Counterclaim should relate to the cause of action,
which may accrue before or even after filing the suit.
(iii) If the cause of action in the counterclaim relates to
one accrued after filing of suit, it should be one accruing
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before filing of the written statement or the time given for the
same.
When we look at the whole scheme of Order 8 CPC, it
unequivocally points out at the legislative intent to advance
the cause of justice by placing embargo on the belated filing
of written statement, set-off and counterclaim.
13. We have to take note of the fact that Rule 6-A was
introduced in CPC by the Code of Civil Procedure
(Amendment) Act of 1976 (104 of 1976), and before the
amendment, except in money suits, counterclaim or set-off
could not be pleaded in other suits. As per the
recommendation of the Law Commission of India, to avoid
multiplicity of proceedings, the counterclaim by way of Rule
6-A was inserted in the Civil Procedure Code. The Statement
of Objects and Reasons for enacting the Code of Civil
Procedure (Amendment) Act, 1976 (104 of 1976), were--
(1) A litigant should get a fair trial in accordance with
the accepted principles of natural justice.
(2) Every effort should be made to expedite the
disposal of civil suits and proceedings, so that justice may
not be delayed;
(3) The procedure should not be complicated and
should, to the utmost extent possible, ensure fair deal to the
poorer sections of the community who do not have the
means to engage a pleader to defend their cases.
14. Before we proceed further, we deem it appropriate
to note that any provision under the procedural law should
not be construed in such a way that it would leave the court
helpless (refer to Salem Advocate Bar Assn. case In fact, a
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wide discretion has been given to the civil court regarding the
procedural elements of a suit. As held by this Court,
procedural law is not to be a tyrant but a servant, not an
obstruction but an aid to justice.
15. Now we need to observe certain earlier judgments
of this Court which have dealt with Order 8 Rule 6-A. In
Mahendra Kumar v. State of M.P. [Mahendra Kumar v. State
of M.P., (1987) 3 SCC 265] , (hereinafter referred to as
Mahendra Kumar case), where the appeals were preferred
against concurrent findings of the courts below in dismissing
the counterclaim as barred under Section 14 of the Treasure
Trove Act, 1878, this Court, while considering the scope of
Rule 6-A(1) of Order 8 CPC, has held that on the face of it,
Rule 6-A(1) does not bar the filing of a counterclaim by the
defendant after he had filed the written statement. As the
cause of action for the counterclaim had arisen before the
filing of the written statement, the counterclaim was held to
be maintainable. This Court further observed that under
Article 113 of the Limitation Act, 1963, the period of limitation
is three years from the date of the right to sue accrues, when
the period of limitation is not provided elsewhere in the
Schedule. As the counterclaim was filed within three years
from the date of accrual of the right to sue, this Court held
that the learned District Judge and the High Court were
wrong in dismissing the counterclaim. The issue concerning
applicability of limitation period for filing the counterclaim was
also discussed in Jag Mohan Chawla v. Dera Radha Swami
Satsang [Jag Mohan Chawla v. Dera Radha Swami Satsang,
(1996) 4 SCC 699] and Shanti Rani Das Dewanjee v. Dinesh
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Chandra Day [Shanti Rani Das Dewanjee v. Dinesh Chandra
Day, (1997) 8 SCC 174] .
16. In Vijay Prakash Jarath v. Tej Prakash Jarath this
Court directed the court below to entertain the counterclaim
which was filed 2½ years after framing of issues, as the
evidence was still pending and this Court felt that no
prejudice would be caused to the plaintiff. However, in
Bollepanda P. Poonacha v. K.M. Madapa [Bollepanda P.
Poonacha v. K.M. Madapa, (2008) 13 SCC 179] (hereinafter
referred as "Bollepanda Poonacha case"), this Court while
referring to Ramesh Chand Ardawatiya v. Anil Panjwani
[Ramesh Chand Ardawatiya v. Anil Panjwani, (2003) 7 SCC
350] , discouraged the belated filing of counterclaims.
Further, the Court elucidated on the serious harm caused by
allowing such delayed filing. In any case, in Bollepanda P.
Poonacha [Bollepanda P. Poonacha v. K.M. Madapa, (2008)
13 SCC 179] , the Court could not expound any further as
the counterclaim was rejected on the basis that the cause of
action had arisen after the filing of the written statement.
17. The time limitation for filing of the counterclaim, is
not explicitly provided by the legislature, rather only limitation
as to the accrual of the cause of action is provided. As noted
in the above precedents, further complications stem from the
fact that there is a possibility of amending the written
statement. However, we can state that the right to file a
counterclaim in a suit is explicitly limited by the embargo
provided for the accrual of the cause of action under Order 8
Rule 6-A. Having said so, this does not mean that
counterclaim can be filed at any time after filing of the written
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statement. As counterclaim is treated to be plaint, generally it
needs to first of all be compliant with the limitation provided
under the Limitation Act, 1963 as the time-barred suits
cannot be entertained under the guise of the counterclaim
just because of the fact that the cause of action arose as per
the parameters of Order 8 Rule 6-A.
