When a counter-claim can be filed in a suit?

Under Order 8 Rule 6A to 6G of the Code of Civil Procedure, we find the provisions for filing the counter-claim by the Defendant. These provisions were introduced by The Code of Civil Procedure (Amendment) Act 1976. Prior to the said amendment, The original Code Civil Procedure did not provide statutory right to file a counter-claim. Order 8 only permitted to file written statement and setoffs. After the 1976 Amendment the following Rules 6A to 6G were added in Order 8 Rule 6 and it reads as follows:

Rule 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 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 to as to enable the Court to pronounce a final judgement in the same suit, both on the original claim and on the counter-claim.

(3)   The Plaintiff shall be at liberty to file written statement in answer to the counter-claim of the Defendant within such period as may be fixed by the Court.

(4)   The Counter-claim shall be treated as a Plaint and governed by the Rules applicable to the plaints.

6B. Counter-claim to be stated.—

Where any Defendant seeks to rely upon any ground as supporting a right of counter-claim, he shall, in written statement, state specifically that he does so by way of counter-claim.

6C. Exclusion of counter-claim.—

Where  a defendant sets up a counter-claim and the plaintiff contends that the claim thereby raised ought not to be disposed of by way of counter-claim but in an independent suit, the plaintiff may, at any time before issues are settled in relation to the counter-claim, apply to the Court for an order that such counter-claim may be excluded and the Court may, on the hearing of such application make such an order as it thinks fit.

6D. Effect of Discontinuance of suit.—

If in any case in which the Defendant sets up a counter-claim, the suit of 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 judgement 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 counter-claim 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 judgement to the paty 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.

Thus after 1976 Amendment, the right to file a counter-claim was explicitly stipulated in the Code of Civil Procedure to the Defendant by forming the above Rules.  As per the Rule 6A(1) provides that the cause of action  pertaining to the counter-claim must arise either before or after the filing  of the suit, but before the Defendant has delivered his defence or before the expiry of the time for delivering such defence. Thus it provides limitation  for accrual of the cause of action to the Defendant but it does not  provide time within which the counter-claim itself must be filed. However Rule 6A(4) provides that a counter-claim is governed by the Rules applicable to plaints. Therefore Section 3(2)(b)(ii) of the Limitation Act, 1963 which provides that: SECTION 3(2) For the purposes of this Act,— (b) any claim by was of a set off or a counter claim, shall be treated as a separate suit and shall be deemed to have been institutes—(ii) in the case of a counter-claim, on the date on which the counter-claim  is made in court.

 

 

Order VIII Rule 9 states; Subsequent Pleadings:-

No pleading subsequent to the written statement of a Defendant other than by way of defence to setoff 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 and fix a time of not more than thirty days for presenting the same.

Thus Order VIII Rule 9 provides that the Court can allow any type of subsequent pleadings on the terms that it thinks fit by using its judicial discretion, and that subsequent pleadings includes additional written statement with counter-claim. Rule 9does not create a bar on the types claims in the subsequent pleadings. As long as the Court considers that it would be proper to allow a counter-claim by way of a subsequent pleading, it is possible to file a counter-claim after filing the written statement.

There is another way to file a belated counter claim, i.e. by was of amendment to the written statement. However the said amendment is subject to the leave of the Court, but it cannot be used as a matter of right by the Defendant

Hon’ble Apex Court in the case of Ramesh Chand Ardawatiya V/s. Anil Panjwani, reported in 2003 (7) SCC 350 observed in para 28 that:” 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 counter-claim in a civil suit. Firstly, the written statement filed under Rule 1 may itself contain a counter-claim  which in the light of Rule 1 read with Rule 6-A would be a counter-claim against the claim of the Plaintiff preferred in exercise of legal right conferred by Rule 6-A. Secondly, a counter-claim may be preferred by way of amendment incorporated subject to the leave of the Court in a written statement already filed. Thirdly, a counter-claim may be filed by way of a subsequent pleading under Rule- 9. In the latter two cases the counter-claim 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 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 pleadings.”

Order VIII Rule 10 states: Rule 10.Pocedure when party fails to present written statement called for by Court;—

Where any party from whom a written statement is required Under Rule1 or Rule9 fails to present the same within the time permitted or fixed by the Court, as the case may be, the Court shall pronounce judgement against him, or make such order in relation to the suit as it thinks fit and on te pronouncement of such judgement a decree shall be drawn up.

