Saturday, 14 December 2019

Whether defendant can file counter claim by amending his written statement?

In the case of Ramesh Chand Ardawatiya Vs. Anil
Panjwani (supra), the Hon'ble Supreme Court has held that
counterclaim
can be filed either with written statement or by way
of amendment of written statement or further by way of
subsequent pleading under Order VIII Rule 9 of CPC. It has been
further observed in the said Judgment that the purpose of the
provision enabling filing of counterclaim
is to avoid multiplicity
of judicial proceedings and to save time of the Court as well as
prevent inconvenience to the parties. The Trial Court in the
present case has referred to the judgment of the Hon'ble Supreme
Court in the case of Bollepanda P. Poonacha and Another Vs.
K.M. Madapa, (2008) 13 Supreme Court Cases 179 wherein it
has been specifically held by the Hon'ble Supreme Court that right
to file a counterclaim
is an additional right. 
12. The aforesaid position of law as enunciated by the
Hon'ble Supreme Court in the above mentioned judgment makes
it clear that the defendant cannot be prohibited from filing a
counter claim merely because it failed to raise the same in the
written statement itself. Although, it is clear that the defendant
will not be entitled to file a counter claim if it had not filed written
statement at all. In the facts and circumstances of the present
case, it is evident that the respondent No.1 did file its written
statement on 28/6/2017 well within the time limit specified under
Order VIII Rule 1 as amended and applicable to cover the dispute.
Therefore, the present case is not a situation where respondent
No.1 (defendant) is claiming to raise a counterclaim
in the
absence of written statement on record. The amendments
incorporated in Order VIII Rules 1 & 10 of CPC mandatorily
require written statement to be filed within outer limit of 120 days
and the Court is prohibited from extending the time so specified.
But, it would not lead to the conclusion that the defendant would
be completely prohibited from raising counterclaim
after expiry of
the period of 120 days. As laid down by the Hon'ble Supreme
Court the counter claim is an additional pleading and it can be
raised with leave of the Court subject to the rider that it shall
pertain only to cause of action that accrued to the defendant
either before or after filing of the suit but before the defendant
delivered its defence or time period for delivering its defence had
expired.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH AT NAGPUR
Writ Petition No. 1688 of 2018

M/s Sri Sai Gopal Turbo Engineering Services, Vs. EM Services Private Limited,

CORAM : MANISH PITALE, J.

PRONOUNCED ON : 04.06.2019


1. The question that arises for consideration in the
present petition is, as to whether the Court of Judge Special
Commercial Court, Nagpur (Trial Court) was justified in
permitting respondent No.1 to raise counter claim, after having
already filed written statement in the suit for recovery filed by the
petitioner.
2. The petitioner filed Special Civil Suit (Commercial) No.
12/2017, against the respondents for recovery of specific amount
towards payment of contract work, damages, loss of tools, etc.
along with future interest @ 18% p.a. The petitioner filed the suit
on 30/03/2017 and respondent No.1 was served with summons
on 05/06/2017. The respondent No.1 filed its written statement
before the Trial Court on 28/06/2017. Thereafter, on
11/12/2017, the respondent No.1 filed an application for
amendment of written statement to incorporate the counter claim.
By the proposed amendment, the respondent No.1 intended to
incorporate the counter claim against the petitioner on the basis
that it was not liable to pay amount claimed by the petitioner and
on the contrary it was entitled to recover a specific amount from
the petitioner, the details of which were given in the proposed

