Case Note & Summary
In the present revision application, the High Court of Bombay at Goa considered the legality of the Trial Court's order rejecting an application filed by the newly impleaded defendants in a counterclaim under Order VII Rule 11 of the Code of Civil Procedure, 1908. The petitioners, who were the original defendant nos. 4 to 8, challenged their addition in the counterclaim on the grounds that no cause of action was disclosed against them and that the counterclaim was barred by limitation. The original suit, filed on 11 May 2011 by plaintiffs nos. 1 and 2, sought permanent injunction against the original defendant nos. 1 to 3, who subsequently filed a written statement and also a counterclaim on 6 July 2011. The Trial Court framed issues on 13 June 2012. On 29 July 2015, the original defendants moved an application under Order 1 Rule 10 CPC to add the present petitioners as parties to the counterclaim, which was allowed on 9 October 2015. The petitioners were served on 20 February 2016 and thereafter, on 11 March 2016, they filed their written statement and simultaneously moved an application under Order VII Rule 11 CPC seeking rejection of the counterclaim against them. The petitioners contended that the counterclaim did not disclose any cause of action against them and was ex-facie barred by limitation since they were impleaded after the expiry of the limitation period. They argued that under Section 21 of the Limitation Act, 1963, the counterclaim is deemed to have been instituted against them only on the date of their addition, and since the court did not pass any order under the proviso to Section 21 directing that the impleadment should relate back to the date of the original counterclaim, the counterclaim was hopelessly barred by limitation. The respondents opposed the application, asserting that the petitioners were necessary parties to decide the counterclaim. The Trial Court, vide order dated 27 June 2016, rejected the application, holding that the petitioners were necessary parties and that the counterclaim was not barred by limitation. Aggrieved by this order, the petitioners preferred this civil revision application. The High Court examined the provisions of Section 21 of the Limitation Act and the precedents cited, including the Supreme Court decision in Ramalingan Chettiar v. K. Pattabiraman & anr. (2001) 4 SCC 96, which clarified that when a new party is added, the suit or counterclaim is deemed to be instituted on the date of addition unless a specific order under the proviso to Section 21 is passed deeming it to have been instituted on an earlier date. The Court observed that the Trial Court had not passed any such order in the present case. Consequently, the counterclaim as against the newly added defendants was barred by limitation. The High Court held that the Trial Court failed to exercise its jurisdiction properly and that the application under Order VII Rule 11 CPC ought to have been allowed. Accordingly, the revision application was allowed and the impugned order dated 27 June 2016 was set aside. The application under Order VII Rule 11 CPC filed by the petitioners was allowed, and the counterclaim against them was rejected.
Headnote
A) Limitation Act - Counterclaim - Section 21 of Limitation Act, 1963 - Rejection of Counterclaim Against Newly Added Defendants - Applicability of Section 21 to Counterclaim - Held that counterclaim is barred by limitation as against defendants added after limitation expired, in the absence of an order under the proviso to Section 21 directing relation back - Trial Court's order rejecting the application under Order VII Rule 11 CPC was set aside and the revision application was allowed (Paras 9-13).
Issue of Consideration
Whether the counterclaim against the newly impleaded defendants is liable to be rejected under Order VII Rule 11 CPC on the ground that it is barred by limitation, given that they were added after expiry of limitation and no order under the proviso to Section 21 of the Limitation Act was passed
Final Decision
The revision application was allowed. The impugned order of the Trial Court dated 27.06.2016 was set aside. The application under Order 7 Rule 11 CPC filed by the applicants was allowed, and the counterclaim against the applicants (original defendant nos. 4 to 8) was rejected.
Law Points
- Counterclaim against newly added defendants
- limitation for counterclaim
- Section 21 of Limitation Act
- 1963
- Order VII Rule 11 CPC
- impleadment and limitation
- proviso to Section 21 Limitation Act
