Order VIII Rule 6A of the Code of Civil Procedure explains 'counter claim'. Rule 6A states that the defendant, by means of a counter-claim can claim any form of a right or a claim with respect to a cause of action that accrues w.r.t the defendant against the claim of the plaintiff. Order VIII Rule 6A(1) states the following:

​"A defendant in a suit may, in addition to his right of pleading a set-off under rule 6, set up, by way of counter-claim against the claim of the plaintiff, any right or claim in respect of a cause of action accruing to the defendant against the plaintiff either before or after the filing of the suit but before the defendant has delivered his defenceor 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:

Provided that such counter-claim shall not exceed the pecuniary limits of the jurisdiction of the Court."

In Avtar Singh v. Rajwanti and Another, it was laid down that any amendment to the written statement by virtue of a counter claim in not considered to be maintainable when the cause of action has already arisen. an application for counter-claim, which is resorted to by invoking Order 8 Rule 6A shall be filed at or after filing the suit but before filing the written statement in defence.

In the case of Punjab State Electricity Board, Patiala vs. Punjab Pre-Stressed Concrete Ltd. the Supreme Court had observed that:

".... It cannot be expected of the Board to make its counter claim at whatever stage of the proceedings it likes. Again by not challenging the order of the arbitrator and seeking a direction from the court, the Board in my opinion is now precluded from contending that the arbitrator misconducted in the proceedings......."

In a recent case of Vishal Engineering Works v. The Chief Engineer (Electrical) MTNL & Anr., the Bombay High Court had held the filing of counter claims after the filing of written statement to be valid by providing the reason that an arbitration agreement is independent in nature and not bound by the Civil Procedure Code. Section 19 of the Arbitration and Conciliation act, 1996 clearly mentions that the arbitral proceedings are not compelled to be bound by the provisions of the Civil Procedure Code or the Evidence Act.

The general legal position regarding filing of counter claim after the filing of written statement was laid down as follows in the case of Southern Ancillaries Private Ltd. v. Southern Alloy Foundaries:

1. The defendant can make a counter claim even after filing the written statement but that should be before the commencement of recording of evidence.
2. Generally, an amendment once allowed will relate back to the date of filing of the plaint/written statement.
3. Court may make it clear while allowing such amendment that it will not relate back to the date of filing of the plaint/written statement.
4. Even if in the order allowing amendment it is not stated that the order would not relate back, it will be open to the aggrieved party to contend that the order (allowing amendment) would not relate back at the time of the trial of the suit.
5. If after allowing the amendment, the concerned party does not take care to amend the plaint/written statement within the period allowed or within 14 days where no period is fixed, or within the extended period, the plaintiff or defendant, as the case may be, shall not be permitted to amend after the expiration of the period and the Court has to only consider the unamended plaint or written statement.

All of the above judicial pronouncements were referred to in the very recent case of Rattan Chand vs Biru Ram And Others in the Punjab-Haryana High Court where it was ultimately laid down that such a filing of counter claims shall not be allowed as the law courts, strictly governed by the civil procedure as envisaged in the Code or other statutory acts should proceed with eyes open and not to misguide themselves by passing innocuous orders which seriously tarnish the image of the justice delivery system. Even in Union of India v. Jain Associates, the arbitrator totally failed to consider the counter-claim on the specious plea that it is belated counter-statement.

Recently in State of Goa v. Praveen Enterprises, the Apex Court had given the ratio decdendi which reflected the following:

"Where the arbitration agreement provides for referring all disputes between the parties, the arbitrator will have jurisdiction to entertain any counter claim, even though it was not raised at a stage earlier to the stage of pleadings before the Arbitrator."

As this is most recent scenario available in the purview of filing of counter claims after the written statement in cases of arbitration proceedings, it is considered to be the prevailing now with its reasoning lying undefeated.

Written By: Dr Farrukh Khan, Advocate
Dr Farrukh Khan, Advocate is a New Delhi based Lawyer and Managing Partner of a full service law firm, Diwan Advocates