18. As discussed by us in the preceding paragraphs,
the whole purpose of the procedural law is to ensure that the
legal process is made more effective in the process of
delivering substantial justice. Particularly, the purpose of
introducing Rule 6-A in Order 8 CPC is to avoid multiplicity of
proceedings by driving the parties to file separate suit and
see that the dispute between the parties is decided finally. If
the provision is interpreted in such a way, to allow delayed
filing of the counterclaim, the provision itself becomes
redundant and the purpose for which the amendment is
made will be defeated and ultimately it leads to flagrant
miscarriage of justice. At the same time, there cannot be a
rigid and hyper-technical approach that the provision
stipulates that the counterclaim has to be filed along with the
written statement and beyond that, the court has no power.
The courts, taking into consideration the reasons stated in
support of the counterclaim, should adopt a balanced
approach keeping in mind the object behind the amendment
and to subserve the ends of justice. There cannot be any
hard and fast rule to say that in a particular time the
counterclaim has to be filed, by curtailing the discretion
conferred on the courts. The trial court has to exercise the
discretion judiciously and come to a definite conclusion that
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by allowing the counterclaim, no prejudice is caused to the
opposite party, process is not unduly delayed and the same
is in the best interest of justice and as per the objects sought
to be achieved through the amendment. But however, we are
of the considered opinion that the defendant cannot be
permitted to file counterclaim after the issues are framed and
after the suit has proceeded substantially. It would defeat the
cause of justice and be detrimental to the principle of speedy
justice as enshrined in the objects and reasons for the
particular amendment to CPC.
19. In this regard having clarified the law, we may note
that Mahendra Kumar case [Mahendra Kumar v. State of
M.P., (1987) 3 SCC 265] needs to be understood and
restricted to the facts of that case. We may note that even if
a counterclaim is filed within the limitation period, the trial
court has to exercise its discretion to balance between the
right to speedy trial and right to file counterclaim, so that the
substantive justice is not defeated. The discretion vested
with the trial court to ascertain the maintainability of the
counterclaim is limited by various considerations based on
facts and circumstances of each case. We may point out that
there cannot be a straitjacket formula, rather there are
numerous factors which needs to be taken into consideration
before admitting a counterclaim.
20. We may note that any contrary interpretation
would lead to unnecessary curtailment of the right of a
defendant to file counterclaim. This Court needs to recognise
the practical difficulties faced by the litigants across the
country. Attaining the laudable goal of speedy justice itself
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cannot be the only end, rather effective justice wherein
adequate opportunity is provided to all the parties, need to
be recognised as well (refer to Salem Advocate Bar Assn.
case [Salem Advocate Bar Assn. (2) v. Union of India, (2005)
6 SCC 344 : AIR 2005 SC 3353] ).
21. We sum up our findings, that Order 8 Rule 6-A
CPC does not put an embargo on filing the counterclaim
after filing the written statement, rather the restriction is only
with respect to the accrual of the cause of action. Having
said so, this does not give absolute right to the defendant to
file the counterclaim with substantive delay, even if the
limitation period prescribed has not elapsed. The court has to
take into consideration the outer limit for filing the
counterclaim, which is pegged till the issues are framed. The
court in such cases have the discretion to entertain filing of
the counterclaim, after taking into consideration and
evaluating inclusive factors provided below which are only
illustrative, though not exhaustive:
(i) Period of delay.
(ii) Prescribed limitation period for the cause of action
pleaded.
(iii) Reason for the delay.
(iv) Defendant's assertion of his right.
(v) Similarity of cause of action between the main suit and
the counterclaim.
(vi) Cost of fresh litigation.
(vii) Injustice and abuse of process.
(viii) Prejudice to the opposite party.
(ix) And facts and circumstances of each case.
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(x) In any case, not after framing of the issues.
22. We answer the reference accordingly. The instant
special leave petition may be placed before an appropriate
Bench after obtaining orders from the Hon'ble Chief Justice
of India, for considering the case on merits.
M.M. Shantanagoudar, J. (partly supplementing and
partly dissenting)-- I have read the opinion given in this
reference by my learned Brothers. I agree with their
conclusion that a court may exercise its discretion and permit
the filing of a counterclaim after the written statement, till the
stage of framing of the issues of the trial. However, in
addition to this, I find that in exceptional circumstances, the
subsequent filing of a counterclaim may be permitted till the
stage of commencement of recording of the evidence on
behalf of the plaintiff. I deem it fit to state the reasons for
arriving at this conclusion through this opinion.
24. This reference arises out of the order of this Court
dated 10-9-2018 in Ashok Kumar Kalra v. Surendra Agnihotri
[Ashok Kumar Kalra v. Surendra Agnihotri, 2018 SCC
OnLine SC 3497] , which states as follows: (SCC OnLine SC
para 3)
"3. The papers to be placed before the Hon'ble Chief
Justice of India for constitution of a three-Judge Bench to
look into the effect of our previous judgments as well as
whether the language of Order 8 Rule 6-A of the Code of
Civil Procedure is mandatory in nature."
