Rajul Manoj Shah @ Rajeshwari Rasiklal Sheth v. Kiranbhai Shakrabhai Patel & Anr.
SLP (C) NO. 5635 OF 2023
(PAMIDIGHANTAM SRI NARASIMHA and JOYMALYA BAGCHI, JJ)
The Supreme Court considered the extent and limitations of counterclaims under the Code of Civil Procedure, 1908 (CPC). The case emanated from a protracted property dispute over a bungalow in a cooperative housing society at Ahmedabad. The appellant instituted a civil case in 2012 alleging that the property initially belonged to her father and, upon his death, passed on to her and her brother. Upon the death of her brother, the property was jointly held by the appellant and her sister-in-law (defendant no.1). When it came to her notice that her sister-in-law had signed an agreement for sale of part of the property to respondent no.1 (defendant no.2), she filed a suit for declaration that the agreement for sale dated 21.10.2011 stood in abatement and defendant no.1 could not deal with the property without her consent. Defendant no.1 died in 2013, and the appellant requested in 2017 her removal from the list of parties, which was granted by the trial court in 2019. The defendant no.2, meanwhile, had requested substitution of defendant no.1 through a court officer under Order XXII Rule 4A CPC, which was denied.
On a challenge before it, the Gujarat High Court in 2020 designated the City Civil Court Nazir as representative of defendant no.1. Shortly after, the appellant had amended her plaint, but defendant no.2 had to wait until July 2021 before requesting amendment of his written statement and adding a counter-claim. By the counter-claim, he had prayed for two reliefs: one, specific performance of the 2011 sale agreement by ordering the Nazir to receive the balance consideration and sign the sale deed; and two, partition of the suit property under the Partition Act, 1893. The trial court rejected his application in August 2021 on the ground that it had been filed with an unreasonable delay, very late after issues had been joined in February 2019 and evidence had begun.
It further opined that specific performance was being asked against defendant no.1, now being represented by a court officer, which was not permissible in the suit of the plaintiff. Drawing upon Supreme Court judicial precedent, the trial court held that a counter-claim cannot be brought against a co-defendant, and further held the claim to be barred by limitation under Article 54 of the Limitation Act, as the sale agreement was entered into in 2011 and no action was filed within three years. In appeal, however, the Gujarat High Court overruled the trial court’s order and granted defendant No. 2’s counter-claim.
It argued that the cause of action accrued only when the Nazir was appointed in the year 2020, and hence, the delay was warranted. The High Court also ruled that the counter-claim was not against a co-defendant in isolation, but against the Nazir as an administrator and also the plaintiff, and hence, it is maintainable. In the exercise of its supervisory jurisdiction under Article 227 of the Constitution, the High Court allowed the counter-claim to be made and reserved the question of limitation to be decided at trial. Being aggrieved, the appellant went to the Supreme Court. Appellant’s senior counsel contended that the counter-claim was time-barred and impermissible post-framing of issues when the Court had ruled that counter-claims cannot be entertained once the trial has started.
On the other hand, counsel for respondent no.1 defended the High Court’s view, submitting that Order VIII Rule 6A CPC does not prescribe a rigid timeframe, that the cause of action arose only after 2020, and that the counter-claim should be liberally construed to avoid multiplicity of proceedings. The Supreme Court, after analysing the matter, found merit in the appellant’s contentions. It ruled that the High Court was wrong to intervene in the trial court’s well-thought-out order.
Regarding the issue of delay, the Court reiterated that while Order VIII Rule 6A CPC does not stipulate a limitation period, the counter-claims have to adhere to the Limitation Act and cannot be entertained after issues are framed and evidence has started. Here, the counter-claim was founded on a 2011 agreement, and the filing thereof in 2021 was undoubtedly beyond the allowable period under Article 54 of the Limitation Act. The Court noted that such delayed claims being allowed would jeopardize the principle of speedy trial. In this case, relief of specific performance was in essence against the deceased defendant no.1 (via the Nazir) and not against the plaintiff, and thus fell outside the jurisdiction of a valid counter-claim. The Court further observed that defendant no.2’s inaction for almost ten years, even while defendant no.1 was alive, showed his lack of diligence and further justified the rejection of his plea.
The Supreme Court granted the appeal, quashed the order of the High Court, and reinstated the dismissal of defendant no.2’s counter-claim by the trial court. It explained that counterclaims are required to be in time, against the plaintiff, and within the limitation.
