Supreme Court Clarifies Counter-Claim Rules: Defendant Cannot File Counter-Claim Against Co-Defendant Under Order VIII Rule 6-A CPC

Summary:

[1]The Supreme Court allowed the appeal, setting aside the Gujarat High Court’s order that had permitted a counter-claim to be filed by defendant no. 2, Kiranbhai Shakrabhai Patel, in a suit for declaration and injunction. The Court found that the High Court erred on two key grounds: a counter-claim cannot be directed solely against a co-defendant, and it cannot be permitted to be filed after the issues have been framed in the suit. The Court ruled that the High Court’s order was incorrect in fact and law, and the Trial Court’s decision to dismiss the application for the counter-claim was correct.

Facts:

• The appellant, Rajul Manoj Shah, filed a suit in 2012 seeking a declaration and an injunction concerning property in Ahmedabad that she jointly owned with her sister-in-law, who served as defendant no. 1. The litigation arose from an agreement to sell dated October 21, 2011, which the sister-in-law had entered into with Kiranbhai Shakrabhai Patel, defendant no. 2. The appellant challenged this agreement, contending it was null and void since her sister-in-law lacked the authority to transfer the property without obtaining her consent.
• The proceedings were complicated when defendant no. 1 died in October 2013 while the case was ongoing. After considerable delay, the Gujarat High Court appointed the Nazir of the City Civil Court, Ahmedabad, to replace the deceased defendant no. 1 in February 2020, following an agreement between the parties.
• Subsequently, in July 2021, defendant no. 2 sought to amend his written statement to include a counter-claim, filing this application approximately two years after issues had been settled and nine years into the litigation. The counter-claim requested that the Nazir be directed to accept outstanding consideration and execute a sale deed for the undivided property share, while also seeking partition of the disputed property.
• The Trial Court rejected this amendment application in August 2021, determining that it suffered from unreasonable delay and that maintaining a counter-claim exclusively against a co-defendant was impermissible. The court additionally concluded that the counter-claim was time-barred under the Limitation Act.
• Nevertheless, the Gujarat High Court overturned this ruling in January 2023 under its supervisory powers pursuant to Article 227 of the Constitution. The High Court authorized the counter-claim, concluding that its cause of action emerged only following the Nazir’s appointment in February 2020. This decision prompted the plaintiff-appellant to seek recourse before the Supreme Court.

Issues:

1.  Whether a counter-claim can be filed against a co-defendant.
2.  Whether a counter-claim can be entertained after the issues have been framed in the suit.

Judgement:

• On Counter-Claim Against Co-Defendant- The Supreme Court held that a counter-claim must be directed against the plaintiff. While it may incidentally claim relief against a co-defendant, a counter-claim directed solely against a co-defendant is not maintainable. In this case, defendant no. 2’s counter-claim for specific performance was directed against the deceased defendant no. 1, as represented by the Nazir, and not against the plaintiff/appellant. Therefore, the counter-claim was not permissible. The Court also dismissed the claim for partition, noting that the defendant must first establish a right to the property before seeking partition.
• On Counter-Claim Filed After Issues are Framed: The Court noted that issues were framed on February 12, 2019, and the counter-claim application was filed almost two years later on July 26, 2021. The Court referenced its decision in Ashok Kumar Kalra v. Wing CDR. Surendra Agnihotri (2020) 2 SCC 394 clarified that while Order VIII Rule 6A of the CPC does not provide a specific time limit for a counter-claim, it generally cannot be permitted after issues are framed and the suit has substantially proceeded. Permitting a delayed counter-claim would defeat the goal of speedy justice and avoid multiplicity of proceedings. The Court concluded that the High Court was wrong to allow the application on the grounds that the cause of action for the counter-claim only arose after the Nazir was appointed.

Analysis:

The Supreme Court reinforced established legal principles regarding counterclaims under the CPC. First, it reaffirmed that the purpose of a counterclaim is to enable a defendant to make a claim against the plaintiff, not a co-defendant. The Court underscored that allowing a counter-claim to be filed solely against a co-defendant would improperly convert the litigation into a different type of suit. Second, the judgment upheld the principle that a counter-claim should be filed in a timely manner and is generally not allowed after the issues have been framed, even if the limitation period has not expired. The decision emphasizes that courts should exercise their discretion judiciously, balancing the right to file a counter-claim with the need for speedy trials and the prevention of prejudice to the opposing party.

[1] Rajul Manoj Shah Alias Rajeshwari Rasiklal Sheth Vs. Kiranbhai Shakrabhai Patel & Anr.

Civil Appeal No. OF 2025 (ARISING OUT OF SLP (C) NO. 5635 OF 2023)

Judgment Dated: September 15, 2025