IN IN IN THE HIGH COURT OF BOMBAY AT GOA THE HIGH COURT OF BOMBAY AT GOA THE HIGH COURT OF BOMBAY AT GOA CIVIL CIVIL CIVIL APPELLATE JURISDICTION. APPELLATE JURISDICTION. APPELLATE JURISDICTION. WRIT WRIT WRIT PETITION No.283/2006. PETITION No.283/2006. PETITION No.283/2006. Mr. Teofilo Barreto ..Petitioner. V/s. V/s. V/s. Sadashiva G. Nasnodkar ..Respondents. and Ors. Mr J.E.Coelho Pereira, Sr.Advocate for the Petitioner. Mrs. A. A. Agni, Advocate for the Respondent. CORAM: CORAM: CORAM: V.C V.C V.C. DAGA,J. DAGA,J. DAGA,J. DATE DATE DATE : 5th March,2007. : 5th March,2007. : 5th March,2007. (Pronounced (Pronounced (Pronounced at Mumbai) at Mumbai) at Mumbai) JUDGMENT. JUDGMENT. JUDGMENT. -------- -------- -------- 1. This writ petition arising from the order dated 31st August, 2005 in Regular Civil Appeal No. 20 of 2005 passed by the II Ad-hoc Additional District Judge, Panji is heard finally by consent of parties at the stage of admission. FACTS:- FACTS:- FACTS:- ------ . The facts required to be stated to decide this petition are as under:- 2. Plaintiff had instituted a suit, before Civil Judge, Senior Division valued at Rs. 38,500/- for the purpose of court fee and jurisdiction, inter-alia, praying for permanent injunction, mandatory injunction and for [ 2 ] 2 ] 2 ] deletion of the entry in occupant’s column of the record of rights. 3. On being summoned, petitioner appeared and filed written statement, inter-alia, denying the claim of the plaintiff and preferred counter claim, inter-alia, claiming damages to the tune of Rs. 90,00,000/- from the plaintiff and for the said purpose valued the counter claim at Rs.90,00,000/-. 4. The trial Court after trying the suit and counter claim on merits by its judgment and order dated 31.12.2004 was pleased to dismiss the suit of the plaintiff as well as the counter-claim of the petitioner. 5. Respondent no.1- original plaintiff in the suit, filed an appeal against the said judgment and decree of the trial Court before the District Court, whilst the petitioner chose to file cross objection under Order 41 Rule 22 of the Code of Civil Procedure,1908 ("the Code" for short) 6. The Petitioner, by an application dated 14th July,2005, inter-alia, submitted that as the valuation of the counter claim before the lower Court was Rs.90,00,000/- and as the same [ 3 ] 3 ] 3 ] being the valuation in cross-objection filed before the Appellate Court, the District Court would have no pecuniary jurisdiction to entertain and or decide the matter, hence appeal alongwith cross-objection be transferred to the High Court. 7. The learned II Ad-hoc Additional District Judge, Panji, after hearing the arguments of the rival parties, was pleased to reject the above application of the petitioner by its order dated 31st August, 2005 holding that the District Court has jurisdiction to entertain and dispose of the appeal and cross-objection in view of provision of Order 20 Rule 19(2) of the Code. 8. Being aggrieved by the aforesaid impugned order dated 31st August, 2005, petitioner preferred this writ petition under Article 227 of the Constitution of India to challenge the said impugned order. RIVAL RIVAL RIVAL SUBMISSIONS:- SUBMISSIONS:- SUBMISSIONS:- ----------------- ----------------- ----------------- 9. Mr. J. K. Coilho Pereira, learned Senior Counsel for the petitioner urged that the impugned order dated 31st August, 2005 deserves to be quashed and set aside as the District Court has no jurisdiction to [ 4 ] 4 ] 4 ] entertain, hear and dispose of the appeal since the subject-matter of the appeal exceeds the pecuniary jurisdiction of the District Court. 10. In the submission of the learned Senior Counsel the value of the subject-matter of the suit and of the counter claim gets rolled up and interlocked and by implication, as a general rule, constitute unified proceedings unless the counter-claim is excluded under the provisions of Order 8 Rule 6-C of the Code. This exceptional provision in Rule 6-C only illustrate the homogeneity of the suit claim and the counter claim as a single proceeding. 