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In a judgment delivered yesterday, the Supreme Court held that there is no embargo on the filing of a counterclaim after filing of written statements under Order VIII Rule 6A of the Code of Civil Procedure (CPC). The outer limit for the same is till the framing of issues.
The question relating to the procedural law was referred by a Division Bench of the Supreme Court to a three-Judge Bench. The issue was decided by a Bench of Justices NV Ramana, M Mohan Shantanagoudar, and Ajay Rastogi. Summarising its findings, the Court held,
“Order VIII Rule 6A of the CPC does not put an embargo on filing the counterclaim 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 counterclaim 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 counterclaim, which is pegged till the issues are framed.”
Order VIII Rule 6A essentially deals with the issue of filing of counterclaim by a defendant in a suit after filing of written statements.
It was argued before the Court by the petitioner that the intent of the legislation is to allow for a counterclaim to be filed after the filing of written statements to avoid multiplicity of proceedings. This would also save the time of the courts, it was submitted. As long as the cause of action for the counterclaim took place in the period before the defendant has advanced the defence, there would be no bar on filing the same, the petitioner argued.
The respondent countered by saying that the counterclaim ought to be a part of the written statement itself, as per the language used by the legislature in the scheme of Order VIII. It was also argued that Order VIII Rule 6 also required for set-off pleadings to be filed along with the written statement. The same rule would be applicable for counterclaims also, it was contended.
In its judgment, the Court highlighted the reasons behind inserting Rule 6A in the CPC by way of an amendment. These included ensuring that a litigant gets fair trial, speedy disposal of suits, and benefit to the poor sections of the community who cannot engage pleaders.
Upon placing reliance on precedents of the Court in other cases, the judgment states that no limitation is provided for filing of a counterclaim by the legislature but only a limitation on accrual of the cause of action is mentioned. It further held that a counterclaim cannot be filed at any time, but will have to be compliant with the provisions of the Limitation Act, given that a counterclaim can be treated as a plaint itself.
While noting that allowing delay in filing of counterclaim would defeat the purpose of the amendment, at the same time, the Court stated that there cannot be a rigid approach mandating that the counterclaim must be filed with the written statement. The Court further elaborated,
“There cannot be any hard and fast rule to say that in a particular time the counterclaim 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 counterclaim, 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.”
The Court therefore held that an outer limit of the time when issues are framed can be set as the time limit for filing of counterclaim.
A separate and concurring opinion was written by Justice Shantanagoudar.
[Read the Judgment]