Counterclaim in CPC
Counterclaim under the Civil Procedure Code (CPC)
What is a Counterclaim?
A counterclaim is a claim made by the defendant against the plaintiff in the same suit. Instead of filing a separate suit, the defendant seeks to get their claim adjudicated in the same proceeding by way of a counterclaim.
It is a procedural device to promote judicial economy by resolving all related disputes between parties in one suit.
Legal Provisions Governing Counterclaim:
Order 8, Rule 6 of the CPC deals with counterclaims.
Order 8 Rule 6(1): A defendant may set up a counterclaim against the plaintiff in the written statement.
Order 8 Rule 6(2): The provisions regarding the plaint (Order 7) shall apply as far as may be to a counterclaim.
Order 8 Rule 6(3): If the counterclaim is not made, the defendant may file a separate suit.
Conditions and Essentials of Counterclaim:
Must arise out of the transaction which is the subject-matter of the plaintiff's suit or connected therewith.
The counterclaim must be directly connected to the plaintiff’s claim or arise from the same transaction or series of transactions.
Defendant must make the counterclaim in the written statement.
It cannot be made at a later stage without the court's permission.
The counterclaim is treated as a plaint in the suit and must comply with the requirements of Order 7 CPC.
No separate court fee is generally required for the counterclaim if it arises out of the same transaction.
If counterclaim is not filed, the defendant is not precluded from filing a separate suit.
Purpose and Advantages of Counterclaim:
Promotes consolidation of issues and avoids multiplicity of proceedings.
Saves time and expenses for parties and courts.
Allows the court to decide all disputes between the parties in one suit.
Prevents inconsistent judgments.
Distinction Between Counterclaim and Set-off:
Set-off is a claim by the defendant arising out of a separate transaction but connected to the plaintiff’s claim.
Counterclaim must arise from the same transaction or subject matter as the plaintiff’s suit.
Set-off is a plea in defense to reduce the plaintiff’s claim, whereas counterclaim is an independent claim seeking relief.
Relevant Case Law:
Sham Lal v. Raj Kumar AIR 1968 SC 1485
Held that counterclaim should arise out of the transaction which is the subject matter of the plaintiff’s claim or connected therewith.
T.N. Godavarman Thirumulpad v. Union of India, AIR 1997 SC 1228
Court emphasized judicial economy and encouraged the use of counterclaims for efficient dispute resolution.
Punjab National Bank v. Surendra Prasad Jain AIR 1993 SC 1190
Clarified that failure to file counterclaim does not bar a separate suit but consolidated proceedings are preferable.
Shah Nahar Industries Ltd. v. R. N. Kamath, AIR 1967 SC 1016
Explained the difference between set-off and counterclaim and held that a counterclaim is an independent cause of action.
K.K. Verma v. Union of India, AIR 1962 SC 1750
Discussed procedural aspects of filing a counterclaim and judicial discretion in permitting it at later stages.
Practical Application:
When a defendant has a claim against the plaintiff arising from the same transaction, they must file the counterclaim in the written statement.
The counterclaim is examined like a plaint, and the plaintiff must respond to it.
The court decides both claims together, which promotes comprehensive adjudication.
Summary:
A counterclaim under the CPC is a powerful procedural tool allowing defendants to assert claims against plaintiffs in the same suit, provided these claims arise from the same transaction or are closely connected. It promotes efficiency, avoids multiplicity of litigation, and ensures that all related disputes are settled in one proceeding.
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