TaxTMI 
TaxTMI 
2019 (11) TMI 1848
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng of counter-claim by a Defendant in a suit. The reference order dated 10.09.2018 is extracted below: ......... 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 VIII Rule 6A of the Code of Civil Procedure 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 No. 2) and Respondent No. 1 (Plaintiff) concerning performance of agreement to sell dated 20.11.1987 and 04.10.1989. Respondent No. 1 (Plaintiff) filed the suit for specific performance against the Petitioner (Defendant No. 2) on 02.05.2008. Petitioner (Defendant No. 2) herein filed a written statement on 2.12.2008 and counter-claim on 15.3.2009, in the same suit. By order dated 12.05.2009, the trial court rejected the objections, concerning filing of the counter-claim after filing of the written statement and framing of issues. Order dated 15.05.2009 was challenged before the High Court, in Civil Revision No. 253....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ovision relating to counter-claim in Order VIII Rule 6A of the Code of Civil Procedure. 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: 1) Whether Order VIII Rule 6A of the Code of Civil Procedure mandates an embargo on filing the counter-claim after filing the written statement? 2) if the answer to the aforesaid question is in negative, then what are the restrictions on filing the counterclaim after filing of the Written Statement? 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 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... pertains to the counter-claim, reads as under: Order VIII Rule 6A: 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... given for the same. When we look at the whole scheme of Order VIII Code of Civil Procedure, 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 counter-claim. 12. We have to take note of the fact that Rule 6A was introduced in the Code of Civil Procedure by the Code of Civil Procedure (Amendment) Act of 1976 (Act No. 104 of 1976), and before the amendment, except in money suits, counter-claim 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 counter-claim by way of Rule 6A was inserted in the Civil Procedure Code. The statement of objects and reasons for enacting the Code of Civil Procedure (Amendment) Act, 1976 (Act No. 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,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and this Court felt that no prejudice would be caused to the Plaintiff. However, in the case of Bollepanda P. Poonacha and Anr. 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, (2003) 7 SCC 350, discouraged the belated filing of counter-claims. Further, the Court elucidated on the serious harm caused by allowing such delayed filing. In any case, in Bollepanda Poonacha Case (supra), the Court could not expound any further as the counter-claim was rejected on the basis that the cause of action had arisen after the filing of the written statement. 16. The time limitation for filing of the counter-claim, 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 counter-claim in a suit is explicitly limited by the embargo provided for the accrual of the cause of action Under Order VIII Rule 6A. Having said so, this does ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Procedure. 18. In this regard having clarified the law, we may note that the Mahendra Kumar Case (supra) needs to be understood and restricted to the facts of that case. We may note that even if a counter-claim 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 counter-claim, 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 counter-claim. 19. We may note that any contrary interpretation would lead to unnecessary curtailment of the right of a Defendant to file counter-claim. This Court needs to recognize the practical difficulties faced by the litigants across the country. Attaining the laudable goal of speedy justice itself cannot be the only end, rather effective justice wherein adequate opportunity is provided to all the parties, need to be recogn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s: 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 VIII Rule 6A of the Code of Civil Procedure is mandatory in nature. Essentially, in light of the previous judgments of this Court, the question referred to this Court is whether it is mandatory for a counter-claim of the Defendant to be filed along with the written statement. 24. Counsel for both parties argued about the scope of Order VIII Rule 6A of the Code of Civil Procedure, 1908 [hereinafter "CPC"] and whether a counter-claim 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. 25. 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 counter-claims were introduced in the Code of Civil Procedure. The originally enacted Code of Civil Procedure of 1908 did not provide a statutory right to file a counter-claim. At that time, Order VIII onl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Effect of discontinuance of suit.--If in any case in which the Defendant sets up a counter-claim, the suit of the Plaintiff is stayed, discontinued or dismissed, the counter-claim may nevertheless be proceeded with. 6E. Default of Plaintiff to reply to counter-claim.--If the Plaintiff makes default in putting in a reply to the counter-claim made by the Defendant, the Court may pronounce judgment against the Plaintiff in relation to the counter-claim made against him, or make such order in relation to the counter-claim as it thinks fit. 6F. Relief to Defendant where counter-claim succeeds.--Where in any suit a set-off or 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. 