Karnataka HC Sets Aside ₹4.4 Lakh Refund Decree Against Pipe Seller Because Customer Filed No Counterclaim

The plaintiff, a firm dealing in PVC pipes and fittings, sued to recover Rs.2,58,156, alleging sales of Rs.16,17,156 under 16 invoices and a balance due after accounting for payments, returned goods and tempo charges.

The defendant denied that a running account existed and asserted that he had overpaid, seeking repayment of the alleged excess; he filed no formal counterclaim, paid no court fee, and no issue was framed on that claim.

The Trial Court dismissed the suit but directed the plaintiff to refund Rs.4,41,844 to the defendant.

The plaintiff appealed under Section 96 CPC.

The Court applied Order VIII Rule 6-A of the Code of Civil Procedure, holding that a defendant seeking an affirmative monetary decree must raise a specific counterclaim; the claim must be subject to the applicable court fee, and issues must be framed to permit the parties to address it at trial.

A defensive pleading cannot, without those procedural steps, be converted into an affirmative money decree in the defendant’s favour.

No precedent was cited in the judgment.

The Court upheld dismissal of the plaintiff’s suit because P.W.1 admitted the statement of account marked as Ex.D-1, and the plaintiff’s account did not reflect payments shown in the evidence; the plaintiff also did not produce delivery notes for the invoices.

The Court therefore found the claimed balance unproved.

By contrast, the refund decree could not stand: the defendant had filed no formal counterclaim, paid no court fee, and obtained no framed issue, yet the Trial Court granted affirmative monetary relief.

The Court also found that the refund award conflicted with the Trial Court’s negative finding on whether the parties maintained the alleged purchasing and running-account relationship.

The Court affirmed dismissal of the plaintiff’s suit but set aside the direction requiring the plaintiff to refund the defendant’s alleged excess payment.

The operative order states the amount set aside as Rs.4,41,384, although the judgment’s discussion and account of the Trial Court’s decree state Rs.4,41,844.

The Court also directed that any court fee paid by the defendant be refunded.