Ashok Kumar Kalra vs Wing Cdr. Surendra Agnihotri & Ors.

Code of Civil Procedure, 1908 – Or. VIII – Scheme of – Held: Whole scheme of Or. VIII unequivocally points out at the legislative intent to advance the cause of justice by placing embargo on the belated filing of written statement, set-off and counter-claim. Code of Civil Procedure, 1908 – Filing of belated counterclaim – Factors to be considered – Discussed. Jurisprudence – Procedural justice vis-a-vis substantive justice – Balanced approach towards – Discussed – Civil Procedure Code, 1908 – Or. VIII, r. 6A – Limitation Act, 1963. Code of Civil Procedure, 1908 – Or. VIII, rr. 6A, 9, 10 and Or. VI, r.17 – Power of Court under – Held: Per Mohan M. Shantanagoudar, J. (Supplementing) Conjoint and harmonious reading of rr. 6A, 9 & 10 of Or. VIII and Or. VI, r. 17, CPC reveals that the Court is vested with the discretion to allow the filing of counter-claim even after the filing of the written statement, as long as the same is within the limitation prescribed under the 1963 Act – Limitation Act, 1963.

Code of Civil Procedure, 1908 – Or. VIII, r. 6A, 6B – Plea of respondent, relying on r.6B, that r.6A(1) requires that the cause of action for counter-claim should arise before the filing of the written statement – Held: Per Mohan M. Shantanagoudar, J. (Supplementing) Not agreed with, for two reasons- (i) It is possible that at the time of filing the written statement, the defendant is unaware of the facts giving rise to the cause of action for his counter-claim (ii) perusal of Or.VIII, r. 6B suggests that it is only limited to cases where the counter-claim is made along with the written statement – Provisions u/Or. VIII should not be read in isolation, but in a conjoint and harmonious manner – Rule 6B cannot be read as limitation on the Court’s discretion to permit the filing of belated counter-claim.

Code of Civil Procedure, 1908 – Or. VIII, r.6, 6A(1), (4) – Plea that the limitation on filing of set-offs u/Or. VIII, r. 6 should be read into r. 6A(1) – Held: Per Mohan M. Shantanagoudar, J. (Supplementing) Untenable – Nature of a set-off and a counterclaim is different – Distinctions enumerated. Answering the Reference, the Court

HELD : Per N. V. RAMANA, MOHAN

SHANTANAGOUDAR AND AJAY RASTOGI, JJ.

M.

1.1 As per Order VIII Rule 6 CPC, the defendant can claim set-off of any ascertained sum of money legally recoverable by him from the plaintiff, against the plaintiff’s demand, in a suit for recovery of money. Whereas, Rule 6A deals with counter-claim by defendant, according to which 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 filing of the suit but before the defendant has delivered his defence or before the time prescribed for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not. The whole scheme of Order VIII CPC unequivocally points out at the legislative intent to advance the cause of justice by placing embargo on the belated filing of written statement, set-off and counter-claim. Rule 6A was introduced in the CPC by the Code of Civil Procedure (Amendment) Act of 1976 (Act No.104 of 1976), and before the amendment, except in money suits, counter-claim or set-off could not be pleaded in other suits. As per the recommendation of the Law Commission of India, to avoid multiplicity of proceedings, the counter-claim by way of Rule 6A was inserted in the Civil Procedure Code. The whole purpose of the procedural law is to ensure that the legal process is made more effective in the process of delivering substantial justice. Particularly, the purpose of introducing Rule 6A in Order VIII of the CPC is to avoid multiplicity of proceedings by driving the parties to file separate suit and see that the dispute between the parties is decided finally. If the provision is interpreted in such a way, to allow delayed filling of the counter-claim, the provision itself becomes redundant and the purpose for which the amendment is made will be defeated and ultimately it leads to flagrant miscarriage of justice. At the same time, there cannot be a rigid and hyper-technical approach that the provision stipulates that the counter-claim has to be filed along with the written statement and beyond that, the Court has no power. The Courts, taking into consideration the reasons stated in support of the counter-claim, should adopt a balanced approach keeping in mind the object behind the amendment and to sub-serve the ends of justice. There cannot be any hard and fast rule to say that in a particular time the counter-claim has to be filed, by curtailing the discretion conferred on the Courts. The trial court has to exercise the discretion judiciously and come to a definite conclusion that by allowing the counter-claim, no prejudice is caused to the opposite party, process is not unduly delayed and the same is in the best interest of justice and as per the objects sought to be achieved through the amendment. But however, the defendant cannot be permitted to file counter-claim 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 as enshrined in the objects and reasons for the particular amendment to the CPC. [Paras 10, 12 and 17] [227-D-F; 228-D-F; 230-D-H; 231-A-B]

Salem Advocate Bar Association, Tamil Nadu v. Union Of India AIR 2005 SC 3353 ; [2005] 1 Suppl. SCR

929 – relied on.

