Supreme Court Holds Counter-claim For Specific Performance Cannot Be Launched Solely Against Co-defendant; High Court Order Set Aside

A bench of Justices Pamidighantam Sri Narasimha and Joymalya Bagchi heard an appeal against a Gujarat High Court order which had allowed a defendant to amend his written statement and file a counter-claim in a suit for declaration and injunction. The principal questions were whether a counter-claim could be permitted after issues had been framed and whether a counter-claim seeking specific performance could be maintained when directed solely against a co-defendant (the estate of a deceased vendor represented by a court-appointed Nazir).

The Court allowed the appeal and set aside the High Court's order permitting the counter-claim. It held that a counter-claim seeking specific performance could not be maintained when it was directed solely against a co-defendant and not against the plaintiff. The Court relied on settled precedent including Rohit Singh v. State of Bihar and Ashok Kumar Kalra v. Wing CDR Surendra Agnihotri, confirming that while Order VIII Rule 6A of the CPC enabled counter-claims to avoid multiplicity of litigation, the power was circumscribed by limitation and the object of speedy justice. The Court, in its reasoning, observed: "In the present case, defendant no. 2 sought to raise a counter-claim primarily for the relief of specific performance of agreement dated 21.10.2011 executed in his favour by deceased original defendant no. 1 with respect to her undivided share in the suit property, by a direction to the Nazir, the substituted representative of defendant no. 1, to execute a sale deed in pursuance of the agreement to sell. The relief of specific performance as sought to be raised by defendant no. 2 cannot be set up by way of a counter-claim since the same is not directed against the appellant/plaintiff, but is instead directed solely against the co-defendant. In view of this, defendant no. 2 is held to be disentitled to raise prayer of specific performance by way of counter-claim. This is simply not permissible, and this position is no more res-integra in view of the decision of this Court in Rohit Singh (supra)." The Court also noted that "the defendant cannot be permitted to file counterclaim after the issues are framed and after the suit has proceeded substantially," endorsing the limits articulated in Ashok Kumar Kalra.

Background The appellant instituted a suit in 2012 seeking a declaration that an agreement to sell, dated 21.10.2011, was null and void and that the alleged vendor could not transfer the property without her consent. The original defendant (the vendor) died in 2013; the High Court later, by consent, appointed the Nazir of the City Civil Court as representative of the deceased in 2020. Defendant No. 2 then sought, in July 2021, to amend his written statement and file a counter-claim for (a) direction to the Nazir to accept balance consideration and execute a sale deed in pursuance of the 2011 agreement, and (b) partition under the Partition Act.

The Trial Court dismissed the application on 05.08.2021, holding the counter-claim was barred by limitation, was filed after a substantial lapse and after issues were framed (12.02.2019), and that a counter-claim could not be directed solely against a co-defendant. The High Court, exercising supervisory jurisdiction under Article 227, allowed the petition and permitted the counter-claim, reasoning that the cause of action for defendant No. 2 arose only after the Nazir was appointed and that the counter-claim was filed soon thereafter.

Before the Supreme Court, the appellant challenged the High Court order. The Court examined the scope of Order VIII Rule 6A CPC and precedent, including Rohit Singh (which held a counter-claim directed solely against co-defendants could not be maintained) and Ashok Kumar Kalra (which set out factors and limited the outer temporal limit for filing counter-claims to before framing of issues). The Court found that the Trial Court's factual findings — that the agreement dated 21.10.2011 was challenged in 2012, that defendant No. 2 took no steps for nearly nine years, and that the claim for specific performance was therefore time-barred and improperly directed solely against a co-defendant — were correct in law and fact. The Supreme Court allowed the appeal, set aside the High Court order dated 16.01.2023, and restored the position of the Trial Court. There was no order as to costs.

Case Details: Case No.: Civil Appeal arising out of SLP (C) No. 5635 of 2023 Case Title: Rajul Manoj Shah alias Rajeshwari Rasiklal Sheth v. Kiranbhai Shakrabhai Patel & Anr. Appearances: For the Petitioner(s): Ritin Rai, Senior Counsel (assisted by others) For the Respondent(s): Pradhuman Gohil, Counsel (and others)