Counterclaim Against Co-defendant Is Impermissible; Supreme Court Sets It Aside

A bench of Justices K. Vinod Chandran and N. V. Anjaria heard the civil appeal arising from a suit for specific performance, challenging the High Court’s refusal to interfere with a trial court order that permitted impleadment of two defendants and admitted a counterclaim by them against a co-defendant in the same suit.

The Court allowed the appeal and set aside the counterclaim of the impleaded defendants (2 & 3), holding that a counterclaim could not be directed against a co-defendant and that the claim advanced by those defendants could not survive. The Court observed that impleadment of the 2nd and 3rd defendants remedied any defect of non-joinder insofar as possession was concerned, but declined to permit the counterclaim which was “grossly delayed” and hit by limitation. The Court, in its reasoning, observed: Background The appellant, who had filed a suit for specific performance in respect of 0.93 acres allegedly agreed to be sold on 02.12.2002, contended that the sole defendant (originally impleaded) executed an oral agreement and accepted consideration by demand drafts on 03.12.2002. The written receipt mentioned possession and transfer, and the plaintiff claimed to have been put in possession and to have constructed a boundary wall. The original defendant’s written statement asserted that two other persons (later impleaded as defendants 2 and 3) had agreed to purchase parts of the same parcel and were in possession of portions of the land; those defendants sought impleadment and advanced a counterclaim against the first defendant for conveyance of the entire land, alleging part-payment.

The Trial Court allowed impleadment and admitted the counterclaim. The High Court dismissed the Article 227 challenge, reasoning that multiplicity of litigation ought to be avoided and the issues could be decided within the suit. The Supreme Court reviewed earlier authorities including Rohit Singh v. State of Bihar and Rajul Mano Shah v. Kiranbhai Shakrabhai Patel, noting established principles that a counterclaim could not be directed against a co-defendant and that counterclaims must comply with Order VIII, Rule 6A CPC and be incidental or connected with the cause of action in the suit. The Court found that the 2nd and 3rd defendants had not made out a concrete case for specific performance, that parts of the transaction were inconsistent, and that the counterclaim was belated and hit by limitation. The Court stated that “the counter claim against the co-defendant cannot survive and the same has to be rejected.” The appeal was allowed; the counterclaim of defendants 2 & 3 stood set aside, impleadment remained effective to cure any non-joinder regarding possession, and the matter was remitted to the Trial Court to determine possession and other contentions on merits. The Court declined to grant liberty to defendants 2 & 3 to file a fresh suit at that stage.

Case No.: C.A. @ SLP(C) No.11050 of 2025 Case Title: Sanjay Tiwari v. Yugal Kishore Prasad Sao & Ors. Appearances: For the Petitioner(s): Counsel not indicated in the judgment For the Respondent(s): Counsel not indicated in the judgment