25. Essentially, in light of the previous judgments of
this Court, the question referred to this Court is whether it is
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mandatory for a counterclaim of the defendant to be filed
along with the written statement.
26. The counsel for both parties argued about the
scope of Order 8 Rule 6-A of the Code of Civil Procedure,
1908 (hereinafter "CPC") and whether a counterclaim must
necessarily be filed along with the written statement. Since
the arguments have been elaborated upon by my learned
Brother Judge, they are not reproduced herein for the sake
of brevity.
27. To fully understand the expanse of the legal
questions in this case, it is essential to appreciate the context
in which the rules relating to counterclaims were introduced
in the CPC. The originally enacted CPC of 1908 did not
provide a statutory right to file a counterclaim. At that time,
Order 8 only pertained to written statements and set-offs.
Taking note of this omission, the Law Commission of India,
in its 27th and 54th Reports, had recommended that express
provisions on counterclaims should be included in CPC to
avoid multiple proceedings and to dispel ambiguity on
whether counterclaims could be entertained at all. These
recommendations were implemented through the Code of
Civil Procedure (Amendment) Act, 1976, which introduced
the following rules to Order 8 CPC:
"6-A. Counterclaim 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 counterclaim 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
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has delivered his defence or before the time limited for
delivering his defence has expired, whether such
counterclaim is in the nature of a claim for damages or not:
Provided that such counterclaim shall not exceed the
pecuniary limits of the jurisdiction of the court.
(2) Such counterclaim 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
counterclaim.
(3) The plaintiff shall be at liberty to file a written statement in
answer to the counterclaim of the defendant within such
period as may be fixed by the court.
(4) The counterclaim shall be treated as a plaint and
governed by the rules applicable to plaints.
6-B. Counterclaim to be stated.--Where any
defendant seeks to rely upon any ground as supporting a
right of counterclaim, he shall, in his written statement, state
specifically that he does so by way of counterclaim.
6-C. Exclusion of counterclaim.--Where a
defendant sets up a counterclaim and the plaintiff contends
that the claim thereby raised ought not to be disposed of by
way of counterclaim but in an independent suit, the plaintiff
may, at any time before issues are settled in relation to the
counterclaim, apply to the court for an order that such
counterclaim may be excluded, and the court may, on the
hearing of such application make such order as it thinks fit.
6-D. Effect of discontinuance of suit.--If in any
case in which the defendant sets up a counterclaim, the suit
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of the plaintiff is stayed, discontinued or dismissed, the
counterclaim may nevertheless be proceeded with.
6-E. Default of plaintiff to reply to counterclaim.--If
the plaintiff makes default in putting in a reply to the
counterclaim made by the defendant, the court may
pronounce judgment against the plaintiff in relation to the
counterclaim made against him, or make such order in
relation to the counterclaim as it thinks fit.
6-F. Relief to defendant where counterclaim
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.
6-G. 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
counterclaim."
28. For the first time, through the introduction of Rules
6-A to 6-G of Order 8, an explicit right of filing a counterclaim
was accorded to the defendant, and rules governing the
same were laid down. In this scheme, Rule 6-A(1) is the
cornerstone provision. It specifically grants the right of filing a
counterclaim. In addition to this, it also places a categorical
limitation on the accrual of the cause of action for a
counterclaim. This is in the form of the requirement that the
cause of action pertaining to the counterclaim must arise
either before or after the filing of the suit, but before the
defendant has delivered his defence (i.e. before the filing of
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the written statement), or before the expiry of the time period
for delivering such defence.
29. Further, under Rule 6-A(2), a counterclaim is
stated to have the same effect as the plaint in a cross-suit,
so as to enable the court to pronounce a final judgment on
the original claim as well as the counterclaim in the same suit
itself. Thus, it is evident that Rule 6-A has been carefully
designed to meet the purpose of avoiding multiplicity of
proceedings.
30. It is clear that Rule 6-A(1) only places a limitation
on the time within which the cause of action for a
counterclaim must arise. Besides this limitation, there is no
explicit guidance in Rule 6-A(1) as to the time within which
the counterclaim itself must be filed. In this respect, Rule 6-
A(4) provides that a counterclaim is governed by the rules
applicable to plaints. It is well established that a plaint must
be presented within the period prescribed under the
Limitation Act, 1963 (hereinafter "the Limitation Act"). For
counterclaims as well, the period within which they must be
filed can be inferred from Section 3(2)(b)(ii) of the Limitation
Act, 1963, which states thus:
"3. (2) For the purposes of this Act--
(b) any claim by way of a set-off or a counterclaim, shall be
treated as a separate suit and shall be deemed to have been
instituted--
(ii) in the case of a counterclaim, on the date on which the
counterclaim is made in court;"
This provision mandates that in order to determine the
limitation period applicable to a counterclaim, it must be
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treated as a separate suit, which is deemed to have been
instituted on the date on which it is made in the court. Thus,
evidently, in consonance with the provisions of Order 8 Rule
6-A(4), the Limitation Act also treats a counterclaim like a
plaint. This means that much like a plaint, the limitation for
filing a counterclaim also depends on the nature of the claim
and is accordingly governed by the period of limitation
stipulated in the Limitation Act.
