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INTRODUCTION
Order VIII Rule 6A of the Code of Civil Procedure("CPC") provides that a defendant in acivil suit may set up a counter-claim involving any claim inrespect of a cause of action accruing to the defendant against thePlaintiff. As per Order VIII Rule 6A of CPC, the counter-claim mustbe set up either before or after the filing of the suit but beforeDefendant has delivered its defence. Interestingly, Order VIII Rule6A of CPC does not provide a time limit for filing of counter-claimin a civil suit. This raises the question of whether Order VIIIRule 6A of CPC imposes any restrictions on the filing ofcounter-claim and whether the filing of counter-claim postoccurrence of certain events in a civil suit may be barred by theCivil Court. The Hon'ble Supreme Court of India inAshok Kumar Kalra v. SurendraAgnihotri1 had addressed the question ofthe time limit for filing of counter-claim in a civil suit.
The Hon'ble Supreme Court in the majority judgment of N.V.Ramana and Ajay Rastogi JJ had ruled that the civil court maypermit the filing of a counter-claim after filing of the writtenstatement until the framing of the issues in the civil suit. In aconcurring opinion, Shantanagoudar J. ruled that filing ofcounter-claim may be permitted till the stage of commencement ofrecording of the evidence on behalf of the plaintiff in exceptionalcirc*mstances. The majority as well as concurring opinion agreedthat the civil court may exercise its discretion and permit thefiling of a counterclaim after the written statement, till thestage of framing of issues of the trial. However, the concurringopinion of Shantanagoudar J held that the civil court in itsdiscretion may allow the filing of counter-claim until therecording of evidence in a civil suit in exceptional circ*mstances.The choice of outer-limit and suitabilitythereof in promotingprompt resolution and rendering finality to disputes needs to bestudied in detail.
FRAMING OF ISSUES AS OUTER-LIMIT: DELIVERY OF DEFENCE UNDERORDER VIII RULE 6A OF CPC
Order XIV Rule 1 of the CPC provides that at the first hearingof the suit, the Court shall after reading the plaint and thewritten statements ascertain upon what material propositions offact or law the parties are at variance and shall thereupon proceedto frame and record the issues on which the right decision of thecase appears to depend in a civil suit. The framing of issues bythe Civil Court is also taken to denote the first instance in acivil suit when the Court had applied its mind on the facts andcirc*mstances of the case.2 The framing of issues alsosets in motion the performance of the first act or steps necessaryor essential to proceed with the trial.3 InAshok Kumar, the Hon'ble SupremeCourt reasoned that allowing a counter-claim to be filed afterframing of issues would effectively result in a re-trial of thesuit as the Civil Court would have to frame new issues, bothparties would have to lead evidence leading not only to prolongingof trial but also prejudice to the rights that might get vestedwith the Plaintiff over the course of time. Nonetheless, theembargo on the filing of counter-claim after framing of issues isnot easily reconciled with the requirement of delivery of defenceby the defendant as provided for in Order VIII Rule 6A of CPC.Hon'ble Madras High Court inA Nandagopala Krishnanv. Antony4 interpreted "Defendant hasdelivered his defence" as continuing to run until evidence isfinally closed by either side.5
Previously, the Hon'ble High Court of Calcutta6and Madras7 have held that counterclaim cannot bepermitted after issues are settled and evidence is adduced. Theinterpretation of the framing of charges as outer limit foreclosesthe filing of counter-claim even before "Defendant hasdelivered his defence" as required under Order VIII Rule 6A ofCPC.
RECORDING OF EVIDENCE: COMMENCEMENT AND CONTINUATION
In his concurring opinion, Shantanagoudar J ruled that the Courtmay entertain a counter-claim even after the framing of issues, solong as the Court had not started recording the evidence.Shantanagoudar J ruled that in exceptional circ*mstances, acounter-claim may be permitted to be filed after a writtenstatement till the stage of commencement of recording of theevidence on behalf of Plaintiff. Pertinently, the concurringopinion has emphasized commencement as opposed to completion oreven continuation of recording of the evidence as to the outerlimit for filing of counter-claim. Shantanagoudar J held that aslong as the counterclaim is filed before the recording of evidence,the civil court can frame the new issue and record evidencethereupon without seriously prejudicing the rights of either partyto the suit.