counter claim. The petitioner filed reply to the said application
and sought dismissal of the same by contending that the counter
claim was an after thought, pertaining to transaction of the year
2013 and further that since the suit filed by the petitioner was a
commercial suit, it was to be decided within a stipulated time
frame and that no such counter claim could be permitted to be
incorporated.
3. By the impugned order date 11/01/2018, passed by
the Trial Court, the application for amendment to incorporate the
counter claim filed by respondent No.1 was allowed, subject to the
condition of the respondent No.1 paying costs of Rs.5,000/.
The
petitioner filed the present writ petition challenging the said order
wherein notice was issued for final disposal on 21/03/2018 and in
the meantime the proceedings before the Trial Court were stayed.
4. Mr. R.S. Sundaram, learned counsel appearing for the
petitioner submitted that the impugned order passed by the Trial
Court was unsustainable in view of specific amendments
incorporated in Order VIII Rules 1 & 10 of the Code of Civil
Procedure, 1908 (CPC). It was submitted that the amendments
specifically incorporated in the aforesaid Rules pertaining to
commercial disputes made it very clear that no written statement
could be permitted to be filed after expiry of 120 days from the
date of service of summons and that the defendant forfeited the
right to amend the written statement to incorporate counter claim
beyond the said period. It was further submitted that the
amendment prohibited the Court from extending the aforesaid
time period for filing written statement and that, therefore, in the

present case, the Trial Court could not have permitted the
respondent No.1 to amend the written statement to incorporate
the counter claim after said period of 120 days from service of
summons had expired. It was submitted that since the present
suit concerned a commercial dispute, the position of law
pertaining to general suits could not be applied to the present case
and that the Trial Court ought not to have allowed application
filed by respondent No.1. It was further submitted that Order VIII
Rule 6A
of CPC read with amended Order VIII Rules 1 & 10 of
CPC demonstrated obvious error committed by the Trial Court in
referring to Order VIII Rule 9 of CPC while passing the impugned
order. The learned counsel placed reliance on the Judgment of
the Delhi High Court in the case of System Air India Private
Limited Vs. ETA Engineering Private Limited (Order dated
29/11/2016) in CS (COMM) 56/2016, to contend that the
amendment of the aforesaid provisions of CPC for commercial
disputes clearly demonstrate that the impugned order of the Trial
Court was unsustainable.
5. On the other hand, Mr. A.A. Choube, learned counsel
appearing for respondent No.1 submitted that the impugned order
passed by the Trial Court was in terms of the position of law laid
down by the Hon'ble Supreme Court and that the petitioner was
misreading the amended provisions of Order VIII Rules 1 & 10 of
CPC, while interpreting Order VIII Rule 6A
of CPC in the context
of right of defendant to raise counter claim by way of additional
pleadings. It was submitted that there was no quarrel with the
mandatory nature of amended Rules 1 & 10 of Order 8 of CPC in
the context of commercial disputes, as the Hon'ble Supreme Court

in the case of SCG Contracts India Pvt. Ltd. Vs. K. S. Chamankar
Infrastructure Pvt. Ltd. and Others, 2019 SCC OnLine SC 226
had upheld the view of the Delhi High Court relied upon by the
learned counsel for the petitioner. It was not submitted that
despite the said mandatory nature of the amended Rules, a proper
reading of Order VIII Rules 6A
of CPC read with position of law
laid down by the Hon'ble Supreme Court in that context would
show that no error had been committed by the Trial Court in
passing the impugned order. The learned counsel placed reliance
on the Judgments of the Hon'ble Supreme Court in the cases of
Mahendra kumar and Another Vs. State of Madhya Pradesh
and Others (1987) 3 Supreme Court Cases 265 and Ramesh
Chand Ardawatiya Vs. Anil Panjwani (2003) 7 Supreme Court
Cases 350.
6. In order to appreciate the contentions raised by rival
parties, it would be appropriate to refer the relevant provisions of
the CPC, as applicable to commercial disputes, which read as
follows.
“Order VIII Rule 1 :Written
Statement :The
defendant shall, within thirty days from the date of
service of summons on him, present a written
statement of his defence.
Provided that where the defendant fails to file the
written statement within the said period of thirty days,
he shall be allowed to file the written statement on
such other day, as may be specified by the Court, for
reasons to be recorded in writing and on payment of
such costs as the Court deems fit, but which shall not
be later than one hundred twenty days from the date of
service of summons and on expiry of one hundred
twenty days from the date of service of summons, the

