Ashok Kumar Kalra v. Surendra Agnihotri [SLP NO. 23599 OF 2018]

Case name – Ashok Kumar Kalra v. Wing CDR. Surendra Agnihotri & Others.

Case number – SLP NO. 23599 OF 2018.

Forum – Supreme Court of India.

Bench – Justice N.V. Ramana, Justice Mohan M. Shantanagoudar and Justice Ajay Rastogi.

Decided on – 19th November, 2019.

Facts: 

  • Suit for specific performance was filled by the Respondent 1-plaintiff, the appellant-Defendant 2 filed written statement.
  • Afterwards the appellant-Defendant 2, filed counterclaim in the same suit after the framing of issues by the honorable court.
  • Trail court treated the counterclaim filed as a part of the proceedings. However, the High Court quashed the same.
  • Hence, an appeal was filed. And clarification on the same was sought from the larger bench (3 Judge Bench).

Issues:

  • Can counterclaim be filed post the submission of the written statement?
  • Can the court allow counterclaim post the formation of issues of the case being adjudicated?

Ratio:

  • When courts setout to do justice, they should not lose sight of the end goal that is to deliver justice amidst the technicalities. Equity and Justice should be the foremost considerations while construing procedural rules, without nullifying object of the legislature in totality.
  • Nature of set-offs and counterclaims are different. Set-off arises out of the same transaction whereas the counterclaim may arise out of a different one.
  • For filing of counterclaims accrual of cause of action is not mandatory. R. 6-B cannot be read as limitation on court’s discretion to permit filing of belated counterclaim.
  • Rule 6-A permits filing of counterclaim after the filing of written statement, But the court has the discretion to refuse such a filing if it is done at highly belated stage. Counterclaim cannot be filed post the framing of issues, unless in exceptional circumstances when there hasn’t been any significant development in the legal proceedings, to prevent the multiplicity of the proceedings. 

Analysis:

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 justice by 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. 

Conclusion:

Procedural law is not to be a tyrant but 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. As counterclaim is treated like a plaint, it should generally be the first of all the complaints with limitation provided under the Limitation Act, 1963 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 the intent of the legislature of avoiding the multiplicity of the proceedings and that no injustice is being suffered by any of the parties, in mind.

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Analyzed by Mr. Advait Mishra, Intern (June, 2020)

Reviewed by Lexstructor

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