31. From the foregoing discussion, it is clear that a
counterclaim can be filed if two conditions are met: first, its
cause of action complies with Order 8 Rule 6-A(1); and
second, it is filed within the period specified under the
Limitation Act. Clearly, by itself, Rule 6-A does not
specifically require that a counterclaim has to be filed along
with the written statement. In the absence of a particular
mandate under this Rule, it is necessary to look to other
provisions of CPC to determine whether a counterclaim can
be filed after a written statement.
32. It would be appropriate to begin with a reference
to Order 8 Rule 9, which states thus:
"9. Subsequent pleadings.--No pleading
subsequent to the written statement of a defendant other
than by way of defence to set-off or counterclaim shall be
presented except by the leave of the court and upon such
terms as the court thinks fit; but the court may at any time
require a written statement or additional written statement
from any of the parties and fix a time of not more than thirty
days for presenting the same."
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According to this Rule, after the filing of the written
statement, it is open to plead a defence to a set-off or
counterclaim without the leave of the court. However, any
other pleading sought to be filed after the written statement
requires the leave of the court. The Rule also vests the court
with a discretion to allow filing of a written statement or
additional written statement within a period not exceeding
thirty days.
33. A plain reading of Order 8 Rule 9 makes it clear
that the court has the discretion to allow any subsequent
pleading upon such terms as it thinks fit. It is important to
appreciate here that such subsequent pleading or additional
written statement may include a counterclaim. This is
because Rule 9 does not create a bar on the nature of claims
that can be raised as subsequent pleadings. As long as the
court considers that it would be proper to allow a
counterclaim by way of a subsequent pleading, it is possible
to file a counterclaim after filing the written statement.
34. In addition to this, it is also possible to introduce a
belated counterclaim by way of an amendment to the original
written statement under Order 6 Rule 17 CPC. However, as
is the case with Order 8 Rule 9, the filing of such a
counterclaim through an amended written statement is
subject to the leave of the
35. In this regard, it would be relevant to note the
observations of this Court in Ramesh Chand Ardawatiya v.
Anil Panjwani [Ramesh Chand Ardawatiya v. Anil Panjwani,
(2003) 7 SCC 350] : (SCC p. 367, para 28)
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"28. Looking to the scheme of Order 8 as amended by
Act 104 of 1976, we are of the opinion, that there are three
modes of pleading or setting up a counterclaim in a civil suit.
Firstly, the written statement filed under Rule 1 may itself
contain a counterclaim which in the light of Rule 1 read with
Rule 6-A would be a counterclaim against the claim of the
plaintiff preferred in exercise of legal right conferred by Rule
6-A. Secondly, a counterclaim may be preferred by way of
amendment incorporated subject to the leave of the court in
a written statement already filed. Thirdly, a counterclaim may
be filed by way of a subsequent pleading under Rule 9. In
the latter two cases the counterclaim though referable to
Rule 6-A cannot be brought on record as of right but shall be
governed by the discretion vesting in the court, either under
Order 6 Rule 17 CPC if sought to be introduced by way of
amendment, or, subject to exercise of discretion conferred
on the court under Order 8 Rule 9 CPC if sought to be
placed on record by way of subsequent pleading."
I fully agree with this proposition, and affirm on the
basis of the foregoing discussion that the court has the
discretion to allow a counterclaim to be filed after the written
statement in exercise of its power under Order 8 Rule 9 and
Order 6 Rule 17 CPC.
36. It can also be gleaned from Order 8 Rule 10 that it
is permissible to file a belated counterclaim under the
scheme of Order 8 CPC:
"10. Procedure when party fails to present written
statement called for by court.--Where any party from
whom a written statement is required under Rule 1 or Rule 9
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fails to present the same within the time permitted or fixed by
the court, as the case may be, the court shall pronounce
judgment against him, or make such order in relation to the
suit as it thinks fit and on the pronouncement of such
judgment a decree shall be drawn up."
Under this Rule, the court is afforded with the
discretion to pass any order that it deems fit in the event that
a written statement is not filed within the prescribed statutory
limit. To determine whether this discretion extends to
allowing the filing of a belated counterclaim as well, it would
be useful to appreciate the scope of the discretion accorded
under this provision.
