Counter Claim Against Co-Defendant in Civil Suits

Source: Supreme Court 

Why in News? 

The bench of Justices K. Vinod Chandran and N. V. Anjaria in the case of Sanjay Tiwari v. Yugal Kishore Prasad Sao & Ors. (2025) held that a counter claim in a civil suit cannot be directed against a co-defendant and set aside the counter claim raised by defendants 2 and 3 against defendant 1. 

What was the Background of Sanjay Tiwari v. Yugal Kishore Prasad Sao & Ors. (2025) Case? 

• The plaintiff (appellant) filed a suit for specific performance claiming that defendant No.1 had entered into an oral agreement on December 2, 2002 to sell 0.93 acres of land. 
• The entire consideration was allegedly paid on December 3, 2002 through three demand drafts, upon which a receipt was issued promising transfer of the land. 
• The plaintiff claimed he was put in possession of the property and had built a boundary wall. 
• Defendant No.1 filed a written statement contending that two other persons (later impleaded as defendants 2 and 3) were in possession of part of the suit property, making the suit defective for non-joinder of necessary parties. 
• Defendant No.1 claimed that on December 1, 2002, a portion of 50 decimals of the same land was agreed to be transferred to defendants 2 and 3 for Rs.2,95,000/- to be paid on December 3, 2002. 
• It was admitted that defendant No.1, due to financial need, had sold 43 decimals to the plaintiff's father for Rs.2,55,000/-. 
• Defendants 2 and 3 filed an application for impleadment, which was allowed by the Trial Court. 
• After being impleaded, defendants 2 and 3 raised a counter claim against defendant No.1 claiming entitlement to transfer of the entire land. 
• The Trial Court admitted the counter claim, which was challenged by the plaintiff before the High Court under Article 227. 
• The High Court dismissed the challenge reasoning that the entire issue including maintainability of the counter claim could be decided in the suit itself to avoid multiplicity of litigation. 
• The plaintiff appealed to the Supreme Court challenging the admission of the counter claim. 

What were the Court's Observations? 

• The Court noted that defendants 2 and 3 had no concrete case, as their claims were contradictory - first asserting agreement for entire land for Rs.5,55,000/-, then conceding 43 decimals were for the plaintiff, and finally claiming 50 decimals based on part payment. 
• The Court found that the impleading application was filed in 2006, after the limitation period had expired, as the cause of action arose on December 2, 2002. 
• The Court relied on Rohit Singh & Ors. v. State of Bihar (2006) which held that a counter claim must be incidental or connected with the plaintiff's cause of action and necessarily directed against the plaintiff, not against a co-defendant. 
• The Court also relied on Rajul Mano Shah v. Kiranbhai Shakrabhai Patel (2025) which established that a counter claim for specific performance requires establishing a right first before raising claims against the plaintiff. 
• The Court held that the counter claim against co-defendant cannot survive under Order 8, Rule 6A of the Code of Civil Procedure, 1908 (CPC) and clarified that impleadment of defendants 2 and 3 saved the suit from non-joinder defect but did not validate their counter claim. 
• The Court found no reason to grant liberty to file a separate suit as the claim was barred by limitation and set aside the counter claim while allowing the Civil Appeal. 

What is Counterclaim? 

About: 

• It is enshrined in Order VIII Rule 6A – 6G of the CPC. 
• The 27th Law Commision Report of 1964 recommended to set-up a right to file counterclaim in the civil procedure a right for the defendant.   
• As an aftermath of the recommendation, CPC (Amendment) Act, 1976 added rules 6B to 6G to the existing act.  

Concept of Counterclaim: 

• It is a claim which is independent in nature or can be separated from the claim of the plaintiff.  
• When the cause of action arises against the plaintiff the defendant gets the right to submit that claim along with the written statement.  
• It is considered as a plaint by the defendant against the claim of the plaintiff and is dealt with in the same manner as a plaint.  
• Furthermore, the plaintiff has an opportunity to file a written statement against the plaint consisting of the counterclaim.  
• The Supreme Court held the right to file a counterclaim a statutory right, in Laxmidas v. Nanabhai (1964).  
• The Delhi HC in the case of Gastech Process Engineering Pvt. Ltd. v. Saipem (2009) deciphered it as a weapon in the hand of the defendant.  

Purpose of Counterclaim: 

• To stop the multiplicity of suits. 
• To save the time of the court of law. 
• To make the civil procedure convenient for parties. 
• To make the timely trials. 

Time of Filing Counterclaim: 

A counterclaim can be filed in three situations aligned below: -  

• before or after filing the suit, 
• before the defendant has delivered his defence, 
• before the time limited for delivering his defence, expired. 

Modus of Filing Counterclaim: 

• By amending written statement with the leave of the court and setting up counterclaim;            
• By mentioning into the subsequent pleading prescribed under Order 8 Rule 9. 

Essentials of Filing Counterclaim 

• It must be filed by the defendant. 
• It must for an independent or a claim that is separable in nature. 
• It must be filed against the plaintiff. It can be filed against co-defendants in some scenarios.  
• It must be in respect of any incident that happened before or after the filing of the suit.  
• It cannot be filed at the appellate stage before the appellate authority.