Ashok Kumar Kalra vs Wing Cdr Surendra Agnihotri
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BY:-Khan Ahmad Darvesh

NAME OF THE CASEAshok Kumar Kalra vs Wing Cdr. Surendra Agnihotri and Ors.
CITATIONSLP no. 23599 of 2018
DATE OF THE CASE19th Nov, 2019
APPELLANTAshok Kumar Kalra
RESPONDENTWing Cdr. Surendra Agnihotri and Ors.
BENCH/JUDGEJustice N.V. Ramana, Justice M. Shantanagoudar. and Justice Ajay Rastogi
STATUTES/CONSTITUTION INVOLVEDCode of Civil Procedure
IMPORTANT SECTIONS/ARTICLESOrder VII Rule 6 of CPC

ABSTRACT

Questions about procedural justice are remarkably persistent and usual in the life of Common Law Courts. However, achieving a perfect procedural system may be feasible or affordable, rather more manageable standards of meaningful participation needs to be aspired while balancing cost, time and accuracy at the same time.

The present reference placed before the court arises out of the order dated 10.09.2018 passed by a two­-Judge Bench of this Court, wherein clarification has been sought as to the interpretation of Order VIII Rule 6A of the Civil Procedure Code (hereinafter referred to as “the CPC”), regarding the filing of counter­claim by a defendant in a suit.

INTRODUCTION

The Hon’ble Supreme Court, in Ashok Kumar Kalra v. Wing Cdr. Surendra Agnihotri expressed that Order VIII Rule 6A of CPC has removed their rule to put an embargo on submitting a counterclaim after filing a written assertion, but this doesn’t provide an absolute right to the Defendant to report counterclaim with noticeable put-off, even though the limitation length prescribed has not elapsed. 

BACKGROUND OF THE CASE

The law commission of India in its 27th and 54th reports, recommended express provision on counterclaims should be included in CPC to avoid multiple proceedings and to dispel ambiguity on if the counterclaim should be entertained at all. These recommendations where implemented through the Code of Civil Procedure (Amendment) Act, 1976.

The order 8 of CPC clearly depicts the intent of the legislature which is to advance the cause of justiceby placing embargo on the belated filing of setoff and counterclaim. The purpose of introducing rule 6-A in order 8 was to avoid the multiplicity of the proceedings which will save the time of the judiciary. But when the provision will be interpreted in such a way so as to allow the filing of the belated counterclaim, the whole purpose of for the which the amendment was made will be defeated.

However, at the same time the approach cannot be very strict that the provision stipulates that the counterclaim has to be filed along with the written statement itself and beyond that the court has no power. The courts in support of the counterclaim must adopt a balanced approach, keeping in mind the object behind the legislature and to subserve the ends of justice. 

Court has to exercise its jurisdiction judiciously, and must keep in mind that no prejudice is caused to the other party, the process is not unduly delayed and the same is in the best interest of justice. Even if the counterclaim is filed within the limitation period, the court must exercise its discretion to balance the right to file counterclaim and the right to speedy trail in order to preserve the substantive justice.

There cannot be any straitjacket formula, multiple factors will have to be taken in consideration. However, propriety requires that the court’s discretion to allow counterclaim afterwards the filing of the written statement should ordinarily be allowed before framing of the issues. 

Justice Shantanagoudar opined that before allowing belated counterclaim some considerations must be borne in mind. 

First– the court must consider that no injustice or inseparable loss is being suffered by any of the parties. 

Second– The interest of justice must be given utmost importance and procedure should not outweigh substantive justice. 

Third– The objective of reducing multiplicity of litigation and ensuring speedy trials must be accorded due consideration.    

When the counterclaim will be rejected strictly on the basis of the provision of rule 6-B of Order 8, in that case the plaintiff will still be free to file a different suit for such a claim. He may afterwards plead to club both the suits or to hear them simultaneously, which will again delay the process of adjudication ultimately defeating the objective of Rules 6-A to 6-G of the CPC. Thus, Justice Shantanagoudar opined that the provisions under Order 8 should not be read in isolation, but in a conjoint and harmonious manner, and Rule 6-B cannot be read as a limitation on the court’s discretion to allow filing of a belated counterclaim.

