Supreme Court Upholds Counterclaim in Specific Performance Suit: Mahesh Govindji Trivedi vs. Bakul Maganlal Vyas (2022)

Introduction

Date of the Judgment: October 12, 2022

Citation: 2022 INSC 484

Judges: Justices Dinesh Maheshwari and Aniruddha Bose

Can a defendant introduce a counterclaim many years after filing their written statement? The Supreme Court of India recently addressed this question in a case concerning a suit for specific performance. This judgment clarifies the circumstances under which a delayed counterclaim can be accepted, balancing the need for efficient proceedings with the right to present a full defense. The bench, comprising Justices Dinesh Maheshwari and Aniruddha Bose, delivered the judgment.

Case Background

The case revolves around a suit for specific performance filed by the plaintiffs-respondents on June 10, 2004, seeking to enforce an agreement for the transfer of a property in Mumbai, dated May 28, 2001. The agreement was allegedly executed by the late Ramalaxmi Ravishankar Trivedi, the sister of the defendant-appellant, who passed away on January 31, 2004. The defendant-appellant, Mahesh Govindji Trivedi, filed his written statement on November 16, 2005.

The appellant claimed to have acquired all rights to the suit property through testamentary succession and settlement with other legal heirs. The matter of succession was settled on April 5, 2017. Subsequently, on January 16, 2018, the appellant filed a Chamber Summons to remove other defendants from the suit, which was allowed. On September 7, 2018, the appellant filed a counterclaim, which was signed on August 18, 2018, seeking possession of the suit property. The Single Judge of the High Court initially rejected the counterclaim on December 5, 2018, citing a violation of Rule 95 of the Bombay High Court (Original Side) Rules, which requires a counterclaim to be filed with the defense or before the time for filing the defense has expired.

Timeline:

Course of Proceedings

The Single Judge of the High Court initially ordered the de-registration of the counter-claim on December 5, 2018, because it was filed much after the written statement and without seeking prior leave of the Court, referring to Rule 95 of the Bombay High Court (Original Side) Rules. The defendant-appellant appealed this order. The Division Bench of the High Court, on March 29, 2019, allowed the appellant to file an application seeking leave to present the counter-claim, directing the Single Judge to consider it on its merits. Subsequently, on May 2, 2019, the Single Judge granted leave to file the counter-claim, noting that it would avoid multiplicity of proceedings. However, this order was challenged by the plaintiffs-respondents in an intra-court appeal. The Division Bench, on November 30, 2021, set aside the Single Judge’s order and remitted the matter for fresh consideration, stating that the plaintiffs were not given adequate opportunity to contest the notice of motion.

Legal Framework

The legal framework for this case primarily involves Order VIII Rule 6-A of the Code of Civil Procedure, 1908 (CPC) and Rule 95 of the Bombay High Court (Original Side) Rules. Order VIII Rule 6-A of the CPC allows a defendant to set up a counterclaim against the plaintiff’s claim, provided it accrues before the defendant delivers their defense or before the time for delivering the defense expires. Rule 95 of the Bombay High Court (Original Side) Rules is similar, stating that a counterclaim can be made before the defense is delivered or the time for it expires. Both provisions treat a counterclaim as a cross-suit, allowing the court to pronounce a final judgment on both the original claim and the counterclaim.

Order VIII Rule 6-A of the Code of Civil Procedure, 1908 states:
“6-A. Counterclaim 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 counterclaim 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 limited for delivering his defence has expired, whether such counterclaim is in the nature of a claim for damages or not: Provided that such counterclaim shall not exceed the pecuniary limits of the jurisdiction of the court.
(2) Such counterclaim shall have the same effect as a cross-suit so as to enable the court to pronounce a final judgment in the same suit, both on the original claim and on the counterclaim.
(3) The plaintiff shall be at liberty to file a written statement in answer to the counterclaim of the defendant within such period as may be fixed by the court.
(4) The counterclaim shall be treated as a plaint and governed by the rules applicable to plaints.”

Rule 95 of the Bombay High Court (Original Side) Rules states:
“95. A defendant in a suit, in addition to his right of pleading a set-off under Order VIII, Rule 6 of the Code of Civil Procedure, may set-up by way of counter-claim against the claims of the plaintiff any right or claim in respect of a cause of action accruing to the defendant either before or after the filing of the suit but before the defendant has delivered his defence and before the time limited for delivering his defence has expired, whether such counter-claim sounds in damages or not, and such counter-claim shall have the same effect as a cross-suit, so as to enable the Court to pronounce a final judgment in the same suit, both on the original claim and on the counter-claim; and the plaintiff (if so advised) shall be at liberty to file a reply to the counter-claim of the defendant within eight weeks after service upon him or his Advocate on record of a copy of the defendant’s counter-claim; and the Court or the Judge in Chambers may, on the application of the plaintiff before trial if in the opinion of the Court or the Judge such counter-claim cannot be disposed of in the pending suit or ought not to be allowed, refuse permission to the defendant to avail himself thereof and require him to file a separate suit in respect thereof.”

Arguments

Appellant’s Arguments:

• The appellant argued that the Division Bench of the High Court erred in setting aside the Single Judge’s order, which had allowed the counterclaim. The appellant contended that the Supreme Court’s order dated February 26, 2021, in a related matter, implied that the counterclaim was validly on record.
• The appellant stated that the counterclaim was necessary to avoid multiplicity of proceedings and was filed after the succession dispute was settled in his favor in 2017.
• The appellant also argued that the counterclaim was filed before the framing of issues in the suit.
• The appellant argued that the Single Judge had rightly granted leave to submit the counter-claim.