defendant shall forfeit the right to file the written
statement and the Court shall not allow the written
statement to be taken on record.
Order VIII Rule 6A.
Counterclaim
by defendant :(
1) A defendant in a suit may, in addition to his right of
pleading a setoff
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 limit 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 crosssuit
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.
Order VIII Rule 9 :Subsequent
pleadings :No
pleading subsequent to the written statement of a
defendant other than by way of defence to setoff
or
counterclaim
shall be presented except by the leave of
the Court and upon such terms as the Court thinks fit;
but the Court may at any time require a written
statement or additional written statement from any of
the parties and fix a time of not more than thirty days
for presenting the same.

Order VIII Rule 10 :Procedure
when party fails to
present written statement called for by Court :Where
any party from whom a written statement is
required under rule 1 or rule 9 fails to present the same
within the time permitted or fixed by the Court, as the
case may be, the Court shall pronounce judgment
against him, or makes such order in relation to the suit
as it thinks fit and on the pronouncement of such
judgment a decree shall be drawn up.
Provided further that no Court shall make an order to
extend the time provided under rule 1 of this Order for
filing of the written statement”.
7. The above quoted provisions specifically pertain to
commercial dispute, pursuant to amendment, as it is undisputed
that the suit for recovery filed by the petitioner herein pertains to
commercial dispute between the parties.
8. There can be no doubt about the fact that post
amendment, as per the aforesaid Rules in commercial disputes the
outer limit for filing of written statement is 120 days. This is
clearly laid down by the Hon'ble Supreme Court in the aforesaid
judgment in the case of SCG Contracts India Pvt. Ltd. Vs. K. S.
Chamankar Infrastructure Pvt. Ltd. and Others (supra).
Therefore, the only question that arises in this petition is, as to
whether upon expiry of the said period of 120 days and
respondent No.1 having filed its written statement well within the
specified time limit, it could raise a counterclaim
against the
petitioner. It has been vehemently submitted on behalf of the
petitioner that when summons were served on respondent No.1
on 05/06/2017 and written statement was filed on 28/6/2017,
the counterclaim
ought to have been filed with the written
statement itself and upon expiry of the aforesaid period of 120

days as per the amended rules, the application for raising counterclaim
or for incorporating the same in the written statement could
not have been entertained by the Trial Court. It was submitted
that a proper reading of the amended rules along with Order VIII
Rule 6A
of CPC would show that the Trial Court erred in not only
entertaining the application of respondent No.1, but allowing the
same and holding that the counterclaim
could be said to be
within limitation. It was emphasized on behalf of the petitioner
that the counterclaim
could have been filed only within the
aforesaid specified time limit of 120 days as per the amended Rule
1 of Order VIII of CPC. As opposed to this, the emphasis on behalf
of respondent No.1 was on the fact that filing of counterclaim
was not completely barred even after incorporation of aforesaid
amendments pertaining to commercial dispute. It was
emphasized that counter claim was an additional pleading, which
could be permitted when written statement was already filed on
record by the respondent No.1 within stipulated period of time.
9. In this context, a perusal of the above quoted Order
VIII Rule 6A
of CPC shows that the defendant can certainly raise
a counter claim in respect of cause of action accruing to it either
before or after filing of the suit but before it has delivered its
defence or before the time limit for delivering its defence has
expired. Thus, the said provision is concerned with only period
upto which the cause of action accruing to a defendant can be
raised by way of counterclaim.
10. It has been considered down by the Hon'ble Supreme
Court in the case of Mahendra Kumar and Another Vs. State of

