Writ Petition No. 1688 of 2018

4th June 2019

Petitioner Counsel: Mr. R.S. Sundaram
Respondent Counsel: Mr. A.A. Choubey Mr. P.N. Rawlani
Act Name: Code of Civil Procedure, 1908

Section :

Cases Cited :
Para 4: System Air India Private Limited Vs. ETA Engineering Private Limited, (Order dated 29/11/2016) in CS (COMM) 56/2016
Paras 5, 8: SCG Contracts India Pvt. Ltd. Vs. K. S. Chamankar Infrastructure Pvt. Ltd. and Others, 2019 SCC OnLine SC 226
Paras 5, 10: Mahendra kumar and Another Vs. State of Madhya Pradesh and Others, (1987) 3 Supreme Court Cases 265
Paras 5, 11: Ramesh Chand Ardawatiya Vs. Anil Panjwani, (2003) 7 Supreme Court Cases 350
Para 11: Bollepanda P. Poonacha and Another Vs. K.M. Madapa, (2008) 13 Supreme Court Cases 179
Para 11: Vijay Prakash Jarath Vs. Tej Prakash Jarath, (2016) 11 Supreme Court Cases 800

JUDGEMENT

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 6-A 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 6-A 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 6-A 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 6-A. Counter-claim 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 Counter-claim 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 Counter-claim is in the nature of a claim for damages or not :
Provided that such Counter-claim shall not exceed the pecuniary limits of the jurisdiction of the Court.
(2) Such Counter-claim 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 Counter-claim.
(3) The plaintiff shall be at liberty to file a written statement in answer to the Counter-claim of the defendant within such period as may be fixed by the Court.
(4) The Counter-claim 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 Counter-claim 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 Counter-claim 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 Counter-claim 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 Counter-claim 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 6-A 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 Counter-claim could be said to be within limitation. It was emphasized on behalf of the petitioner that the Counter-claim 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 Counter-claim 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 6-A 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 Counter-claim.

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 6-A of CPC would bar filing of Counter-claim after filing of written statement. It has been emphatically laid down that there can be no such bar in filing Counter-claim and that the defendant can certainly file a Counter-claim after having filed written statement, but only pertaining to cause of action as specifically laid down in Order VIII Rule 6-A(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 Counter-claim as it had failed to raise the Counter-claim 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 Counter-claim 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 Counter-claim 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 Counter-claim 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 6-A 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 Counter-claim 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 Counter-claim 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 Counter-claim only in respect of cause of action limited by the provision of Order VIII Rule 6-A 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 Counter-claim could be said to be within limitation. The said observation is erroneous because even if respondent No.1 is permitted to raise Counter-claim, 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 Counter-claim 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 Counter-claim. 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 Counter-claim 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.