Counterclaim Cannot Be Introduced After Trial Ends If It Was Never On Record, Supreme Court Rules

The defendant’s written statement contained a counterclaim, but when the written statement was resubmitted on 29 March 2016, the defendant sought only that the written statement be taken on record because it lacked the means to pay the requisite court fee.

The Trial Court’s order accordingly accepted only the written statement; the counterclaim was not treated as being on record.

On 5 March 2020, after the plaintiff’s evidence had closed on 24 July 2019 and the defendant’s evidence had concluded on 29 January 2020, the defendant sought permission to pay the court fee on the counterclaim.

The Trial Court permitted the payment, and the High Court affirmed that order.

The plaintiff challenged those orders before the Supreme Court.

Whether the defendant could invoke Section 149 of the Code of Civil Procedure, 1908 (CPC), to pay court fees on a counterclaim at a belated stage when the counterclaim had not been accepted or placed on record.

Whether the counterclaim could be introduced after conclusion of the trial, particularly in the absence of an amendment application satisfying the requirements of Order VI Rule 17 CPC.

Whether the Trial Court and High Court were justified in permitting payment of court fees on the counterclaim approximately four years after its purported filing.

Section 149 CPC empowers the court to permit payment of deficient court fees on a document at any stage of the suit, as recognised in A. Nawab John v. V.N. Subramaniyam, (2012) 7 SCC 738.

However, that power presupposes that the relevant document, including a counterclaim, is already before the court and forms part of the record.

Where a counterclaim is not on record, its subsequent introduction amounts to an amendment or incorporation of pleadings, which is governed by Order VI Rule 17 CPC.

After commencement of trial, such amendment is permissible only if the party establishes that, despite due diligence, it could not have raised the matter earlier.

A counterclaim not on record cannot be revived merely by permitting payment of court fees after the evidence has concluded.

The Supreme Court distinguished A. Nawab John because, in that case, the relevant pleading was treated as available for the purpose of permitting payment of court fees, whereas here the Trial Court had accepted only the written statement and not the counterclaim.

Although the counterclaim was mentioned in the written statement, the defendant had expressly sought acceptance only of the written statement; consequently, no counterclaim existed on the record to which Section 149 CPC could apply.

The defendant should have sought either permission to raise the counterclaim or acceptance of the counterclaim already recited in the written statement before the trial progressed.

By the time the application to pay court fees was filed, the entire trial had concluded, and the plaintiff had not adduced evidence to meet the counterclaim.

Introducing it at that stage would therefore prejudice the plaintiff and would require an amendment governed by Order VI Rule 17 CPC.

The defendant pleaded only lack of financial capacity, not the due-diligence circumstances required by the proviso to Rule 17.

Its belated introduction after conclusion of the trial was impermissible, particularly without satisfying Order VI Rule 17 CPC.

The Court allowed the appeal, set aside the orders of the High Court and Trial Court permitting payment of court fees, and directed that the suit be adjudicated without the counterclaim.