FACTS OF THE CASE

A dispute arose among the Petitioner (Defendant no. 2) and Respondent No. 1 (Plaintiff) regarding the overall performance of settlement to sale dated 20.11.1987 and 04.10.1989. Respondent No.1 (plaintiff) filed the suit for a unique performance towards the petitioner (defendant no. 2) on 02.05.2008. Petitioner (defendant No.2) herein filed a Written Statement on 2.12.2008 and counter-declare on 15.3.2009, in the identical suit.

By order dated 12.05.2009, the trial court rejected the objections, concerning the filing of the counter-claim after filing of the written statement and formation of issues. Order dated 15.05.2009 changed into challenged before the High Court, in Civil Revision No. 253 of 2009, the High Court allowed the identical and quashed the counter-claim. Aggrieved by the aforesaid order of the High Court, the petitioner (defendant No.2) herein approached the Division Bench of this court docket, which has referred the problem 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 Honourable Chief Justice of India, for considering the case on merits.

The counsel of the Plaintiff was relying upon that counterclaim can save the time of the court by preventing multiple institutions of cases. They relied on several judgments. On the other side, the Defendant argues that it is compulsory to file a counterclaim with a written statement only, as per the Order VIII Rule 6A of the CPC.

ISSUE RAISED BEFORE THE COURT

  • Whether Order VIII Rule 6 of the CPC mandates an embargo on filing the counterclaim after filing the written statement?
  • If the answer to the aforesaid question is negative, then what are the restrictions on filing the counterclaim after filing the written statement?

ARGUMENTS FROM THE APPELLANT SIDE

  • The learned counsel for the petitioner said that the intention behind Rule 6A of CPC Order VIII is to provide authorization clauses to file counterclaims in order to avoid the multiplicity of litigation procedures, thus saving time in court and avoiding inconvenience to the parties.
  • The learned Counsel further stated that there is no special restriction on the jurisdiction of the court to accept counterclaims, except for the restrictions stipulated in the previous clauses, that is, the cause of action in the counterclaim must appear before or after the commencement of the claim, but before have the defendant present a defense.
  • The learned counsel argued that if the authorization of counterclaims results in delays in judgment and delays in litigation decisions, the court may exercise its discretion by not allowing counterclaims to be filed, but must not interpret the rules in a way that ultimately leads to failure judicial. 

ARGUMENTS FROM THE RESPONDENT SIDE

  • The learned counsel for the defendant said that 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 learned counsel for the defendant also said that 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.
  • The learned counsel further argued that relying on the language of Order VIII Rule 6 of CPC, a defendant claim to setoff to be a part of the written statement, same rules should apply to the filing of a counterclaim.

RELATED PROVISIONS

The whole case revolves around one provision which is Order VIII Rule 6 of Criminal Procedure Code (CPC).

Order VIII Rule 6 of CPC[1] defines-

1) Where in a suit for the recovery of money the defendant claims to set off against the plaintiff’s demand any ascertained sum of money legally recoverable by him from the plaintiff, of exceeding to pecuniary limits of the jurisdiction of the court, and both parties fill the same character as they fill in the plaintiff’s suit, the defendant may, at the first hearing of the suit, but not afterwards unless permitted by the court, present a written statement containing the Particulars of the debt sought to be set off.

(2) Effect of set off—The written statement shall have the same effect as a plaint in a cross Suit so as to enable the court to pronounce a final judgment in respect both of the original claim and of the set off; but this shall not affect the lien, upon the amount decreed, of any pleader in respect of the costs payable to him under the decree.

(3) The rules relating to a written statement by a defendant apply to a written statement in answer to a claim of set off. —

Illustrations

(a) A bequeaths Rs. 2,000 to B and appoints C his executor and residuary legatee. B dies and D takes out administration to B’s effects. C pays Rs. 1,000 as surety for D; then D sues C for the legacy. C cannot set off the debt of Rs. 1,000 against the legacy, for neither C. nor D fills the same character with respect to the legacy as they fill with respect to the payment of the Rs. 1000.

