The Supreme Court of India, in a recent judgment, has set aside orders from a High Court and Trial Court that admitted a counter-claim filed by two defendants against a co-defendant. The apex court, in Sanjay Tiwari v. Yugal Kishore Prasad Sao & Ors., held that such a counter-claim cannot survive and must be rejected, reaffirming established legal principles.
The judgment was delivered by a bench comprising Justice K. Vinod Chandran and Justice N. V. Anjaria on a civil appeal filed by the original plaintiff in a specific performance suit.
Background of the Case
The appellant, Sanjay Tiwari, was the plaintiff in a suit seeking specific performance of an oral agreement dated December 2, 2002, with the first defendant, Yugal Kishore Prasad Sao. The suit pertained to 0.93 acres of land. The plaintiff contended that the entire consideration was paid via demand drafts on December 3, 2002, a receipt was issued, and he was put in possession of the property, where he subsequently built a boundary wall.
The first defendant, in his written statement, contended that two other individuals (defendant Nos. 2 and 3) were in possession of a part of the suit property (50 decimals) based on a separate agreement from December 1, 2002. He claimed the suit was bad for non-joinder of these parties.
Following this, defendant Nos. 2 and 3 filed an application for impleadment, which was allowed by the Trial Court. In their written statement, defendant Nos. 2 and 3 asserted that their agreement with the first defendant was for the entire land for Rs. 5,50,000/- and raised a counter-claim against the first defendant, seeking a transfer of the entire land to them.
The Trial Court admitted this counter-claim. The plaintiff’s challenge to this order under Article 227 was dismissed by the High Court “on the ground of avoiding multiplicity of litigation, reasoning that the entire issue can be decided in the suit.” The plaintiff then appealed this decision to the Supreme Court.
Arguments Before the Court
The appellant-plaintiff argued that “there can be no counter claim against the co-defendant in a suit filed by him.” This contention was supported by reliance on the Supreme Court’s decisions in Rohit Singh & Ors. v. State of Bihar ((2006) 12 SCC 734) and Rajul Mano Shah Rajeshwari Rasiklal Sheth v. Kiranbhai Shakrabhai Patel & Anr. ((2025) 10 SCR 152).
The respondents (defendant Nos. 2 and 3) pleaded that they “may be left liberty to agitate their cause in appropriate proceedings.”
Supreme Court’s Analysis and Findings
The Supreme Court bench first noted that the claim by defendant Nos. 2 and 3 was not concrete. Their written statement first claimed the entire land, but also conceded that 43 decimals were agreed to be conveyed to the plaintiff and that their contention was that the plaintiff had “fraudulently changed the area from 43 decimals to 93 decimals.” The court observed that their claim “towards the end of the written statement is that, in any event 50 decimals of the suit property has to be conveyed to them.”
The Court found that defendant Nos. 2 and 3 “have no concrete claim against the property” and noted their impleading application was filed “only in the year 2006 after the period of limitation seeking the claim of specific performance,” for a cause of action that arose in 2002.
The judgment then analyzed the precedents cited by the appellant.
Referring to Rohit Singh (supra), the Court highlighted the “multiple reasons” for which the counter-claim in that case was rejected. These included that it was raised after issues were framed and evidence was closed, and that despite the contention, “there was not even a prayer seeking a declaration of title, in which event, there was no counter claim in terms of Order 8, Rule 6A of the Code of Civil Procedure, 1908.” Finally, the judgment noted the finding in Rohit Singh that a counter-claim “has necessarily to be directed against the plaintiff and cannot be directed against the co-defendant.”
Regarding Rajul Mano Shah (supra), the Court noted that a claim for specific
Applying these principles, Justice Chandran, writing for the bench, held, “The said declaration squarely applies in the present case also.”
The Court clarified that the voluntary impleadment of defendant Nos. 2 and 3 “saves the suit from the defect of non-joinder of necessary parties, on the ground of possession, even if it is so found.” However, it made clear that “we have not held on merits regarding the possession as such and it would be for the Trial Court to determine the same.”
The Decision
The Supreme Court allowed the civil appeal, concluding that the counter-claim against the co-defendant was impermissible.
“As has been held in the decisions cited, the counter claim against the co-defendant cannot survive and the same has to be rejected,” the Court ruled.
The bench explicitly rejected leaving liberty for defendant Nos. 2 and 3 to file a separate suit, stating, “We find no reason to leave liberty to the defendants 2 & 3 to file a separate suit at this stage, when the claim would be grossly delayed, which was hit by limitation even at the time of filing of the counter claim”.
The appeal was allowed, and the matter was sent back to the Trial Court, with the specific direction that all contentions were left open “except – that of the counter claim of the defendants 2 & 3, which stands set aside.”