37. In Salem Advocate Bar Assn. (2) v. Union of India
[Salem Advocate Bar Assn. (2) v. Union of India, (2005) 6
SCC 344 : AIR 2005 SC 3353] , this Court, while construing
the nature of Order 8 Rule 1, relied on the broad
discretionary power under Order 8 Rule 10, and observed as
follows: (SCC p. 364, para 21)
"21. In construing this provision, support can also be had
from Order 8 Rule 10 which provides that where any party
from whom a written statement is required under Rule 1 or
Rule 9, fails to present the same within the time permitted or
fixed by the court, the court shall pronounce judgment
against him, or make such other order in relation to the suit
as it thinks fit. ... In construing the provision of Order 8 Rule
1 and Rule 10, the doctrine of harmonious construction is
required to be applied. The effect would be that under Rule
10 Order 8, the court in its discretion would have the power
to allow the defendant to file written statement even after
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expiry of the period of 90 days provided in Order 8 Rule 1.
There is no restriction in Order 8 Rule 10 that after expiry of
ninety days, further time cannot be granted. The court has
wide power to 'make such order in relation to the suit as it
thinks fit'. Clearly, therefore, the provision of Order 8 Rule 1
providing for the upper limit of 90 days to file written
statement is directory."
Thus, under Order 8 Rule 10, the court has the power
to condone the delay in filing of a written statement, if it
deems it fit in the facts and circumstances of the case. If it is
so, there is no reason as to why the delay in filing a
counterclaim cannot be condoned by the court as well.
38. A conjoint and harmonious reading of Rules 6-A, 9
and 10 of Order 8 as well as Order 6 Rule 17 CPC thus
reveals that the court is vested with the discretion to allow
the filing of a counterclaim even after the filing of the written
statement, as long as the same is within the limitation
prescribed under the Limitation Act, 1963. In this regard, I
agree with the propositions laid down in the decisions
discussed below.
39. In Mahendra Kumar v. State of M.P. [Mahendra
Kumar v. State of M.P., (1987) 3 SCC 265] , it was held that:
(SCC pp. 272-73, para 15)
"15. The next point that remains to be considered is whether
Rule 6-A(1) of Order 8 of the Code of Civil Procedure bars
the filing of a counterclaim after the filing of a written
statement. This point need not detain us long, for Rule 6-A(1)
does not, on the face of it, bar the filing of a counterclaim by
the defendant after he had filed the written statement. What
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is laid down under Rule 6-A(1) is that a counterclaim can be
filed, provided the cause of action had accrued to the
defendant before the defendant had delivered his defence or
before the time limited for delivering his defence has expired,
whether such counterclaim is in the nature of a claim for
damages or not. The High Court, in our opinion, has misread
and misunderstood the provision of Rule 6-A(1) in holding
that as the appellants had filed the counterclaim after the
filing of the written statement, the counterclaim was not
maintainable. ... Under Article 113 of the Limitation Act,
1963, the period of limitation of three years from the date the
right to sue accrues, has been provided for any suit for which
no period of limitation is provided elsewhere in the Schedule.
It is not disputed that a counterclaim, which is treated as a
suit under Section 3(2)(b) of the Limitation Act has been filed
by the appellants within three years from the date of accrual
to them of the right to sue."
40. In Shanti Rani Das Dewanjee v. Dinesh Chandra
Day [Shanti Rani Das Dewanjee v. Dinesh Chandra Day,
(1997) 8 SCC 174] , it was held that the right to file a
counterclaim is referable to the date of accrual of the cause
of action: (SCC p. 175, para 2)
"2. In our view, the impugned decision does not warrant
interference. Such question was specifically raised before
this Court in Mahendra Kumar v. State of M.P. [Mahendra
Kumar v. State of M.P., (1987) 3 SCC 265] It has been held
by this Court that right to file a counterclaim under Order 8
Rule 6-A of the Code of Civil Procedure is referable to the
date of accrual of the cause of action. If the cause of action
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had arisen before or after the filing of the suit, and such
cause of action continued up to the date of filing written
statement or extended date of filing written statement, such
counterclaim can be filed even after filing the written
statement. The said Civil Case No. 248 of 1982, in which the
application under Order 8 Rule 6-A has been filed by the
defendant-respondents was instituted on 15-7-1982 and the
application under Order 8 Rule 6-A was presented on 22-6-
1985. It cannot be held that the cause of action for the suit or
counterclaim was ex facie barred by limitation under the
Limitation Act."
41. I am unable to persuade myself to arrive at a
different conclusion than the one found in the
aforementioned judgments.
42. It was argued by the counsel for the respondent
that Order 8 Rule 6-A(1) requires that the cause of action for
a counterclaim should arise before the filing of the written
statement, and hence it is logical that the counterclaim, or
the grounds upon which it is based, should also find a
mention in the written statement. To support this, he relied
on Order 8 Rule 6-B, which states that a defendant seeking
to rely upon any ground in support of his right of
counterclaim, shall specifically state in his written statement
that he does so by way of a counterclaim.