Jai Jai Ram Manohar Lal v. National Building Material Supply, Gurgaon (1969) 1 SCC 869 : [1970] 1 SCR

22 ; Mahendra Kumar and Anr. v. State Of Madhya Pradesh and Ors. (1987) 3 SCC 265 : [1987] 3 SCR

155 ; Jag Mohan Chawla And Another v. Dera Radha Swami Satsang & Ors., (1996) 4 SCC 699 : [1996] 2 Suppl. SCR 509 ; Shanti Rani Das Dewanjee (Smt.) v. Dinesh Chandra Day (Dead) by LRs. (1997) 8 SCC

174 : [1997] 4 Suppl. SCR 177 ; Vijay Prakash Jarath v. Tej Prakash Jarath (2016) 11 SCC 800; Bollepanda P. Poonacha & Anr. v. K.M. Madapa

(2008) 13 SCC 179 : [2008] 4 SCR 1011 ; Ramesh Chand Ardawatiya v. Anil Panjwani (2003) 7 SCC

350 : [2003] 3 SCR 1149 – referred to.

1.2 Findings- Order VIII Rule 6A of the CPC does not put an embargo on filing the counter-claim after filing the written statement, rather the restriction is only with respect to the accrual of the cause of action. Having said so, this does not give absolute right to the defendant to file the counter-claim with substantive delay, even if the limitation period prescribed has not elapsed. The court has to take into consideration the outer limit for filing the counter-claim, which is pegged till the issues are framed. The court in such cases have the discretion to entertain filing of the counter-claim, after taking into consideration and evaluating inclusive factors provided below which are only illustrative, though not exhaustive: (i) Period of delay; (ii) Prescribed limitation period for the cause of action pleaded; (iii) Reason for the delay; (iv) Defendant’s assertion of his right; (v) Similarity of cause of action between the main suit and the counter-claim; (vi) Cost of fresh litigation; (vii) Injustice and abuse of process; (viii) Prejudice to the opposite party; (ix) and facts and circumstances of each case; (x) In any case, not after framing of the issues. [Paras 19, 20] [231-E-H; 232-A-D]

Per MOHAN M. SHANTANAGOUDAR, J. (Partly

Supplementing and Partly Dissenting)

1.1 A plain reading of Order VIII Rule 9 makes it clear that the Court has the discretion to allow any subsequent pleading upon such terms as it thinks fit. Such subsequent pleading or additional written statement may include a counterclaim. This is because Rule 9 does not create a bar on the nature of claims that can be raised as 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. In addition to this, it is also possible to introduce a belated counter-claim by way of an amendment to the original written statement under Order VI Rule 17, CPC. However, as is the case with Order VIII Rule 9, the filing of such a counter-claim through an amended written statement is subject to the leave of the Court, and not accorded to the defendant as a matter of right. The Court has the discretion to allow a counter-claim to be filed after the written statement in exercise of its power under Order VIII Rule 9 and Order VI Rule 17 of the CPC. Under Order VIII Rule 10, the Court has the power to condone the delay in filing of a written statement, if it deems it fit in the facts and circumstances of the case. If it is so, there is no reason as to why the delay in filing a counter-claim cannot be condoned by the Court as well. A conjoint and harmonious reading of Rules 6A, 9 and 10 of Order VIII as well as Order VI Rule 17, CPC thus reveals that the Court is vested with the discretion to allow the filing of a counterclaim even after the filing of the written statement, as long as the same is within the limitation prescribed under the Limitation Act, 1963. [Paras 8, 10 and 11] [236-G-H; 237-A-B; 237-F-H; 238-H; 239-A-B]

1.2 It is possible that at the time of filing the written statement, the defendant is unaware of the facts giving rise to the cause of action for his counter-claim. For instance, in a suit for declaration of title brought by the plaintiff against his sister, the defendant may be unaware that the plaintiff has wrongfully detained her belongings kept at the said property, at the time of filing her written statement. In such a situation, even though the cause of action for her counter-claim of wrongful detention of belongings may have arisen before the filing of the written statement, it may not have been possible for her to raise the said counter-claim. Similarly, limited access to justice, especially in rural areas, shaped by the socio-economic context of parties, may compel the filing of belated counter-claims. Second, a perusal of Order VIII Rule 6B suggests that it is only limited to cases where the counter-claim is made along with the written statement. In instances where a belated counter-claim is raised by way of an amendment to the written statement, or as a subsequent pleading, Rule 6B cannot be said to be applicable. This is because in any such case, if the Court relies on a technical interpretation of Rule 6B to disallow the filing of a belated counter-claim, the defendant would still be free to file a fresh suit for such a claim. He may, in such matters, after filing the separate suit, request the Court to club the suits or to hear them simultaneously. This may further delay the process of adjudication and would certainly not help the plaintiff in the first suit, who may have opposed the filing of the belated counterclaim. Such multiplicity of proceedings goes against the object with which Rules 6A-6G were introduced to the CPC. Thus, the provisions under Order VIII should not be read in isolation, but in a conjoint and harmonious manner, and Rule 6B cannot be read as a limitation on the Court’s discretion to permit the filing of a belated counter-claim. Therefore, I do not find force in the argument raised by Counsel for Respondent. [Para 12] [240-FH; 241-A-E]