Respondents’ Arguments:

• The respondents argued that the counterclaim was filed nearly 13 years after the written statement, which is not permissible under the law.
• The respondents contended that the Single Judge’s order of May 2, 2019, was passed without giving them adequate opportunity to contest the notice of motion.
• The respondents relied on the Supreme Court’s decision in Ashok Kumar Kalra v. Wing Cdr. Surendra Agnihotri and Ors.: (2020) 2 SCC 394, arguing that it prohibits the filing of a counterclaim after a significant delay.
• The respondents stated that the Supreme Court order of February 26, 2021, was about the transfer of the suit property and not about the counter-claim.

[TABLE] of Submissions:

Issues Framed by the Supreme Court

The primary issue framed by the Supreme Court was:

1. Whether the Division Bench of the High Court was justified in interfering with the order passed by the Single Judge for taking the counterclaim on record.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Cases:

• Ashok Kumar Kalra v. Wing Cdr. Surendra Agnihotri and Ors.: (2020) 2 SCC 394 – The Court discussed this case in detail, which deals with the permissibility of filing a counterclaim after the filing of the written statement. The Court noted that the majority opinion in this case was that a counterclaim cannot be filed after the issues are framed and the suit has proceeded substantially.

Legal Provisions:

• Order VIII Rule 6-A of the Code of Civil Procedure, 1908 – This provision allows a defendant to set up a counterclaim against the plaintiff’s claim.
• Rule 95 of the Bombay High Court (Original Side) Rules – This rule is similar to Order VIII Rule 6-A of the CPC and governs the filing of counterclaims in the Bombay High Court.

[TABLE] of Authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court considered the case of Ashok Kumar Kalra v. Wing Cdr. Surendra Agnihotri and Ors.: (2020) 2 SCC 394 and clarified that the principles laid down in that case did not bar the filing of the counterclaim in the present case as it was filed before the framing of issues.
• The Court referred to Order VIII Rule 6-A of the Code of Civil Procedure, 1908 and Rule 95 of the Bombay High Court (Original Side) Rules, explaining that these provisions allow for counterclaims to be filed before the defense is delivered or the time for it expires.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The need to avoid multiplicity of proceedings.
• The fact that the counterclaim was filed before the framing of issues.
• The Supreme Court’s order dated 26.02.2021 indicated that the counterclaim was a fait accompli.
• The procedural rules are to subserve the cause of justice.

[TABLE] of Sentiment Analysis Ranking:

Fact:Law Ratio:

The Court emphasized that procedural laws should not be interpreted in a way that hinders the delivery of justice. The Court also noted that the counterclaim was filed before the framing of issues, which is a crucial factor in its decision. The Court was also influenced by the fact that the Supreme Court’s order dated 26.02.2021 had already implied that the counterclaim was validly on record.

Logical Reasoning:

The Supreme Court considered the arguments for and against the counterclaim, noting that the counterclaim was filed before the framing of issues. The court emphasized that the rules of procedure are intended to subserve the cause of justice rather than to punish parties. The court also considered the impact of its earlier order dated 26.02.2021, which implied that the counterclaim was already on record. The Court rejected the argument that the counterclaim was barred due to the delay, as it was filed before the framing of issues, and the court held that the counterclaim should be allowed to avoid multiplicity of proceedings.

The Supreme Court quoted the following from the judgment:

• “the rules of procedure are intended to subserve the cause of justice rather than to punish the parties in conduct of their case”
• “the counter-claim in question could not have been removed out of consideration merely because it was presented after a long time since after filing of the written statement.”
• “existence of the counter-claim on record was taken by this Court as a fait accompli; and this order left a little, rather nil, scope for upsetting the existing pleadings.”

There were no dissenting opinions in this case.

Key Takeaways

• A counterclaim can be filed after the written statement, provided it is done before the framing of issues.
• Courts have discretion to allow a delayed counterclaim if it serves the interest of justice and avoids multiplicity of proceedings.
• The delay in filing a counterclaim is not a bar if it is filed before the framing of issues.
• Orders of the Supreme Court in related matters can impact procedural aspects of a case.
• Procedural rules should be interpreted to facilitate rather than hinder the delivery of justice.

This judgment clarifies that while there are time limits for filing a counterclaim, courts have the discretion to allow delayed counterclaims if it is in the interest of justice and does not cause prejudice to the other party. This decision provides a more flexible approach to the filing of counterclaims, ensuring that all relevant issues can be addressed in a single proceeding.

Directions

The Supreme Court directed that the suit shall proceed from the stage where it was pending, and the parties were expected to extend full cooperation for the early disposal of the suit.

Development of Law

The ratio decidendi of this case is that a counterclaim can be filed after the written statement, provided it is done before the framing of issues. The Supreme Court clarified that the principles laid down in Ashok Kumar Kalra v. Wing Cdr. Surendra Agnihotri and Ors.: (2020) 2 SCC 394 do not bar the filing of a counterclaim if it is filed before the framing of issues. This judgment provides a more flexible approach to the filing of counterclaims, ensuring that all relevant issues can be addressed in a single proceeding and also emphasizes the importance of avoiding multiplicity of proceedings.

Conclusion

The Supreme Court allowed the appeal, setting aside the Division Bench’s order and restoring the Single Judge’s order, which had allowed the defendant-appellant to file a counterclaim. The Court held that the counterclaim was validly filed as it was done before the framing of issues and that the delay alone was not a sufficient reason to reject it. The Court emphasized that procedural rules should not be interpreted in a way that hinders the delivery of justice and that counterclaims should be allowed to avoid multiplicity of proceedings. This judgment provides clarity on the permissibility of delayed counterclaims and reinforces the importance of efficient adjudication.