(b) A dies intestate and in debt to B. C takes out administration to A’s effects and B buys part of the effects from C. In a suit for the purchase money by C against B, the latter cannot set off the debt against the price, for C fills two different characters, one as the vendor to B, in which he sues B and the other as representative of A.

(c) A sues B on a bill of exchange. B alleges that A has wrongfully neglected to insure B’s goods and is liable to him in compensation which he claims to set off The amount not being ascertained cannot be set-off,

(d) A sues B on a bill of exchange for Rs. 500. B holds a judgment against A for Rs. 1000, The two claims being both definite, pecuniary demands may be set off.

(e) A sues B for compensation on account of trespass. B holds a promissory note for Rs. 1,000 from A and claims to set off that amount against any sum that A may recover in the suit. B may do so, for as soon as A recovers, both sums are definite pecuniary demands.

(f) A and B sue C for Rs. 1,000. C cannot set off a debt due to him by A alone.

(g) A sues B and C for Rs. 1,000. B cannot set off a debt due to him alone by A.

(h)A owes the partnership firm of B and C, Rs. 1,000, B dies, leaving C surviving, A sues C for a debt of Rs. 1,500 due in his separate character. C may set off the debt of Rs. 1,000.

JUDGEMENT

The Hon’ble Supreme Court referred the case, Mahendra Kumar and ANR. v. Madhya Pradesh and Ors states[2] [also known as the Mahendra Kumar case], which stipulates that Rule 6A (1) does not prohibit the filing of a counter-statement through the defendant after a written statement has been submitted. Since the reason for the counterclaim motion was filed before the submission of the written notice, it is believed that the counterclaim can be maintained.

The Hon’ble court also pointed out that, according to Article 113 of the 1963 Expiry Law[3], when no other places are provided in the list during the difficult period, the problem period is 3 years from the date of the appropriate claim. Since the counterclaim was changed to be filed within 3 years from the date when the right to use it was generated, this court believes that the district judge and the high court that were discovered were wrong to dismiss the counterclaim.

The Hon’ble court accordingly held that in accordance with Article 6 of Order No. 8 of the Criminal Procedure Law, counterclaims cannot be seized without justified reasons. In addition, on the other hand, this is not an absolute rule, but it is sometimes supported by imitating the law. The law stipulates a limitation period during which a counterclaim can be filed after a written statement has been submitted. The court provides an inclusive list of factors that can determine the right to raise counterclaims in various cases.

Some of these factors are:

1)  duration between the two filed

2)  difference in period

3)  reason or the justification is given for the delay

4)  what will be the cost of the litigation or changes in that litigation

5)  its effect on the proceeding

6)  whether it causes more fairness to the case or not

7)  if the issues are framed then it will not be entertained anymore.

CONCLUSION

Procedural law is not to be a tyrantbut a servant, not an obstruction but an aid to justice. The legislature did not vividly mention the time limitation to file a counterclaim, rather only limitation as to the accrual of the cause of action is provided. Ascounterclaim is treated like a plaint, it should generally be the first of all the complaints with limitation provided under the Limitation Act, 1963[4] as the time barred suits cannot be entertained under the guise of counterclaim.

The whole purpose of procedural law is to ensure that the legal process is made more effective and substantive justice is delivered. If the provision will be interpreted so as to allow the filing of belated counterclaim then the whole purpose for which the amendment was made will be defeated.

However, a rigid stance that the provision stipulates that the counterclaim hast to be filed along with the written statement and beyond that, court has no power, must also be avoided by the courts. The court must exercise its discretion judiciously and must keep theintent of the legislature of avoiding the multiplicity of the proceedings and that no injustice is being suffered by any of the parties, in mind.

REFERENCES

[1] The Code of Civil procedure,1908, Order VIII, Rule 6

[2] Mahendra Kumar vs state of Madhya Pradesh, 1987 AIR 1395,1987 SCR (3) 155

[3] The Expiry law,1963, Article 113

[4] The Limitation Act, 1963

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