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KEY TAKEAWAYS

The case in point is M/S JSW Steel Ltd. v. Mysore Minerals Ltd., brought forth by the plaintiff in the Karnataka High Court, challenging the order passed on November 10, 2020 by the City Civil Judge, Bengaluru.

The petitioner company had filed the subject suit on October 5, 2012 for a money decree against a sum of about Rs. 270 crores. The respondent company contended the suit filed shortly after, and later filed an application, in 2016, seeking leave to introduce the counterclaim by way of amendment, amounting to a sum of Rs. 1172.29 crores with interest.

This claim was objected to by the petitioner inter alia on the grounds of 'bar of limitation' and 'delay & latches.'

CONTENTIONS OF THE PARTIES

The petitioner contended that a counterclaim cannot be amended through a Written Statement after the expiry of the statutory period of limitation, since it is a 'deemed suit' and hence, is bound by the same limitation period as a money suit. The petitioner also argues that if a suit would have failed if it were to be filed on the same cause as the respondent's counterclaim, due to the expiry of limitation period.

Per contra, the respondent justifies the causes mentioned in the impugned order, emphasising into the service of mainly three factors – (i) 'doctrine of relation back' whereby the amendments become retrospective in effect from the date of filing of the pleadings concerned; (ii) unassailability of the discretionary order granting leave to amend the Written Statement submitted by the respondent; and (iii) foundational facts supporting the counterclaim being pled in the said written statement.

ORDER PASSED BY THE BENCH

The single-judge bench consisting Justice Krishna S. Dixit elaborated on the stages of filing counterclaims, referring to the judgement passed in Ashok Kumar v. Wing CDR. Surendra Agnihotri & Ors., stating that 'Order 8 Rule 6-A CPC does not put an embargo on filing the counterclaim after filing the written statement.' It further mentions that the restriction is only with respect to the accrual of the cause of action. However, the said order also mentions that this does not provide the respondent the 'absolute right to file the counterclaim with substantive delay,' even if the prescribed limitation period has not expired. The court shall take into consideration and evaluation the factors illustrated in the said order.

The two significant questions brought forth the court were:

(i) Whether leave to incorporate the time-barred counterclaim by way of amendment to the Written Statement can be granted u/o VI Rule 17 of CPC 1908; and

(ii) Whether Court granting leave to amend the Written Statement for taking up a counterclaim can relax the period of limitation prescribed for filing the same, by invoking the doctrine of relation back

As for the observation of one of the judges becoming the ratio of the bench, Senior Advocate Srinivas Raghavan representing the respondent argues that as declared by one of the three judges in the Kalra case that as per Rule 6-A (4) a separate suit must be filed to determine the limitation period of the counterclaim, was only the viewpoint of one of the three judges comprising the said bench of the Apex Court and hence its precedential value needs to be examined.

The order observed that generally, when one of the plural judges comprising a bench makes a normative statement regarding the same fact matrix as the other partner judges, such a statement ought to be treated as a monolith representing the entire bench, unless the partner judge/s make an observation with her higher precedential value. In the Karla casesupra the bench comprised of three judges, where one judgement is rendered by two judges and the other by one judge, it is observed that the judgement pronounced separate from the two-partner judges is not inconsistent, thus there is no repugnancy between the set of judgements.

The order also observed that prescription of the period of limitation for claiming legal remedies is ordinarily prerogative of the legislature, whereas the grounds for 'delay & latches' is a matter of discretion inhering the courts. However, no court or authority has discretion to entertain the claim for the grant if the prescribed limitation period lapses as per sec. 3 (1) of the Limitation Act, 1963.

The Court holds discretion to grant leave for the amendment of Written Statement even belatedly, provided that leave to amend is submitted within the statutory period of limitation, whereby the counterclaim shall be considered as a suit by fiction of law. However, leave may be denied inter alia on the grounds of 'delay & latches' despite the period of limitation not having lapsed.

In case of an amendment to Written Statement through a time-barred counterclaim, no leave can be granted as per sec. 3(1) r/w 3(2)(b)(ii) of the Limitation Act. A time-barred counterclaim cannot be claimed even if there is no 'delay & latches' in submitting the application for amendment of pleadings.

The Court also observed that sec. 3 (1) r/w 3 (2)(b)(ii) of the Limitation Act excludes the invocation of 'doctrine of relation back' while considering an amendment application under Order VI Rule 17 of the Code for introducing a counterclaim to a Written Statement; the said doctrine does not side with the respondent due to the mandatory prescription of a specific limitation period for filing the suit as per the said Act. The petitioner's counsel also relies on the decision of the Kerala High Court in Sabhari Syndicate v. Catholic Syrian Banking Ltd., stating that a plea for a counterclaim cannot be superadded by the respondent despite including all grounds in the Written Statement once the same has become time-barred, since the law of limitation bounds the remedy and not the grounds on which it has been laid.

CONCLUSION

As per the aforementioned facts and contentions, the Writ (of Certiorari) Petition filed by the petitioner succeeded, seeking leave to amend the Written Statement for introducing the counterclaim by the respondent.

WHAT IS YOUR OPINION REGARDING THE NOTABLE JUDEGEMENT PASSED BY THE KARNATAKA HC? LET US KNOW IN THE COMMENTS BELOW!

Click here to download the original copy of the judgment


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