Courts in India treat counterclaims as a plaint in a cross-suit. Counterclaims are a claim bought against the Plaintiff by the Defendant in a lawsuit. It is typically filed as part of a Defendant's answer to the original claim. Counterclaim can contain a variety of material ranging from accusation of fraudulent activity to claims which would preempt any attempt at suit. The goal of counterclaim is to turn the table on the plaintiff by bringing up more issues in the case and demanding redress.
This article delves with the difference between an adjustment and a set-off and/ or counterclaim and focusing on the common features set off and counter claim. It also deals with the object of the amendments established by Rules 6-A to 6-G are conferment of a statutory right on the defendant to set up a counterclaim autonomous of the claim on the basis of which the Plaintiff laid the suit, on his own cause of action. Further the article deals with the effects and reliefs to Defendants through counterclaims.
Rule 6A. Counter- claim by Defendant- 1) A Defendant in a suit may, in addition to his right of pleading a set-off 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 action according to the defendant against the plaintiff either before or after the filing of the suit, but before 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 limited for delivering his defence has expired, whether such counter- claim is in the nature of a claim for damage or not:
- Provided that such counter-claim shall not exceed the pecuniary limits of the jurisdiction of the court.
- Such counter-claim shall have the same effect as a cross-suit 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.
- 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.
- The counter-claim shall be treated as a plaint and governed by the rules applicable to plaints.
The effect of this rule is from the point of view of pleading to assimilate a counter-claim with a plaint in a suit and is therefore governed by the same rules of pleading as a plaint. A counter-claim is substantially a cross-action, not merely a defence to the plaintiff's claim. It must be of such a nature that the court would have jurisdiction to entertain it as a separate action.
The rights granted to the defendants to set up counter claim are not only limited for the claim put forth by the plaintiff in a suit itself, and even the cause of action need not be the same; there is nothing in Order VIII, Rule 6 or 6A, CPC restricting the nature of relief which the defendants might seek in the counter claim1. The essence of a counter claim is that defendant should have an independent cause of action in the nature of a cross action and not merely a defence to the plaintiff's claim2. Where the defendant pays into court the full amount of plaintiff's claim but denies liability to a portion thereof, the plea cannot be agitated in the suit.
The crucial date for determining when the plaint in a cross suit should be treated as having been filed is not the date when the conversion is ordered, but the date on which the written statement, containing the counter claim is filed3.
Limitation for counter- claim- Order VIII, rules 6A to 6G may not prescribe any period of limitation for filing of a counter-claim, but in view of Order 8, rule A (4), read with Order VII, Rule 11(d) and S. 3(2) (b) of the Limitation Act, it can be said that there is a time limit for filing a counter-claim and the time limit is what is prescribed by the law of limitation in relation to that particular counter-claim. If it appears from the statements made in the application wherein the counter-claim is set up that it is barred by the law of limitation, the counter claim would be liable to rejection4.
Counter Claim at appellate stage- An appellate authority has no power to entertain counter-claim made for the first time at the appellate stage5.
SET-OFF AND COUNTER CLAIM- COMMON FEATURES
- None should exceed the pecuniary limits of the jurisdiction of the court;
- Both are pleaded in the written statement, if the law governing the court permits such plea being raised by the defendant in the written statement;
- The plaintiff is expected to file a written statement in answer to claim for set off or to a counter claim;
- Even if permitted to be raised, the court may in appropriate cases direct a set off or counter claim being tried separately;
- A defendant cannot be compelled to plead a set off nor a counter claim: he may as well maintain an independent action for enforcing the claim forming subject matter of set-off or counter claim;
- Both are liable to pay court-fee;
- Dismissal of suit or its withdrawal would not debar a set off or counter claim being tried may be followed by a decree against the plaintiff6.
Claims by Financial Institutions- Recovery of Debts Due to Banks and Financial Institutions Act 1993.- if the claim of the financial institutions exceeds Rs. ten lakhs, then the civil court has no jurisdiction, it must be entertained and decided by the Debts Recovery Tribunal. The counter claim made by the defendants cannot be entertained by debts recovery tribunal, it has to be entertained and decided by the civil court. If such procedure is adopted, then both suits can be tried before the two different forums having jurisdiction to entertain the same. A similar view appears to have been expressed in a ruling7.
Rule 6B. Counter-claim to be stated
Where any defendant seeks to rely upon any ground as supporting a right of counter-claim, he shall, in his written statement, state specifically that he does so by way of counter-claim.
Rule 6C. Exclusion of counter-claim
Where a defendant sets up a counter-claim and the plaintiff contends that the claim thereby raised ought not to be disposed of by way of counter-claim but in an independent suit, the plaintiff may, at any time before issues are settled in relation to the counter-claim, apply to the Court for an order that such counter-claim may be excluded, and the Court may, on the hearing of such application make such order as it thinks fit.
There is no jurisdiction to exclude a counter claim merely on the ground that in the circumstances security cannot be ordered to be given by the defendants, though it has been ordered against plaintiffs. The fact that the defendant cannot bring an independent action is not a sufficient ground for refusing to strike out a counter claim. In a suit for injunction, the defendant can plead counter-claim for injunction in respect of the same suit property or a different property based on a different cause of action is maintainable8.
Only application for counter-claim but adjustment is not maintainable under r 6C9.
Rule 6D. Effect of discontinuance of suit
If in any case in which the defendant sets up a counterclaim, the suit of the plaintiff is stayed, discontinued or dismissed, the counter-claim may nevertheless be proceeded with.