43. I do not agree with this view for two reasons:
43.1.First, it is possible that at the time of filing the
written statement, the defendant is unaware of the facts
giving rise to the cause of action for his counterclaim. For
instance, in a suit for declaration of title brought by the
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plaintiff against his sister, the defendant may be unaware
that the plaintiff has wrongfully detained her belongings kept
at the said property, at the time of filing her written
statement. In such a situation, even though the cause of
action for her counterclaim of wrongful detention of
belongings may have arisen before the filing of the written
statement, it may not have been possible for her to raise the
said counterclaim. Similarly, limited access to justice,
especially in rural areas, shaped by the socio-economic
context of parties, may compel the filing of belated
counterclaims.
43.2.Second, a perusal of Order 8 Rule 6-B suggests
that it is only limited to cases where the counterclaim is
made along with the written statement. In instances where a
belated counterclaim is raised by way of an amendment to
the written statement, or as a subsequent pleading, Rule 6-B
cannot be said to be applicable. This is because in any such
case, if the court relies on a technical interpretation of Rule
6-B to disallow the filing of a belated counterclaim, the
defendant would still be free to file a fresh suit for such a
claim. He may, in such matters, after filing the separate suit,
request the court to club the suits or to hear them
simultaneously. This may further delay the process of
adjudication and would certainly not help the plaintiff in the
first suit, who may have opposed the filing of the belated
counterclaim. Such multiplicity of proceedings goes against
the object with which Rules 6-A to 6-G were introduced to
CPC. Thus, the provisions under Order 8 should not be read
in isolation, but in a conjoint and harmonious manner, and
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Rule 6-B cannot be read as a limitation on the court's
discretion to permit the filing of a belated counterclaim.
44. Therefore, I do not find force in the argument
raised by the counsel for the respondent.
45. Further, the contention that the limitation on filing
of set-offs under Order 8 Rule 6 should be read into Rule 6-
A(1) is untenable. The nature of a set-off and a counterclaim
is different. For instance, a set-off must necessarily be of the
same nature as the claim of the plaintiff and arise out of the
same transaction. These requirements do not hold for
counterclaims, which may be related to "any right or claim in
respect of a cause of action accruing to the defendant
against the plaintiff" as stated in Order 8 Rule 6-A(1).
Further, in case of set-offs, there is no provision akin to
Order 8 Rule 6-A(4), which provides that a set-off must be
treated as a plaint. Thus, it appears that the legislature has
consciously considered it fit to omit a specific time-limit for
filing of counterclaims in Rule 6-A. In such a scenario, a
limitation cannot be read into this Rule.
46. Lastly, as regards the respondent's reliance on
Order 8 Rule 1-A, which requires the documents in support
of a counterclaim to be presented along with the written
statement itself, I am of the view that this requirement should
not be read as being mandatory. Rule 1-A(2) itself provides
instances where such documents are not in the possession
of the defendant, by requiring him to specify the person in
whose possession the documents rest. Accordingly, Rule 1-
A(3) (as amended in 2002) also provides that these
documents may be produced later, with the leave of the
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court. The discretion accorded in these provisions goes on to
support the conclusion that it is possible to file a
counterclaim even after the written statement, with the leave
of the court.
47. Finally, then, the scope of discretion vested with
the court under Order 6 Rule 17 and Order 8 Rule 9 to allow
for belated counterclaims remains to be examined. It must be
determined when it may be proper for the court to refuse a
belated counterclaim, in spite of it being permissible within
the scheme of Order 8 Rule 6-A and the Limitation Act, 1963.
48. In several cases, it is possible that the period of
limitation for filing of counterclaims may extend up to a long
period of time and prolong the trial. For instance, in a suit for
declaration of title, the defendant may bring a counterclaim
for possession of the immovable property based on previous
possession. In terms of Order 8 Rule 6-A, such a claim
would be admissible as long as the dispossession had
occurred before the filing of the written statement, or before
the expiry of the time provided for filing of the written
statement. However, as per the Limitation Act, such a claim
would be valid even if it were brought within twelve years
from the date of the defendant's dispossession.
49. In such a situation, it is possible that by the time
the counterclaim is brought, the issues in the original suit
have already been framed, the evidence led, arguments
made, and the judgment reserved. Allowing a counterclaim
to be filed at this stage would effectively result in a re-trial of
the suit, since the court would have to frame new issues,
both parties would have to lead evidence, and only then
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would the judgment be pronounced. If this is permitted, the
very purpose of allowing counterclaims i.e. avoiding
multiplicity of litigation, would be frustrated.
50. It is well settled that procedural rules should not be
interpreted so as to defeat justice, rather than furthering it.
This is because procedural law is not meant to serve as a
tyrant against justice, but to act as a lubricant in its
administration. Thus, when courts set out to do justice, they
should not lose sight of the end goal amidst technicalities. In
some cases, this means that rules that have traditionally
been treated as mandatory, may be moulded so that their
object and substantive justice is not obstructed. It would be
apposite to remember that equity and justice should be the
foremost considerations while construing procedural rules,
without nullifying the object of the legislature in totality. Thus,
rules under the Limitation Act which may allow for filing of a
belated counterclaim up to a long period of time, should not
be used to defeat the ends of justice.