11. Learned Senior Counsel for the petitioner further urged that the reliance placed on provision of the Code by the Lower Appellate Court is erroneous and misplaced. According to him, Order 20 Rule 19 sets out; how a judgment is to be rendered and a decree to be drawn where set off or counter claim is allowed. In his submission Rules 9 to 19 of Order 20 are illustrative of contents of decrees in certain specified categories of suits. Reliance is placed on the judgment of the Hon’ble Supreme Court in the case of Lakshmi Lakshmi Lakshmi Ram Bhuyan Vs. Hari Prasad Bhuyan and Ram Bhuyan Vs. Hari Prasad Bhuyan and Ram Bhuyan Vs. Hari Prasad Bhuyan and others others others (2003) I S.C.C.197. (2003) I S.C.C.197. (2003) I S.C.C.197. [ 5 ] 5 ] 5 ] 12. Mr. Pareira would submit that Order 20 Rule 19 (2) is one of such illustrative provisions dealing with appeal in Suit where counter-claims have been allowed. While putting his interpretation on the provision of Order 20 Rule 19; he submits that the provision contemplates two situations,viz; Sub Rule (1) deals with how a decree is to be passed when the set off or counter-claim is allowed, while sub Rule (2) provides that in appeal from decree in a suit, where there is a set off or counter-claim, the said decree shall be subject to the procedure contemplated in Order 41, as if no set off or counter-claim has been claimed and Sub Rule 3 lays down that the provisions of sub Rules 1 and 2 would apply irrespective of the fact, whether the set off is admissible under the provisions of Rule 6 of Order 8 or otherwise. 13. The learned Senior counsel for the petitioner also invited my attention to the provisions of Order 41 of the Code and went on to point out that there is no special provision made in respect of appeals from decrees passed in suits where there is a set-off or a counter claim. According to him, Order 41 Rule 30 contemplates how a Judgment in appeal is to be [ 6 ] 6 ] 6 ] passed and Rule 33 sets out what are the powers of the Appellate Court. As such, according to him, since there is no special provision concerning appeals from decrees in suits where counter claims are preferred; it is necessary to resort to the harmonious construction considered from this angle in his submission, reading of Order 20 Rule 19(2) would make clear that the same has been inserted, to specifically deal with cases where appeals arise from suits where there is a counter claim. He submits that Order 20 Rule 19 has been amended to insert the word "counter claim" in sub-Rule 1 and 2 on incorporation of the provisions of Rule 6A to 6G to Order 8 of the Code. 14. Mr. Pareira, turning to the case on hand, would submit that the consolidated valuation of the suit and the counter-claim would be in the sum of Rs. 90,38,500/-. He, thus, submits that the claim in appeal and counter-claim put together would constitute subject-matter of appeal, travelling beyond the pecuniary jurisdiction of the District Court which has a jurisdiction only to try appeals valued upto Rs. 1,00,000/-. Hence appeal with counter- -claim needs to be transferred to the High Court. [ 7 ] 7 ] 7 ] 15. Per contra, Mrs. Agni would submit that it is the valuation of the subject matter of the suit that determines the forum of appeal. Once the suit is valued and the jurisdiction of the court is determined at the stage of the institution of the suit, then valuation of the plaint will be the valuation for the subsequent proceedings in the suit, appeal being continuation of the suit. Thus, valuation of the suit will govern the forum of appeal. 16. In the submission of Mrs. Agni Order 20 Rule 19 (1) covers only the cases where suit claim and counter-claim are for recovery of money. Unified decree can be passed only when upon adjustment a specific sum to be due to plaintiff or defendant can be worked out. In other words, her submission is : where counter claim is filed say for recovery of possession of immovable property, or mandatory injunction or permanent injunction, etc., the same would not be covered by clause (1) of Order 20 Rule 19. On the other hand, Clause (2) of Order 20 Rule 19, covers cases where counter-claim involves claim other than money claim. According to her, a counter-claim is to be treated as a plaint in a cross Suit. Though [ 8 ] 8 ] 8 ] the suit and the counter-claim is required to be disposed of by a common judgment and decree. However, counter claim would retain it’s independent character in cases not covered by clause (1) of Order 20 Rule 19. She, thus, submits that the view taken by the Court below is logical, legal warranting no interference at the hands of this Court. THE THE THE ISSUE ISSUE ISSUE --------- 17. The substantive issue on the submissions as between the parties is as under:- Whether the District Court (Appellate Court) lacks jurisdiction to entertain, hear and decide the appeal when the valuation of the