A.W. Figgis and Co. Pvt. Ltd. vs Barduar Tea and Timber Co. Ltd.

B.P. Saraf, J.—This revision petition is directed against the order of the Assistant District Judge No. 1, Guwahati dated 25.7.87 rejecting the objections of the Petitioner Plaintiff against the Defendant''s counter claims.

The relevant facts of the case may be briefly stated as follows The Petitioner M/s A.W. Figgis and Company Private Ltd. filed suit against the opposite party M/s Barduar Tea & Timber Company Ltd. for recovery of a sura of a Rs. 16,46,716.76 and foreclosure of mortgage and sale of mortgaged properties. The opposite party Defendant No. 1 (hereinafter Defendant company) entered appearance but did not file written statement until inspection of documents. In the written statement the Defendant company reserved its right to the additional written statement if, on further inspection of the documents it was deemed necessary to do so. The additional written statement was filed thereafter on 8.1.85 wherein the Defendant set up counter claims for various amounts under different heads in all amounting to about Rs. 80,000,000/-. On 12.8.85 the Petitioner filed objection to the counter-claims. The objection could, not be disposed of by the trial Court us the contesting parties continued to file one after another petitions for inspection of each others documents. On 24.1.87 before taking up the objection for hearing and disposal, the trial Court directed the Defendant company to state specifically whether the claims referred to in its additional written statement dated 8.1.85 were counter chums and if so, to pay adequate court fee thereon. The Defendant company by an application dated 16.2.87, while making it clear that the claims raised by it in its additional written statement were in the nature of counter claim, also set up some new claims totalling. Rs. 71,58,069.20 in addition to the previous claims and paid further court fee of Rs. 10,000/- therewith making the total court fee paid to the figure of mini mum court fee of Rs. 11,000/-. The break-up of these additional claims was given in Annexure marked as Annexure ''X'' to the petition. The Petitioner Plaintiff filed reply-cum-objection to the counter-claims on the ground, inter alia, that majority of the claims were time barred apart from being barred under the provisions of Order 8 of the Code of Civil Procedure, 1908 (''Code of Criminal Procedure'' hereinafter). The trial Court heard the objections and by order dated 25.8.87 rejected the same and allowed the counter claims of the Defendant company to go for trial. Aggrieved by this order, the Plaintiff has approached this Court.

Mr. J.P. Bhattacharjee, learned Counsel appearing for the Petitioner, submits that from a perusal of the claims sought to be set up by the Defendant company by way of counter-claim, it will be evident that most of thorn are barred by limitation and such claims cannot be allowed to be set up by way of counter claim. Reliance is placed in this connection on Rule 6A of Order 8 CPC as also on the provisions of Section 3(2)(b) of the Limitation Act, 1963 which provides that counter-claim has to be treated as a separate suit and deemed to have been instituted on the date on which such claim is made in the Court. The counsel submits that most of the claims set up as counter claims were prima facie barred by limitation on the date when the claims in question were made in the Court. The learned Counsel further submits that the additional written statement having been filed on 8.1.85, it was not open to the Defendant to set up further counter-claim thereafter by incorporating the same in the application filed in reply to the query of the Court as to whether the claim set up by it in its additional written statement dated 8.1.85 was by way of counter claim or not and directing it to pay the appropriate court fee if it was by way of counter-claim. In other words, the submission of the counsel is that new claims which were not there in the earlier additional written statement cannot be allowed to be set up in view of the clear provisions of Order 8 Rule (sic) of the Code of Civil Procedure.

Mr. S.K. Senapati, learned Counsel for the opposite party-Defendant submits that the Defendant was entitled to make new counter claims in its application dated 16.2.87 as it had reserved its right to file additional statement on the ground that the inspection of the documents of the Plaintiff had not been completed and in source of inspection information may come to light which might justify making of further counter-claim. He, therefore submits that the aforesaid application dated 16.2.87 was also by way of additional written statement and there is nothing wrong in making further counter claim in such statement. So far as the question of limitation as concerned, Mr. Senapati submits that in this case, the suit being governed by Article 62 of the Limitation Act which provides a period of limitation of 12 years from the date when the money sued for becomes due, any counter claim made in such suit would also as governed by the same Article and, if it is so held, the counter claims in question would not be barred by limitation. Mr. Bhattacharjee, learned Counsel for the Petitioner, in reply submits that this submission is misconceived as from a plain reading of Order 8 Rule (sic) of the CPC and Section 3(2)(b) of the Limitation Act it will the clear that for all purposes a counter-claim has to be treated as in separate suit and it will, be governed by the period of limitation applicable to the nature of claim sought to be made by way of counter-claim. In the instant case, according to the learned counter the claims are for compensation for breach of contract, etc, that the period of limitation in such cases is three years. The counter-claims in this case, therefore, would be governed by Article (sic) of the Limitation Act. The counsel further submits that if it is submitted that any of the counter-claims is not governed by Article 115 Article 113 shall come into operation which provides period of limitation in case of suits for which no period is provided elsewhere is the schedule. Under this Article also the period of limitation is three years. Therefore, in any event all the counter claims of the Defendant in the instant case would be governed by a period of limitation of three years. None of the counter claim of the Defendant being for enforcing payment of money secured by mortgage or otherwise charged upon immovable property, the question of application of Article 62 does not arise. The counsel submits that the court below committed manifest error in not applying its mind to this aspect of the matter and in rejecting the objection of the Petitioner. The learned Counsel, however, fairly submits that some portions of the counter-claims included in the additional written statement dated 8.1.85 might not be barred by limitation e.g. claims pertaining to the year 1982. The court below could have segregated such claims, if any, and allowed them to go for trial rejecting the rest as being barred by limitation. But that having not been done the impugned order is not tenable in law.