Madhya Pradesh and Others (supra), as to whether Order VIII
Rule 6A
of CPC would bar filing of counterclaim
after filing of
written statement. It has been emphatically laid down that there
can be no such bar in filing counterclaim
and that the defendant
can certainly file a counterclaim
after having filed written
statement, but only pertaining to cause of action as specifically
laid down in Order VIII Rule 6A(
1) of CPC. Therefore, the
contentions raised on behalf of the petitioner in the present case
that the respondent No.1 was prohibited from filing counterclaim
as it had failed to raise the counterclaim
while filing written
statement, cannot be accepted.
11. In the case of Ramesh Chand Ardawatiya Vs. Anil
Panjwani (supra), the Hon'ble Supreme Court has held that
counterclaim
can be filed either with written statement or by way
of amendment of written statement or further by way of
subsequent pleading under Order VIII Rule 9 of CPC. It has been
further observed in the said Judgment that the purpose of the
provision enabling filing of counterclaim
is to avoid multiplicity
of judicial proceedings and to save time of the Court as well as
prevent inconvenience to the parties. The Trial Court in the
present case has referred to the judgment of the Hon'ble Supreme
Court in the case of Bollepanda P. Poonacha and Another Vs.
K.M. Madapa, (2008) 13 Supreme Court Cases 179 wherein it
has been specifically held by the Hon'ble Supreme Court that right
to file a counterclaim
is an additional right. In the case of Vijay
Prakash Jarath Vs. Tej Prakash Jarath (2016) 11 Supreme
Court Cases 800, the Hon'ble Supreme Court has held that the
defendant can certainly file a counter claim limited to cause of

action as specified under Order VIII Rule 6A
of CPC.
12. The aforesaid position of law as enunciated by the
Hon'ble Supreme Court in the above mentioned judgment makes
it clear that the defendant cannot be prohibited from filing a
counter claim merely because it failed to raise the same in the
written statement itself. Although, it is clear that the defendant
will not be entitled to file a counter claim if it had not filed written
statement at all. In the facts and circumstances of the present
case, it is evident that the respondent No.1 did file its written
statement on 28/6/2017 well within the time limit specified under
Order VIII Rule 1 as amended and applicable to cover the dispute.
Therefore, the present case is not a situation where respondent
No.1 (defendant) is claiming to raise a counterclaim
in the
absence of written statement on record. The amendments
incorporated in Order VIII Rules 1 & 10 of CPC mandatorily
require written statement to be filed within outer limit of 120 days
and the Court is prohibited from extending the time so specified.
But, it would not lead to the conclusion that the defendant would
be completely prohibited from raising counterclaim
after expiry of
the period of 120 days. As laid down by the Hon'ble Supreme
Court the counter claim is an additional pleading and it can be
raised with leave of the Court subject to the rider that it shall
pertain only to cause of action that accrued to the defendant
either before or after filing of the suit but before the defendant
delivered its defence or time period for delivering its defence had
expired.
13. Therefore, in the present case, the respondent No.1

would be entitled to raise its counterclaim
only in respect of
cause of action limited by the provision of Order VIII Rule 6A
of
CPC. It is undisputed that the counter claim raised by respondent
No.1 in the present case certainly pertains to time period prior to
that specified in the aforesaid provision. Hence, it cannot be said
that the Trial Court committed an error in allowing the
application filed by respondent No.1.
14. But, the Trial Court seems to have made an incorrect
observation by stating that the counterclaim
could be said to be
within limitation. The said observation is erroneous because even
if respondent No.1 is permitted to raise counterclaim,
the
petitioner would be entitled to demonstrate that the claim so
raised by the respondent No.1 was barred by limitation. The
question of limitation is, therefore, required to be kept open. To
that extent, the impugned order passed by the Trial Court appears
to be erroneous.
15. In the light of the above, writ petition is partly allowed
by holding that the Trial Court was not justified in observing that
the counterclaim
could be said to be within limitation, but, it
cannot be said that the Trial Court could not have allowed the
application of respondent No.1 to raise the counterclaim.
Accordingly, although the impugned order is confirmed to the
extent that it allows the application of the respondent No.1 at
Exh.37, but, it is made clear that the petitioner would be entitled
to raise issue of limitation as regards the counterclaim
raised by
respondent No.1. The issue of limitation, if raised by the
petitioner, shall be decided along with other issues on merits by

the Trial Court. With these observations, the present writ petition
is disposed of.

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