The Supreme Court, in a significant ruling on civil procedure, has held that a defendant cannot be permitted to file a counter-claim after the issues in a suit have been framed and the trial has substantially progressed. A bench of Justice Pamidighantam Sri Narasimha and Justice Joymalya Bagchi also reiterated the established legal principle that a counter-claim under Order VIII Rule 6A of the Code of Civil Procedure, 1908, must be directed against the plaintiff and cannot be maintained solely against a co-defendant.
The Court set aside a judgment of the High Court of Gujarat which had allowed an application to amend a written statement and file a counter-claim nine years after the institution of the suit and nearly two years after the issues were framed.
Case Background
The case originated from a suit filed in 2012 by the appellant, Rajul Manoj Shah. She sought a declaration that her sister-in-law (original defendant no. 1) had no right to transfer an undivided share in a joint family property in Ahmedabad and an order to declare an agreement to sell dated 21.10.2011 in favour of Kiranbhai Shakrabhai Patel (defendant no. 2) as null and void.
During the pendency of the suit, the original defendant no. 1 passed away in 2013. After a series of applications, the High Court, by consent of the parties, appointed the Nazir of the City Civil Court, Ahmedabad, as the representative of the deceased defendant no. 1 in 2020.
Subsequently, on 26.07.2021, defendant no. 2 filed an application seeking to amend his written statement to include a counter-claim. The counter-claim sought specific performance of the 2011 agreement to sell against the estate of defendant no. 1 (represented by the Nazir) and partition of the suit property.
The City Civil Court, Ahmedabad, dismissed this application on 05.08.2021, holding it was filed after an inordinate delay, was barred by limitation, and was not maintainable against a co-defendant. However, the High Court of Gujarat, exercising its supervisory jurisdiction under Article 227 of the Constitution, reversed the Trial Court’s order, which led to the present appeal before the Supreme Court.
Arguments of the Parties
Mr. Ritin Rai, learned senior counsel for the appellant, argued that a counter-claim cannot be entertained after issues are framed, relying on the Supreme Court’s decision in Ashok Kumar Kalra v. Wing CDR. Surendra Agnihotri. He further contended that a counter-claim cannot be made against a co-defendant, citing Rohit Singh & Ors. v. State of Bihar.
Mr. Pradhuman Gohil, appearing for respondent no. 1 (defendant no. 2), presented an innovative interpretation of Order VIII Rule 6A of the CPC to justify the counter-claim.
Supreme Court’s Analysis
The Supreme Court bench conducted a detailed analysis of the two primary legal issues.
1. Maintainability of Counter-Claim Against a Co-Defendant
The Court examined Order VIII Rule 6A of the CPC, which states that a defendant may set up a counter-claim “against the claim of the plaintiff.” The bench cited its previous judgment in Rohit Singh, which held:
“But, it appears to us that a counterclaim has necessarily to be directed against the plaintiff in the suit, though incidentally or along with it, it may also claim relief against the co-defendants in the suit. But a counterclaim directed solely against the co-defendants cannot be maintained.”
Applying this principle, the Court found that defendant no. 2’s primary relief of specific performance was directed solely against the deceased defendant no. 1’s estate. The Court observed, “The relief of specific performance as sought to be raised by defendant no. 2 cannot be set up by way of a counter-claim since the same is not directed against the appellant/plaintiff, but is instead directed solely against the co-defendant. In view of this, defendant no. 2 is held to be disentitled to raise prayer of specific performance by way of counter-claim.”
2. Delay in Filing Counter-Claim
On the issue of delay, the Court referred extensively to its decision in Ashok Kumar Kalra. The Court noted that while Order VIII Rule 6A does not prescribe a specific time limit, it does not grant an “absolute right to the defendant to file the counterclaim with substantive delay.” The guiding principle, as established in Kalra, is that the outer limit for filing a counter-claim is pegged till the issues are framed.
The judgment in Kalra stated:
“…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…”
The Court noted the significant delay in the present case, where the application was filed nine years after the suit was instituted and two years after the framing of issues. The Court found no justification for this delay, observing that the cause of action to seek specific performance arose in 2012 when the appellant first challenged the agreement to sell.
The Decision
Based on its analysis, the Supreme Court concluded that the High Court had committed an error in reversing the Trial Court’s well-reasoned order. The bench held that the counter-claim was impermissible both on the grounds of being directed against a co-defendant and due to the inordinate delay in its filing.
The Court allowed the appeal and set aside the judgment of the High Court, thereby restoring the Trial Court’s order dismissing the application for filing the counter-claim.
