Restoration of Dismissed Counter-Claim Conditioned on Cost Deposit and Consolidation of Suits Under Section 24 CPC

The Respondent filed a suit (CS DJ 239/2018) for recovery of Rs. 36,27,302/-

The Appellant filed a counter-claim (CS No. 846/18) for Rs. 10,65,826/-

Following the creation of Commercial Courts, the counter-claim was transferred to a Commercial Court while the main suit remained before an Additional District Judge

The counter-claim was dismissed in default for non-prosecution three times (May 2022, April 2024, and June 2025) due to the Appellant’s failure to appear or lead evidence

The Trial Court dismissed the third restoration application on July 2, 2025, citing the Appellant's "callous attitude" and repetitive defaults

The Appellant challenged this dismissal via the present appeal

1. Whether the Trial Court was justified in refusing to restore the counter-claim after a third dismissal in default

2. Whether the lack of consolidation between the main suit and the counter-claim (pending in different courts) necessitated the exercise of transfer powers for the interest of justice

The Court applied Section 104 and Order 43 Rule 1(c) of the CPC regarding appeals from orders refusing to set aside the dismissal of a suit

Order IX Rule 9 of the CPC, which governs the restoration of suits dismissed for non-prosecution upon showing sufficient cause

Section 24 of the CPC, which grants the High Court discretionary power to transfer and consolidate suits to ensure efficient adjudication and prevent conflicting decisions

The Court observed that while the Appellant was grossly negligent and lacked diligence—evidenced by three dismissals over eight years and the filing of redundant applications on territorial jurisdiction—the dismissal was on technical default rather than merits

The Court noted that substantial judicial time was being wasted because the main suit and counter-claim were being heard in two different forums

To prevent further delays and ensure a comprehensive resolution of the 2018 dispute, the Court determined that the matters must be clubbed

To balance the Respondent's prejudice caused by the Appellant's "recalcitrant conduct," the Court conditioned the restoration on a substantial monetary deposit

The Court transferred the main suit (CS DJ 239/2018) to the Commercial Court to be heard alongside the counter-claim

The restoration is conditional upon the Appellant depositing Rs. 5,00,000/- with the Trial Court, of which Rs. 50,000/- is to be paid to the Respondent as costs

The Court directed the parties to file fresh common affidavits and lead joint evidence for both proceedings to ensure expeditious disposal