cross-objection exceeds the pecuniary jurisdiction of the District Court? LEGAL LEGAL LEGAL PROVISIONS:- PROVISIONS:- PROVISIONS:- ---------------- 18. In order to consider the above issue, it is necessary to turn to the relevant legal provisions including legislative history thereof. [ 9 ] 9 ] 9 ] 19. Under the Code of Civil Procedure, 1882 Act No.XIV of 1882 (the old Code) i.e. prior to the present Code of 1908, provision for filing written statement and set-off was under Chapter III and the provision in case of decree when set-off, was as under:- 216:- If the defendant has set-off the amount of a debt against the claim of the plaintiff, and such set off has been allowed, the decree shall state what amount is due to the plaintiff and what amount (if any) is due to the defendant, and shall be for the recovery of any sum which appears to be due to either party. The decree of the Court, with respect to any sum awarded to the defendant, shall have the same effect, and be subject, to the same rules in respect of appeal or otherwise, as if such sum had been claimed by the defendant in a separate suit against the plaintiff. 20. A special committee was appointed by the Council of Governor General of India to consider the amendment of the Civil Procedure [ 10 ] 10 ] 10 ] Code. The said special committee submitted it’s report. It was accepted and published in the Gazette of India (Part V) September 7, 1907. 21. The Code of Civil Procedure Act V of 1908, (the new Code) came to be enacted to consolidate and amend the Laws relating to the Procedure of the Civil Courts. The new Code received assent of the Governor General of India on the 21st March, 1908. As a result of new Code, amended provision Order 20 Rule 19 relating to the decree when set-off is allowed came on the statute book in place of Section 216 of the Old Code. The statement of Object and Reasons for enacting Order 20 Rule 19 in the present form in substitution of Section 216 of the Old Code read as under:- "The Committee have introduced an amendment to give effect to the view that appeals from decrees relating to set off should lie to the Courts to which appeal in respect of the original claim would lie". Order 20 Rule 19 of the new Code (prior to 1976 amendment) reads as under:- [ 11 ] 11 ] 11 ] (1)Where the defendant has been allowed a set-off against the claim of the plaintiff, the decree shall state what amount is due to the plaintiff and what amount is due to the defendant, and shall be for the recovery of any sum which appears to be due to either party. (2)Any decree passed in a suit in which a set-off is claimed shall be subject to the same provisions in respect of appeal to which it would have been subject if no set-off had been claimed. (3) The provisions of this rule shall apply whether the set-off is admissible under rule 6 of Order VIII or otherwise. 22. There was no provision in the Code (Prior to amended Act 104 of 1976) in relation to counter-claim. The provision for filing counter-claim by a defendant was introduced, for the first time, by the 1976 Amendment to the Code of Civil Procedure, 1908 and consequently, Order 8 R. 6A to Order 8 R. 6G came to be inserted by virtue of which now the counter-claims can be set up by the defendant. Order 8 Rule 6A of the C.P.C., 1908, reads as under:- 6-A. 6-A. 6-A. Counter-claim Counter-claim Counter-claim by defendant:- by defendant:- by defendant:- (1) 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 [ 12 ] 12 ] 12 ] 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 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: . Provided that such counter-claim shall not exceed the pecuniary limits of the jurisdiction of the Court. (2) such counter-claim shall have the same effect as a cross-suit so as to enable the Court to pronounce a final judgment in the same suit,both on the original claim and on the counter-claim. (3) The plaintiff shall be at liberty to file a written statement in answer to the counter- claim of the defendant within such period as may be fixed by the Court. (4) The counter-claim shall be treated as a plaint and governed by the rules applicable to plaints. 6-B. 6-B. 6-B. Counter-claim Counter-claim Counter-claim to be stated.- to be stated.- to be stated.- Where any [ 13 ] 13 ] 13 ] defendant seeks to rely upon any ground as supporting a right of counter-claim, he shall, in his written statement, state specifically that he does so by way of counter-claim. 6-C. 6-C. 6-C. Exclusion Exclusion Exclusion of counter-claim.