In Salem Advocate Bar Association, T.N. v. Union ofIndia reported in 2005(6) SCC 344, the Hon’ble Apex Court, while construing the nature of Rule 1 relied on the wide discretionary power under Rule 10 observed that;”21. In construing this provision, support can also be had from Order 8 Rule10 which provides that where any party from whom a written statement is required Under Rule1 or Rule9, fails to present the same within the time permitted or fixed by the Court, the Court shall pronounce judgement against him, or make him 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 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, the 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 OrderVIII Rule 10, The Court has power to condone the delay in filing written statement, therefore ,there is no reason as to why the delay in filling a counter-claim cannot be condoned by the Court as well.

In Mahesh kumar V/s. State of Madhya Pradesh reported in 1987 (3) SCC 265 Hon’ble Apex Court ruled that;” 15 . The next point that remains to be considered is whether Rue 6-A(1) of Order 8 of the Code of Civil Procedure bars the filling 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 -A(1) is that a counter-claim can be filed, provided the cause of action had accrues 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….”

Hon’ble Apex court, in case of Ashok kumar Kalra V/s. Surendra Agnihotri and Ors. reported in 2020 (2) SCC 394 held that;

35.It is also pertinent to note here that though Order VIII Rule 1A requires that the documents in support of a counter-claim 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 1A(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(3) (as amended in 2002) also provides that these documents ,ay be produced later, with the leave of the Court…”.

In Rohit Singh V/s. State of Bihar reported in2006 (12) SCC 734, it was held by the Hon’bl Apex Court that; “18…. A counter-claim, no doubt, could be filed even after the written statement  is filed, but that does not mean that a counter-claim can be raised after issues are framed and the evidence is closed….”

In Bollepanda P. Poonacha V/s.  K.M.Madapa reported in 2008 (13) SCC 179, it was held by the Hon’bl Apex Court that; belated counter-claim were to be discouraged, and called upon the Court to consider questions of serious injustice and irreparable loss while permitting any such claim.

In Gayatri Women’s Welfare Association V/s. Gowramma reported in 2011 (2) SCC 330, while considering the issue of amendment to a counter-claim, it was held by the Hon’bl Apex Court that; “The matter herein symbolises the concern highlighted by this Court in Ramesh Chand [2003 (7) SCC 350]. Permitting a counter-claim at this stage would be to reopen a decree  which has been granted in favour of the Appellants by the trial court.…”  

However in Vijay Prakash Jarath V/s. Tej Prakash Jarath reported in 2016 (11) SCC 800, The Hon’ble Apex Court allowed the counter-claim even after the issues were framed and the and the case was in the early stages  of recording of Plaintiff’s evidence, on the ground that no prejudice was caused to the Plaint.

Still in case of Ashok kumar Kalra V/s. Surendra Agnihotri and Ors. reported in 2020 (2) SCC 394 His Lordship Justice Mohan. M. Shantanagoudar disagreed view taken in Rohit Singh (supra) that; a counter-claim, if filed after the framing of the issues and closing of the evidence, would be illegal and without jurisdiction, had state that ” this is not a correct statement of law, as filing of counter-claims after the commencement of recording of evidence not illegal per se. However, I hastened to add that permitting such a counter-claim would be improper, as the  Court’s discretion has to be exercised wisely and pragmatically. And further added three considerations to be kept in mind while allowing the filing of a belated counter-claim; “first, the Court must consider that no injustice or irreparable loss is being caused to the Defendant due to a refusal to entertain the counter-claim, 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. Second, the interest of justice must be given utmost importance and procedure should not outweigh substantive justice. Third, the specific objectives of reducing  multiplicity of litigation and ensuring speedy trials  underlying the provisions for counter-claims, must be accorded due consideration.”

Thus as per the latest judgement of the Apex Court in Ashok kumar Kalra V/s. Surendra Agnihotri and Ors. reported in 2020 (2) SCC 394 , it is not mandatory for a counter-claim to be filed  along with the written statement. The Court in its discretion, may allow a counter-claim to be filed after the filing of the written statement. In special circumstance , a counter-claim 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.

written and compiled by ;

Dharmendra Parikh (Advocate)

D Parikh & Associates (Law Firm)

www.dpassociates.org