Key Features of Counterclaim
Counterclaim: Meaning and Concept
A Counterclaim is a claim made by a defendant against the plaintiff in the same suit. It allows the defendant not only to defend themselves but also to assert their own cause of action arising out of the same transaction or subject matter.
Key Features of Counterclaim
1. Definition and Legal Provision
Under Order 8 Rule 6 of the Code of Civil Procedure, 1908 (CPC), a defendant may set up a counterclaim against the plaintiff.
It is a claim by the defendant against the plaintiff within the same proceeding, avoiding the necessity for a separate suit.
2. Connection with the Plaintiff’s Claim
The counterclaim must arise out of the same transaction or series of transactions as the plaintiff’s claim.
This connection ensures the dispute is resolved in one suit, promoting judicial economy.
3. Nature of Counterclaim
The counterclaim is essentially a cross-demand.
It is adjudicated alongside the plaintiff’s claim.
The defendant can seek affirmative relief (damages, injunction, recovery) against the plaintiff.
4. Filing and Procedure
The defendant must file the counterclaim along with the written statement or as directed by the court.
The counterclaim is treated as a plaintiff’s suit for the purposes of trial, but is part of the same proceeding.
The court has the power to strike out or allow the counterclaim based on its merit and relevance.
5. Object and Purpose
Avoids multiplicity of litigation.
Promotes expeditious disposal by resolving all related disputes in one suit.
Reduces court time and expenses.
6. When a Counterclaim is Not Permissible
When the claim is unrelated to the plaintiff’s claim.
When the claim is barred by limitation.
If the claim requires a different forum or remedy.
The court may refuse to entertain a counterclaim if it raises issues outside the jurisdiction or the scope of the suit.
7. Difference from Set-off
Counterclaim is a separate claim with a cause of action distinct or related to the plaintiff’s claim.
Set-off is a claim for a debt or liquidated sum which the defendant uses to reduce the plaintiff’s claim.
Counterclaim can seek different reliefs, including unliquidated damages; set-off is usually limited to liquidated sums.
Important Case Law
1. Shiv Sharan v. Jashoda AIR 1961 SC 1203
Held that a counterclaim must arise out of the same transaction or subject matter as the plaintiff’s claim to be entertained.
The purpose is to decide all related disputes in one suit.
2. M.C. Chockalingam v. Union of India AIR 1971 SC 174
Reiterated that counterclaim is to avoid multiplicity of suits and the Court has discretion to accept or reject it.
3. Mohan Singh v. Union of India AIR 1964 SC 232
The Supreme Court clarified that a counterclaim is an independent claim but must be connected to the plaintiff’s claim.
4. Prem Chand Jain v. Union of India AIR 1971 SC 1009
The Court observed that counterclaim should be related to the subject matter of the suit; otherwise, it is not maintainable.
Summary Table
| Feature | Explanation |
|---|---|
| Legal Provision | Order 8 Rule 6, CPC |
| Relationship to Plaintiff’s Claim | Must arise out of the same transaction or series |
| Nature | Independent claim by defendant against plaintiff |
| Purpose | Avoid multiple suits; consolidate disputes |
| When Not Allowed | Unrelated claims, barred by limitation, different forum |
| Difference from Set-off | Counterclaim is a separate cause of action; set-off is adjustment of debts |
Conclusion
A counterclaim is a procedural device allowing the defendant to assert their own claims against the plaintiff arising out of the same transaction or matter. It promotes efficiency by consolidating claims and avoiding multiple suits. Courts carefully examine the connection between claims and ensure only related disputes are tried together. The key is the “same transaction” test, which is central to determining the maintainability of a counterclaim.
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