-- of counter-claim.-- of counter-claim.-- Where a defendant sets up a counter-claim and the plaintiff contends that the claim thereby raised ought not to be disposed of by way of counter-claim but in an independent suit, the plaintiff may, at any time before issues are settled in relation to the counter-claim, apply to the Court for an order that such counter-claim may be excluded, and the Court may, on the hearing of such application make such order as it thinks fit. 6-D. 6-D. 6-D. Effect Effect Effect of discontinuance of suit. of discontinuance of suit. of discontinuance of suit. If in any case in which the defendant sets up a counter-claim, the suit of the plaintiff is stayed, discontinued or dismissed, the counter-claim may nevertheless be proceeded with. 6-E. 6-E. 6-E. Default Default Default of plaintiff to reply to of plaintiff to reply to of plaintiff to reply to counter-claim.-- counter-claim.-- counter-claim.-- If the plaintiff makes default in putting in a reply to the counter-claim made by the defendant, the Court may pronounce judgment against the plaintiff in relation to [ 14 ] 14 ] 14 ] the counter-claim made against him, or make such order in relation to the counter-claim as it thinks fit. 6-F. 6-F. 6-F. Relief Relief Relief to defendant where counter-claim to defendant where counter-claim to defendant where counter-claim succeeds.-- succeeds.-- succeeds.-- Where in any suit a set-off or counter-claim is established as a defence against the plaintiff’s claim, and any balance is found due to the plaintiff or the defendant, as the case may be, the Court may give judgment to the party entitled to such balance. 6-G. 6-G. 6-G. Rules Rules Rules relating to written statement to relating to written statement to relating to written statement to apply.-- apply.-- apply.-- The rules relating to a written statement by a defendant shall apply to a written statement filed in answer to a counter-claim. 23. Consequent upon introduction of provisions relating to the counter-claim order 20 Rule 19 also came to be amended, which now read as under:- Order Order Order 20 20 20. Rule Rule Rule 19 19 19 (1) (1) (1) and and and (2) (2) (2):- (1)Where the defendant has been allowed a set off(or counter-claim) against the claim of the plaintiff, the decree shall state what amount is due to the [ 15 ] 15 ] 15 ] plaintiff and what amount is due to the defendant, and shall be for the recovery of any sum which appears to be due to either party. (2)Any decree passed in a suit in which a set off(or counter-claim) is claimed shall be subject to the same provisions in respect of appeal to which it would have been subject if no set-off (or counter- claim) had been claimed. 24. One more provision which need to be noticed is Order 41 Rule 22 of the Code which reads as under:- Order Order Order 41 Rule 22:- 41 Rule 22:- 41 Rule 22:- Any respondent, though he may not have appealed from any part of the decree, may not only support the decree (but may also state that the finding against him in the Court below in respect of any issue ought to have been in his favour; and may also take any cross- -objection) to the decree which he could have taken by way of [ 16 ] 16 ] 16 ] appeal, provided he has filed such objection in the Appellate Court within one month from the date of service on him or his pleader of notice of the day fixed for hearing the appeal, or within such further time as the Appellate Court may see fit to allow. Explanation Explanation Explanation:- A respondent aggrieved by a finding of the Court in the judgment on which the decree appealed against is based may, under this rule, file cross-objection in respect of the decree in so far as it is based on that finding, notwithstanding that by reason of the decision of the Court on any other finding which is sufficient for the decision of the suit, the decree, is,wholly or in part, in favour of that respondent. DISSECTION DISSECTION DISSECTION OF LEGAL PROVISIONS:- OF LEGAL PROVISIONS:- OF LEGAL PROVISIONS:- ------------------------------- 25. The above extracted Legislative history of the Code of Civil Procedure demonstrates that in the old Code of 1882 it was provided [ 17 ] 17 ] 17 ] that where the set-off was claimed by the defendant and the decree was passed in his favour, the amount of that decree relating to the set-off was to determine the forum of appeal. The old Civil Procedure Code came to be replaced with new Code and Order 20 Rule 19 (2) came to be inserted with a view to provide appeal from decree relating to set-off to the court to which appeal in respect of original claim would lie. By subsequent amendment i.e. by Amending Act of 104 of 1977 Code came to be amended and counter-claim is brought on the same platform on which claim of set-off was. (A) (A) (A) Scope of Counter-claim:- Scope of Counter-claim:- Scope of Counter-claim:- (a) Under Order 8 Rule 6A (2) of the C.P.C., 1908, it is provided that a counter-claim shall have the same effect as a cross-suit so as to enable the Court to pronounce final judgment in the same suit, both on the original claim and the counter-claim and Order 8 Rule 6A (3) entitles the plaintiff to file a written statement in answer to the counter-claim while Order 8 Rule 6A (4) clearly provides that the counter-claim shall be treated as a plaint and governed by the rules applicable to plaints. [ 18 ] 18 ] 18 ] (b). Recognizing that a counter-claim is a cross-suit and not a separate suit, there is firstly, no registration of a counter-claim as a separate suit. Secondly, the Legislature has made a provision in Order 20 Rule 19 (1) C.P.C., 1908 that whenever a set-off or counter-claim is allowed, the decree shall state what amount is due to the plaintiff and what amount is due to the defendant and shall be for the recovery of any sum which appears to be due to either party. Therefore, essentially a set-off or counter-claim is allowed, then the provision of Order 20 Rule 19(1) of the C.P.C., 1908 comes into play. (c). There is no specific provision for drawing a separate decree for a counter-claim in as much as a counter-claim is not registered separately in the "Register of Suits". What the Law contemplates is treating the counter-claim as a cross-suit. (d) Consequently, when a counter-claim is allowed or partly granted or dismissed by a common judgment, a single decree is drawn up by the Court and no separate decrees are drawn up in respect of the plaint and the counter-claim. Similarly, under Order XX R. 19(1) C.P.C., 1908, no separate decree is required to be [ 19 ] 19 ] 19 ] drawn if counter-claim is allowed, but just one decree is provided therein. JUDGMENTS JUDGMENTS JUDGMENTS OF VARIOUS COURTS: OF VARIOUS COURTS: OF VARIOUS COURTS:- --------------------------- 26. With the aforesaid dissection of statutory provisions, let me now turn to the judgments of the various courts dealing with counter claims and its effect. 27. Before amendment to the C.P.C. by Amending Act No. 104 of 1978 Supreme Court had an occasion to consider the nature of the counter-claim. In the case of Laxmidas Vs. Laxmidas Vs. Laxmidas Vs. Nanabhai Nanabhai Nanabhai A.I.R. 1964 S.C.11 A.I.R. 1964 S.C.11 A.I.R. 1964 S.C.11 wherein Their Lordships said that " A right to make a counter-claim is statutory and a counter claim is not admissible in a case which is admittedly not within Order 8 Rule 6 C.P.C. 28. In the case of Uthandarma Pillai V. Uthandarma Pillai V. Uthandarma Pillai V. Arumugam Arumugam Arumugam Pillai AIR 1971 Madras 215, Pillai AIR 1971 Madras 215, Pillai AIR 1971 Madras 215, the Court considered as to what is meant by counter claim, and when the same can be entertained. Their Lordships said thus:- "A counter claim is one based on an independent cause of action which distinguishes it from a set off which generally arises as a part of the transaction giving rise to the cause of action for the suit. The [ 20 ] 20 ] 20 ] essence of counter claim is that the defendant should have a cause of action against the plaintiff and should be in the nature of a cross action against the plaintiff and not merely a defence to the plaintiff’s claim." (emphasis supplied). 29. In that case, their Lordships said that the defendant cannot prefer a counter claim for improvements in a suit for redemption filed by the plaintiff for the reasons that if redemption is not allowed, the value of improvements also cannot be granted. So, it is not an independent cause of action. According to me, the said decision is now given a legislative sanction in view of Rules 6-D and 6-E to Order 8, C.P.C. That is why those Rules say that even in the case of the plaintiff’s suit being stayed, discontinued or dismissed, the counter claim has to be continued, and, even if the plaintiff is not filing a written statement to the counter claim, the Court can pass a judgment on the counter claim. Since it is an independent cause of action, an adjudication is required and the Court