Bench:
- Justice N.V. Ramana
- Justice Mohan M. Shantanagoudar
- Justice Ajay Rastogi
Issue:
I) Whether Order VIII Rule 6 of the CPC mandates an embargo on filing the counterclaim after filing the written statement?
II) If the answer to the aforesaid question is negative, then what are the restrictions on filing the counterclaim after filing the written statement?
Facts:
- A dispute arose between Petitioner and the Respondent concerning performance of agreement to sell and the respondent filed the suit for specific performance against the petitioner.
- Petitioner then filed a written statement and counterclaimed in the same suit.
- The trial court rejected the objections, concerning filing of the counterclaim after filing of the written statement and framing of issues.
- The order was then challenged before the High Court, the High Court allowed the same and quashed the counterclaim.
- Aggrieved by the aforesaid order of the High Court, the petitioner filed approached the Division of Supreme Court, which referred the matter to a Three Judge Bench.
- The Three Judge Bench agreed with decision of the trial court and asked to place an instant Special Leave Petition for obtaining orders from the Hon’ble Chief Justice of India, for considering the case on Merits.
Arguments of the Petitioner:
- Intention behind Order VIII Rule 6A of the CPC is to provide an enabling provision for the filing of counterclaim so as to avoid multiplicity of proceedings, thereby saving time of the Courts and avoiding inconvenience to the parties.
- No specific bar has been imposed on Court’s jurisdiction to entertain a counterclaim except for limitation under the said provision, which says cause of action in the counterclaim should arise before or after the filing of the suit but before the defendant delivers his defence.
- If permitting the counterclaim would lead to protracting the trial and cause delay in deciding the suit, the Court can exercise its discretion by not permitting the filing of counterclaim, but the rules should not be interpreted in a manner that ultimately results in failure of justice.
Arguments of the Respondent:
- 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 cause of action relating to counterclaim must arise before the filing of the written statement, and counterclaim must therefore form a part of written statement.
- Relying on the language of Order VIII Rule 6 of CPC, a defendants claim to setoff to be a part of the written statement, same rules should apply to the filing of a counterclaim.
Judgment:
The Three Judge Bench mentioned that the court has to take into consideration the outer limit for filing the counterclaim, which is pegged till the issues are framed. In such cases the Courts 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.
Lastly, it was held by the Court that once issues have been framed (per curiam), court cannot entertain counterclaim filed after the submission of written statement.