Insofar as the recording of evidence is concerned, Rule 4(1) toOrder XVIII of the CPC provides that examinationin-chief of awitness shall be on affidavit and copies thereof shall be suppliedto the opposite party by the party who calls him for evidence. InAjit Narsinha Talekar, Hon'ble BombayHigh Court held that the actual hearing is said to commence onlywhen a party files an affidavit of himself or his first witness inlieu of examination-in-chief.8 Accordingly, allproceedings prior to the filing of the affidavit of the firstwitness in lieu of examination-in-chief are to be treatedproceedings preliminary to trial.9 Interestingly, theruling in Ashok Kumar also referred to Vijay PrakashJarath v. Tej Parakh Jarath10 wherein theHon'ble Supreme Court had permitted the filing ofcounterclaim after 2.5 years from the framing of issues asthe Respondent's evidence was still being recorded by the trialcourt when the counter-claim was filed by the Defendant andHon'ble Court was satisfied that no "seriousinjustice" or "irreparable loss" would be caused tothe Plaintiff. Pertinently, neither the majority opinion nor theconcurring opinion overruled the judgment of VijayPrakash Jarath v. Tej Parakh Jarath11.Resultantly, there is some uncertainty as to whether the civilcourt in the exercise of its discretion may allow the filing ofcounter-claim when recording of evidence has commenced but had notbeen completed.
EXERCISE OF DISCRETION: INGREDIENTS OF INJUSTICE, LOSS, ANDPREJUDICE
Against this backdrop, the most pertinent question inallowing/disallowing leave to file counter-claim is whether thegrant of leave causes any injustice or irreparable loss to theparties in the civil suit. Hon'ble High Court inAshok Kumar has rightly emphasized thatmere presence of discretion does not vest a right in favor of thelitigant nor can the civil court be compelled to exercise itsdiscretion. Nonetheless, the exercise of discretion must be guidedin order to promote substantive justice and finality between theparties. In Ashok Kumar, both opinions i.e. majority opinion andconcurring opinion had prescribed a set of guidelines andconsiderations for the exercise of discretion by the civil inallowing/disallowing filing of counter-claim. The majority judgmentalso provided an illustrative inclusive factor12 for theexercise of discretion by Courts to entertain the filing ofcounterclaim. Shantanagoudar J listed three considerations thatmust be borne in mind while allowing the filing of a belatedcounter-claim: first, the Court must consider that no injustice orirreparable loss was being caused to the Defendant due to a refusalto entertain the counter-claim, or to the Plaintiff by allowing thesame. Second, the interest of justice must be given utmostimportance and procedure should not outweigh substantive justice.Third, the specific objectives ofreducing the multiplicity oflitigation and ensuring speedy trials underlying the provisions forcounterclaims must be accorded due consideration.
CONCLUSION
The question of whether leave to file counter-claim may beallowed in a civil suit is ultimately a balancing exercise on partof the civil court. However, the lack of clarity on the outer limitfor filing of counter-claim and the exercise of discretion thereinwould only increase the uncertainty regarding whether counter-claimmay be allowed in a civil suit. The Hon'ble Supreme Court'sruling in Ashok Kumar strikes a positivenote insofar as it accommodates counter-claim beyond the filing ofwritten statement by the Defendant based on the exercise ofdiscretion by the civil court. Under such circ*mstances, Partieswould be well-advised to firmly establish the foundation of theircounter-claim in their pleadings and justification for the delay infiling thereof to secure the leave-in filing counter-claim afterfiling of the written statement.
Footnotes
1. Ashok Kumar Kalra v. Surendra Agnihotri,MANU/SC/1590/2019. (Hereinafter, "AshokKumar")
2. Sham Lal v. A.N. Jain Sabha, AIR 1987 SC187.
3. Union of India and Ors v. Major General Madan LalYadav (Retd.), MANU/SC/0355/1996.
4. A Nandaopala Krishnan v. Antony, CRP (PD) (MD) No.1011 of 2012.
5. A Nandagopala Krishnan v. Antony, 2012 (4) CTC807
6. M/s Oriental Ceramic Products Pvt. Ltd v. CalcuttaMunicipal Corporation, MANU/WB/0217/1999.
7. Southern Ancillaries Pvt Ltd. V. Southern AlloyFoundaries, MANU/ TN/0486/2003.
8. Ajit Narsinha Talekar Vs. Smt. Nirmala Wamanrao Kakadeand others" 2010 (5) Mah. L.J. 481
9. Kailash v. Nankhu, MANU/SC/0264/2005.
10. Vijay Prakash Jarath v. Tej Prakash Jarath, (2016) 11SCC 800.
11.Ibid.
12. The inclusive factors provided by the Supreme Courtare as follows: (i) Period of delay, (ii) Prescribed limitationperiod for the cause of action pleaded, (iii) Reason for the delay,(iv) Defendant's assertion of his right, (v) Similarity of thecause 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) facts andcirc*mstances of each case, (x) in any case, not after framing ofissues.
Originally published February 2022
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