51. Keeping this in mind, in Ramesh Chand
Ardawatiya [Ramesh Chand Ardawatiya v. Anil Panjwani,
(2003) 7 SCC 350] , this Court considered the scope of
discretion in allowing for belated counterclaims. It is useful to
refer to the observations made by the Court in the context of
Order 8 Rule 6-A (as it was in 1976): (SCC pp. 367-68, para
28)
"28. ... The purpose of the provision enabling filing of
a counterclaim is to avoid multiplicity of judicial proceedings
and save upon the court's time as also to exclude the
inconvenience to the parties by enabling claims and
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counterclaims, that is, all disputes between the same parties
being decided in the course of the same proceedings. If the
consequence of permitting a counterclaim either by way of
amendment or by way of subsequent pleading would be
prolonging of the trial, complicating the otherwise smooth
flow of proceedings or causing a delay in the progress of the
suit by forcing a retreat on the steps already taken by the
court, the court would be justified in exercising its discretion
not in favour of permitting a belated counterclaim. The
framers of the law never intended the pleading by way of
counterclaim being utilised as an instrument for forcing upon
a reopening of the trial or pushing back the progress of
proceeding. Generally speaking, a counterclaim not
contained in the original written statement may be refused to
be taken on record if the issues have already been framed
and the case set down for trial, and more so when the trial
has already commenced. ... A refusal on the part of the court
to entertain a belated counterclaim may not prejudice the
defendant because in spite of the counterclaim having been
refused to be entertained he is always at liberty to file his
own suit based on the cause of action for counterclaim."
To ensure that the objective of introducing the
statutory amendments with respect to counterclaims was not
defeated, it was rightly held that a belated counterclaim
raised by way of an amendment to the written statement
(under Order 6 Rule 17) or as a subsequent pleading (under
Order 8 Rule 9) should not be allowed after the framing of
issues and commencement of trial.
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52. Later, in Rohit Singh v. State of Bihar [Rohit Singh
v. State of Bihar, (2006) 12 SCC 734] , this Court read in a
similar limitation on the filing of belated counterclaims: (SCC
p. 743, para 18)
"18. ... A counterclaim, no doubt, could be filed even
after the written statement is filed, but that does not mean
that a counterclaim can be raised after issues are framed
and the evidence is closed. Therefore, the entertaining of the
so-called counterclaim of Defendants 3 to 17 by the trial
court, after the framing of issues for trial, was clearly illegal
and without jurisdiction. On that short ground, the so-called
counterclaim, filed by Defendants 3 to 17 has to be held to
be not maintainable."
It is crucial to note that even though the Court held
that a counterclaim can be filed after the filing of a written
statement, it must necessarily be filed before the issues are
framed and the evidence is closed. In fact, since the
counterclaim in the said matter was filed at the stage where
the judgment was reserved [Rohit Singh v. State of Bihar,
2006 SCC OnLine SC 29] , the Court went as far as saying
that entertaining such a claim was illegal and without
jurisdiction.
53. The decision of this Court in Bollepanda P.
Poonacha v. K.M. Madapa [Bollepanda P. Poonacha v. K.M.
Madapa, (2008) 13 SCC 179] , is also significant in this
regard. Referring to Ramesh Chand Ardawatiya [Ramesh
Chand Ardawatiya v. Anil Panjwani, (2003) 7 SCC 350] , it
acknowledged that belated counterclaims were to be
discouraged, and called upon the Court to consider
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questions of serious injustice and irreparable loss while
permitting any such claim. However, in Bollepanda
[Bollepanda P. Poonacha v. K.M. Madapa, (2008) 13 SCC
179] , the Court did not have an occasion to expound further
on this proposition, as the counterclaim had been rejected on
the basis that its cause of action had arisen after the filing of
the written statement.
54. It was in Gayathri Women's Welfare Assn. v.
Gowramma [Gayathri Women's Welfare Assn. v.
Gowramma, (2011) 2 SCC 330 : (2011) 1 SCC (Civ) 429] ,
that this Court once again had the occasion to look into the
filing of a belated counterclaim. In this case, filing of the initial
counterclaim was not in challenge. Instead, the Court was
considering the effect of an amendment to an existing
counterclaim. While the trial court had refused to allow such
an amendment, the High Court had granted [Gowramma v.
Gayathri Women's Welfare Assn., 2008 SCC OnLine Kar
786] the same. Reiterating the concerns noted in Ramesh
Chand Ardawatiya [Ramesh Chand Ardawatiya v. Anil
Panjwani, (2003) 7 SCC 350] , this Court held as follows:
(Gowramma case [Gayathri Women's Welfare Assn. v.
Gowramma, (2011) 2 SCC 330 : (2011) 1 SCC (Civ) 429] ,
SCC p. 343, para 44)
"44. The matter herein symbolises the concern
highlighted by this Court in Ramesh Chand [Ramesh Chand
Ardawatiya v. Anil Panjwani, (2003) 7 SCC 350] . Permitting
a counterclaim at this stage would be to reopen a decree
which has been granted in favour of the appellants by the
trial court. The respondents have failed to establish any
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factual or legal basis for modification/nullifying the decree of
the trial court."