I have carefully considered the rival submissions. To decide the controversy in this case it is necessary to examine the true nature of a counter-claim. Rules 6A to 6D of Order 8 of the CPC deal with counter-claim. These Rules were incorporated by the Amendment Act of 1976. Prior to that there was no statutory provision in this regard. Counter-claims however were admitted by the courts and treated as plaints in a cross suit. This practice was approved by the Supreme Court in Laxmidas Dahyabhai Kabarwala Vs. Nanabhai Chunilal Kabarwala and Others, where it was held that there was nothing in the law, statutory or otherwise, which precluded a court from treating a counter claim as a plaint in a cross suit. It was also held that the crucial date for the purpose of determining when the plaint in a cross suit should be treated as having been filed was not the date on which the con-version was ordered but the date on which the written statement containing the counter-claim was filed. However, by the 1976 amendment specific provisions have been made in the statute itself to provide for counter-claim. Under Sub-rule (1) of Rule 6A Defendant has been vested with the right to set up by way of counter claim against the claim of the Plaintiff, any right or claim in respect of a cause of action according to the Defendant against the Plaintiff either before or after the filing of the said but before the Defendant has delivered his defence, or before the time limited for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not. Sub-rule (2) provides that such counter-claim shall have the same effect as a cross-suit Sub-rule (3) enables the Plaintiff to file a written statement in answer to the counter-claim of the Defendant. Sub-rule (4) makes it clear that the counter-claims shall be treated as a plaint and governed by the rules applicable to plaints. Rule 6D of Order 8 further makes it clear that a counter-claim may be proceeded with even in a case where the suit of the Plaintiff is stayed, discontinued or dismissed. From a careful examination of the scheme of Rules 6A to 6D it is evident that a counter-claim in effect is a cross-suit of the Defendant against the Plaintiff. Besides Sub-rule (4) of Rule 6A clearly provides that a counter-claim shall be treated as a plaint. A counter-claim, therefore, has to contain such particulars as are necessary for constituting a plaint.

The question of period of limitation in case of counter-claim has therefore, to be examined in the light of the aforesaid legal position of counter-claim. Though no specific period of limitation has been prescribed in Rules 6A to 6D for making a counter-claim, such claims will be governed by the period of limitation that would be applicable to a suit to enforce the same. It is also borne out from the provisions of Section 3(2)(b) of the Limitation Act, 1963 which specifically provides that for the purposes of that Act any counter-claim shall be treated as a separate suit and shall be deemed to have been instituted on the date on which the counter-claim is made in the court. Rules 6A to 6D of the CPC read with the aforesaid provisions of the Limitation Act make it clear beyond all doubt that counter claims should be filed within the period during which a separate suit could have been filed to enforce the claim.

Applying the aforesaid proposition of law to the facts of the present case it can be held that the counter claims which were barred on the date they were set up cannot be allowed to go for trial. The contention of the learned Counsel for the Plaintiff Petitioner is that all the claims are for recovery of damages or loss sustained by the Defendant on account of failure of the Plaintiff to provide the finance in time and/or to fulfill other contractual obligations. Such claims, according to the Plaintiff-Petitioner are governed by the period of limitation of three years provided in Article 55 read, with Article 113 of the Limitation Act. The submission of the learned Counsel for the opposite party Defendant is that any counter-claim made in a suit shall be governed irrespective of the nature of the claim or the cause of action giving rise of the claim, by the period of limitation by which the suit, in which such counter-claim is made, is governed.

I have carefully considered the rival submissions. I find force in the submission of the learned Counsel for the Petitioner. As stated above, the counter-claim has the effect of a cross-suit and it is treated as a plant. It shall, therefore, be governed by the limitation applicable to such suit. It cannot get a different period of limitation when set up as the counter-claim than the one available when an independent suit is filed. This view is reinforced from the provisions of Rule 6C which empowers the court, in certain cases, to exclude the counter-claims and direct it to be tried as an independent suit.

In the instant case the suit of the Plaintiff is governed by Article 62 of the Limitation Act which provides for a period of limitation of twelve years. None of the counter-claims of the Defendant is to enforce payment of money secured by mortgage or otherwise charged upon immovable property as is the case of the Plaintiff. These claims, therefore, will be governed by Article 55 read with Article 113 of the Limitation Act which provides a period of limitation of three years. Such of the counter-claims which were barred by the limitation on the date of filing the written statement or additional written statement in which such claims were set up cannot go for trial. Examined from this angle, most of the counter-claims prima-facie appears to be barred by limitation on the date on which such claims were set up. Some of them, however, might not be barred e.g. claims relating to damage caused in the year 1982 set up in the additional written statement filed on 8.1.85. Such claims may go for trial. The claims which are barred for the purposes of filing a suit cannot be allowed to be set up as counter-claim. Each of the counter-claims set up by the Defendant has, therefore, to be scrutinized and the claims which are within time are to be bifurcated from those which are barred by limitation.

In the light of the foregoing discussions, I am of the opinion that the learned court below was not justified in holding that the counter-claims in the instant case are governed by the same period of limitation as is applicable to the suit of the Plaintiff. The counter-claims will be governed by the period of limitation applicable to the counter-claims depending on the nature of each such claim, which in the instant case is a period of three years as indicated above. The impugned order of the Assistant District Judge No. 1, Gauhati dated 25.7.87 is therefore set aside. The case is remanded to the learned trail court to decide it afresh in the light of the law set out above.

In the Result, the revision petition is allowed. In view of the facts and circumstances of the case, I make no order as to costs.