Case Note & Summary
The applicant, M/s Green Associates, filed Special Civil Suit No.50/2018 before the Trial Court for recovery of ₹21,90,125/- with interest against the respondent, Mr. Avito A. Fernandes, based on an agreement for construction of a bungalow. The respondent appeared and filed a written statement along with a counterclaim, alleging that the suit was vexatious and filed with intent to harass him, and claimed compensation of ₹10,00,000/- for mental agony. The applicant filed an application under Order 7 Rule 11(a) of the Code of Civil Procedure, 1908 (CPC) seeking dismissal of the counterclaim on the ground that it did not disclose a cause of action. The Trial Court rejected the application by order dated 15.06.2021. Aggrieved, the applicant filed the present Civil Revision Application before the High Court of Bombay at Goa. The High Court heard arguments from both sides. The applicant's counsel argued that no cause of action accrued to the respondent merely on receipt of legal notice or suit summons, and that the claim for compensation could only be considered under Section 35A CPC after the suit is adjudicated as vexatious. The respondent's counsel contended that the counterclaim was filed to avoid multiplicity of proceedings and that cause of action arose from the legal notice and suit summons. The High Court analyzed the provisions of Order 7 Rule 11 CPC and Section 35A CPC, and held that the counterclaim did not disclose a cause of action because the mere filing of a suit or receipt of legal notice does not entitle a defendant to claim compensation unless the suit is adjudicated as vexatious. The court found that the Trial Court's order was perverse and liable to be set aside. Consequently, the High Court allowed the Civil Revision Application, set aside the impugned order, and dismissed the counterclaim filed by the respondent.
Headnote
A) Civil Procedure - Order 7 Rule 11 CPC - Rejection of Counterclaim - Cause of Action - The applicant/plaintiff filed a suit for recovery of money. The respondent/defendant filed a counterclaim claiming compensation of ₹10,00,000/- on the ground that the suit was vexatious and filed to harass him. The applicant filed an application under Order 7 Rule 11(a) CPC for dismissal of the counterclaim, which was rejected by the Trial Court. The High Court held that the counterclaim did not disclose a cause of action as the mere filing of a suit or receipt of legal notice does not give rise to a claim for compensation unless the suit is adjudicated as vexatious. The court allowed the revision and dismissed the counterclaim. (Paras 4-14) B) Civil Procedure - Section 35A CPC - Compensation for Vexatious Litigation - The court observed that Section 35A CPC provides for compensatory costs in respect of false or vexatious claims or defences, and such compensation can be claimed only after the court adjudicates the suit as vexatious. A separate suit or counterclaim for compensation based on an alleged vexatious suit is not maintainable without such adjudication. (Paras 6, 13)
Issue of Consideration
Whether a counterclaim for compensation on the ground of vexatious suit is maintainable without the suit being adjudicated as vexatious, and whether such counterclaim discloses a cause of action.
Final Decision
The High Court allowed the Civil Revision Application, set aside the impugned order dated 15.06.2021, and dismissed the counterclaim filed by the respondent.
Law Points
- Order 7 Rule 11 CPC
- Section 35A CPC
- Counterclaim
- Cause of Action
- Vexatious Suit