This further illustrates the principle that a counter-claim is to be treated as a cross action, and is not affected by anything which relates solely to the plaintiff's claim. Thus, where the plaintiff discontinues action the counter-claim has been served, he cannot prevent the defendant from enforcing against him the causes of action contained in the counter-claim. So if an action is dismissed being frivolous, the counter claim is not affected and the defendant may be granted the relief which he seeks thereby. In a suit for eviction even if landlord wants to discontinue the suit or get it stayed or dismissed the counter claim by the tenant in respect of rent can nevertheless be proceeded with10.
Rule 6E. Default of Plaintiff to reply to counter-claim.
If the plaintiff makes default in putting in reply to the counter-claim made by the defendant, the Court may pronounce judgment against the plaintiff in relation to the counter-claim made against him or make such order in relation to the counter-claim as it thinks fit.
Though the failure of the plaintiff to file a written statement in answer to the counter-claim of the defendant will make the provisions of Order 8, Rule 5(2) applicable enabling the court to treat the allegations in the counter-claim as admitted and pronounce judgment on that basis as per provisions of r 6G below, this specific provision has empowered the court also to make snap decision against the plaintiff for failure to file written statement to the counter-claim of the defendant. In view of the rival claim of cruelty and desertion against each other, the refusal to grant divorce on the mere ground of not filing reply to the counter claim by the non-petitioner was not held improper11.
Rule 6F. Relief to Defendant where counter-claim succeeds
Where in any suit a set-off or counter-claim is established as defence against the plaintiff's claim and any balance is found due to the plaintiff or the defendant, as the case may be, the Court may give judgment to the party entitled to such balance.
Since order 8, rule 6(2) read with order 20, rule 19 confers power on the court to adjudicate upon the claim to setoff made by the defendant and to pass a decree in his favour in case the balance turns in his favour, reference to a set-off also in this rule seems to have been unnecessarily made.
Rule 6G. Rules relating to written statement to apply
The rules relating to a written statement by a defendant shall apply to a written statement filed in answer to a counter-claim.
The effect of this rule is, from the point of view of pleading, to assimilate a written statement filed by the plaintiff in answer to a counter-claim with a written statement by a defendant to plaintiff's claim, and written statement in answer to a counter-claim is therefore governed by the same rules of pleading as a written statement by the defendant.
Rules 6A to 6G are new and confer in addition to a right of set off under Rule 6, a statutory right to file a counter claim. Before their addition in Order VIII, a set off and counter claim were stringent unless they fell within the limited compass of Rule 6. A reading of rules 6A to 6G of the Civil Procedure Code makes it clear that the counter claim has to be treated as a cross-suit and it has to be tried along with the original claim and all the rules of pleading apply to counterclaim. The scope has now widened and covers the cases of an equitable set off where the defendant's claim made in the set off was larger than the plaintiff's claim and courts in view of Order 20, rule 19 allowed a counter claim for the balance amount as a cross suit, such procedure was admitted only where the claim was in plaint. The new rules now confer a statutory right to a defendant to set up a counter claim. The wide words in which Rule 6A is couched shows that it can be brought in respect of any claim that could be the subject of an independent suit. Unless otherwise restricted, a counter claim for divorce is also be maintainable in proceedings for grants of maintenance under Section 18 of the Hindu Adoption and Maintenance Act 1956. Similarly in a suit for judicial separation by the wife, the husband can have a counter claim of divorce on any grounds stated in Section 13 of the Hindu Marriage Act 195512.
The effect of a counter claim is to place the plaintiff in a position of a defendant who must defend himself and put in a reply thereto or suffer judgment in relation to the counter claim. Since a counter claim is an independent suit allowed to be heard together with a plaintiff's suit to enable the Court to pronounce one judgment, it would appear that where there are several co-plaintiff's, a counter claim would be allowable either against all of them or some of them only.
Since a counter claim is in its nature a cross suit, a defendant seeking to aim himself of a counter claim must set out all the material facts on which he relies in support thereof with the same particularity as he would as a plaintiff in an independent suit. In essence, set-off is a form of defence while counter claim is substantially a cross suit. it was also held by Kerala High Court that, "It is really a weapon of offence and enables a defendant to enforce a claim against the plaintiff as effectively as in an independent action. It need not be an action of the same nature as the original action or even analogous thereto, though the counter claim has to be one entertainable by the Court in India."13
1 Mohan Lal v. Bhawani Shankar, AIR 2002 Raj 144
2 Abdul Majid v. Abdul Rashid AIR 1950 A 201
3 Laxmidas v. Nanabhai AIR 1964 SC 11
4 Oriental Ceramic Products Pvt. Ltd. v. Calcutta Municipal Corpoaration Cal AIR 2000 Cal 17
5 Ram Swaroop v. Mandir Thakran Kalyan Rai AIR 2002 HP 27
6 Cofex Exports Ltd. v. Canara Bank AIR 1997 Delhi 355 (DB)
7 Macherla Ravi Kumar v. Indian Bank AIR 1998 AP 390, 391
8 Jag Mohan Chawla v. Dera Radha Swami Satsang AIR 1996 SC 2222,2223
9 Bansidhar v. United Bank of India AIR 1980 Orissa 19
10 Bhim v. Laxmi AIR 1982 P&H 155
11 Rajneesh v. Savita AIR 2003 Raj 280
12 Surbhi Agarwal v. Sanjay Agarwal AIR 2000 MP 139 (DB)
13 Pathrose Sameul & Anr v. Karumban Parameshwaran, AIR 1988 Ker 163.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.