The Court also relied on Rohit Singh [Rohit Singh v. State of
Bihar, (2006) 12 SCC 734] and observed that a counterclaim
cannot be filed after the framing of issues.
55. In Vijay Prakash Jarath v. Tej Prakash Jarath
[Vijay Prakash Jarath v. Tej Prakash Jarath, (2016) 11 SCC
800 : (2016) 4 SCC (Civ) 505] , this Court further refined the
limitation in Rohit Singh [Rohit Singh v. State of Bihar, (2006)
12 SCC 734] that counterclaims cannot be raised after the
issues are framed and the evidence is closed. In the said
case, even though the issues had been framed, and the case
was in the early stages of recording of the plaintiff's
evidence, a counterclaim filed at that point was allowed, as
no prejudice was caused to the plaintiff.
56. The above discussion lends support to the
conclusion that even though Rule 6-A permits the filing of a
counterclaim after the written statement, the court has the
discretion to refuse such filing if it is done at a highly belated
stage. However, in my considered opinion, to ensure speedy
disposal of suits, propriety requires that such discretion
should only be exercised till the framing of issues for trial.
Allowing counterclaims beyond this stage would not only
prolong the trial, but also prejudice the rights that may get
vested with the plaintiff over the course of time.
57. At the same time, in exceptional circumstances, to
prevent multiplicity of proceedings and a situation of effective
re-trial, the court may entertain a counterclaim even after the
framing of issues, so long as the court has not started
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recording the evidence. This is because there is no
significant development in the legal proceedings during the
intervening period between framing of issues and
commencement of recording of evidence. If a counterclaim is
brought during such period, a new issue can still be framed
by the court, if needed, and evidence can be recorded
accordingly, without seriously prejudicing the rights of either
party to the suit.
58. At this juncture, I would like to address the
observation in Rohit Singh [Rohit Singh v. State of Bihar,
(2006) 12 SCC 734] that a counterclaim, if filed after the
framing of the issues and closing of the evidence, would be
illegal and without jurisdiction. In my opinion, this is not a
correct statement of law, as the filing of counterclaims after
the commencement of recording of evidence is not illegal per
se. However, I hasten to add that permitting such a
counterclaim would be improper, as the court's discretion
has to be exercised wisely and pragmatically.
59. There are several considerations that must be
borne in mind while allowing the filing of a belated
counterclaim:
59.1.First, the court must consider that no injustice or
irreparable loss is being caused to the defendant due to a
refusal to entertain the counterclaim, or to the plaintiff by
allowing the same. Of course, as the defendant would have
the option to pursue his cause of action in a separate suit,
the question of prejudice to the defendant would ordinarily
not arise.
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59.2.Second, the interest of justice must be given
utmost importance and procedure should not outweigh
substantive justice.
59.3.Third, the specific objectives of reducing
multiplicity of litigation and ensuring speedy trials underlying
the provisions for counterclaims, must be accorded due
consideration.
60. Having considered the previous judgments of this
Court on counterclaims, the language employed in the rules
related thereto, as well as the intention of the legislature, I
conclude that it is not mandatory for a counterclaim to be
filed along with the written statement. The court, in its
discretion, may allow a counterclaim to be filed after the filing
of the written statement, in view of the considerations
mentioned in the preceding paragraph. However, propriety
requires that such discretion should ordinarily be exercised
to allow the filing of a counterclaim till the framing of issues
for trial. To this extent, I concur with the conclusion reached
by my learned Brothers. However, for the reasons stated
above, I am of the view that in exceptional circumstances, a
counterclaim may be permitted to be filed after a written
statement till the stage of commencement of recording of the
evidence on behalf of the plaintiff.
61. The reference is answered accordingly."
5. As stated supra, in the light of the undisputed fact that the
counter claim sought to be put forth by the petitioner was after
commencement of plaintiff's evidence, in the light of the judgment
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of the Apex Court in Ashok Kumar Karla's case supra, the outer
limit for filing a counter claim had undisputedly stood expired on the
date, on which the petitioner filed the instant application, I do not
find any illegality or infirmity warranting interference by this Court
exercise of its jurisdiction under Article 227 of the Constitution of
India as held by the Apex Court in the cases of Radhey Shyam
Vs. Chhabi Nath - (2015) 5 SCC 423, K.P. Natarajan Vs.
Muthalammal - AIR 2021 SC 3443 and Mohamed Ali Vs. V. Jaya
& others - (2022) 10 SCC 477.
6. Accordingly, there is no merit in the petition and the same
is hereby dismissed. However, liberty is reserved in favour of the
petitioner to take to recourse to such remedies as available in law
including filing a fresh suit, subject to all just exceptions and
limitation.
Sd/-
(S.R.KRISHNA KUMAR)
JUDGE
Srl.