2. The nature of a set-off and a counter-claim is different. For instance, a set-off must necessarily be of the same nature as the claim of the plaintiff and arise out of the same transaction. These requirements do not hold for counter-claims, which may be related to “any right or claim in respect of a cause of action accruing to the defendant against the plaintiff” as stated in Order VIII Rule 6A(1). Further, in case of set-offs, there is no provision akin to Order VIII Rule 6A(4), which provides that a set-off must be treated as a plaint. Thus, it appears that the Legislature has consciously considered it fit to omit a specific time limit for filing of counter-claims in Rule 6A. In such a scenario, a limitation cannot be read into this Rule. Respondent relied on Order VIII Rule 1A, which requires the documents in support of a counterclaim to be presented along with the written statement itself. 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 1A(3) (as amended in 2002) also provides that these documents may be produced later, with the leave of the Court. The discretion accorded in these provisions goes on to support the conclusion that it is possible to file a counter-claim even after the written statement, with the leave of the Court. Procedural rules should not be interpreted so as to defeat justice, rather than furthering it. When Courts set out to do justice, they should not lose sight of the end goal amidst technicalities. In some cases, this means that rules that have traditionally been treated as mandatory, may be moulded so that their object and substantive justice is not obstructed. Equity and justice should be the foremost considerations while construing procedural rules, without nullifying the object of the Legislature in totality. Thus, rules under the Limitation Act which may allow for filing of a belated counter-claim up to a long period of time, should not be used to defeat the ends of justice. [Paras 13, 14 and 17] [241-D-H; 242-A-B; 242-G-H; 243-A-B]

3. Even though Rule 6A permits the filing of a counterclaim after the written statement, the Court has the discretion to refuse such filing if it is done at a highly belated stage. However, to ensure speedy disposal of suits, propriety requires that such discretion should only be exercised till the framing of issues for trial. Allowing counter-claims beyond this stage would not only prolong the trial, but also prejudice the rights that may get vested with the plaintiff over the course of time. At the same time, in exceptional circumstances, to prevent multiplicity of proceedings and a situation of effective re-trial, the Court may entertain a counter-claim even after the framing of issues, so long as the Court has not started recording the evidence. This is because there is no significant development in the legal proceedings during the intervening period between framing of issues and commencement of recording of evidence. There are several considerations that must be borne 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. [Paras 23, 24] [245-D-H; 246-A-D]

4. 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. However, propriety requires that such discretion should ordinarily be exercised to allow the filing of counter-claim till the framing of issues for trial. To this extent, the conclusion reached by the learned Brothers is concurred with. However, in exceptional circumstances, a counter-claim may be permitted to be filed af ter a written statement till the stage of commencement of recording of the evidence on behalf of the plaintiff. [Para 25] [246-E-G]

Ramesh Chand Ardawatiya v. Anil Panjwani (2003) 7 SCC 350 : [2003] 3 SCR 1149 ; Mahendra Kumar v. State of Madhya Pradesh (1987) 3 SCC 265 : [1987]

3 SCR 155 ; Shanti Rani Das Dewanjee v. Dinesh Chandra Day (1997) 8 SCC 174 : [1997] 4 Suppl. SCR 177 ; Gayathri Women’s Welfare Association v. Gowramma (2011) 2 SCC 330 : [2011] 2 SCR

47 ; Vijay Prakash Jarath v. Tej Prakash Jarath (2016)

11 SCC 800 – affirmed.

Salem Advocate Bar Association, T.N. v. Union of India (2005) 6 SCC 344 : [2005] 1 Suppl. SCR 929 – relied on.

Rohit Singh v. State of Bihar (2006) 12 SCC 734 : [2006] 7 Suppl. SCR 278– explained.

Ashok Kumar Kalra v. Wing CDR Surendra Agnihotri & Ors. [2020] 2 SCC 394 ; Rohit Singh v. State of Bihar (2006) 12 SCC 734 : [2006] 7 Suppl. SCR

278 ; Bollepanda P. Poonacha v. K. M. Madapa, (2008) 13 SCC 179 : [2008] 4 SCR 1011 – referred to.