26. For the first time, through the introduction of Rules 6A-6G to Order VIII, an explicit right of filing a counter-claim was accorded ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng a counterclaim also depends on the nature of the claim and is accordingly governed by the period of limitation stipulated in the Limitation Act. 28. 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 VIII Rule 6A(1); and second, it is filed within the period specified under the Limitation Act. Clearly, by itself, Rule 6A does not specifically require that a counter-claim 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 the Code of Civil Procedure to determine whether a counter-claim can be filed after a written statement. 29. It would be appropriate to begin with a reference to Order VIII 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 counter-claim 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as of right but shall be governed by the discretion vesting in the court, either Under Order 6 Rule 17 Code of Civil Procedure if sought to be introduced by way of amendment, or, subject to exercise of discretion conferred on the court Under Order 8 Rule 9 Code of Civil Procedure 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 counter-claim to be filed after the written statement in exercise of its power Under Order VIII Rule 9 and Order VI Rule 17 of the Code of Civil Procedure. 31. It can also be gleaned from Order VIII Rule 10 that it is permissible to file a belated counter-claim under the scheme of Order VIII, Code of Civil Procedure: 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 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 pronouncem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rd, I agree with the propositions laid down in the decisions discussed below. In Mahendra Kumar v. State of Madhya Pradesh, (1987) 3 SCC 265, it was held that: 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 counter-claim 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 counter-claim by the Defendant after he had filed the written statement. What is laid down Under Rule 6-A(1) is that a counter-claim 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 counter-claim 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 counter-claim after the filing of the written statement, the counter-claim was not maintainable...Under Article 113 of the Limitation Act, 1963, the period of limitation of three years from the date the r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ise to the cause of action for his counter-claim. For instance, in a suit for declaration of title brought by the 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 counter-claim 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 counter-claim. Similarly, limited access to justice, especially in rural areas, shaped by the socio-economic context of parties, may compel the filing of belated counter-claims. Second, a perusal of Order VIII Rule 6B suggests that it is only limited to cases where the counter-claim 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 6B cannot be said to be applicable. This is because in any such case, if the Court relies on a technical interpretation of Rule 6B to disallow the filing of a belated counter-claim, the Defendant would stil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the written statement, with the leave of the Court. 36. Finally, then, the scope of discretion vested with the Court Under Order VI Rule 17 and Order VIII Rule 9 to allow for belated counter-claims 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 VIII Rule 6-A and the Limitation Act, 1963. 37. In several cases, it is possible that the period of limitation for filing of counter-claims 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 counter-claim for possession of the immovable property based on previous possession. In terms of Order VIII Rule 6A, 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. In such a situation, it is possible that by the time the count....
X X X X Extracts X X X X
X X X X Extracts X X X X
....avour of permitting a belated counter-claim. The framers of the law never intended the pleading by way of counter-claim being utilized as an instrument for forcing upon a reopening of the trial or pushing back the progress of proceeding. Generally speaking, a counter-claim 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 counter-claim may not prejudice the Defendant because in spite of the counter-claim having been refused to be entertained he is always at liberty to file his own suit based on the cause of action for counter-claim. To ensure that the objective of introducing the statutory amendments with respect to counter-claims was not defeated, it was rightly held that a belated counter-claim raised by way of an amendment to the written statement (Under Order VI Rule 17) or as a subsequent pleading (Under Order VIII Rule 9) should not be allowed after the framing of issues and commencement of trial. 40. Later, in Rohit Singh v. State of Bihar, (2006)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Appellants by the trial court. The Respondents have failed to establish any factual or legal basis for modification/nullifying the decree of the trial court. The Court also relied on Rohit Singh (supra) and observed that a counter-claim cannot be filed after the framing of issues. 43. In Vijay Prakash Jarath v. Tej Prakash Jarath, (2016) 11 SCC 800, this Court further refined the limitation in Rohit Singh (supra) that counter-claims 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. 44. The above discussion lends support to the conclusion that even though Rule 6A permits the filing of a counter-claim 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 counter-claims beyo....