Court’s Decision
The Calcutta High Court, Commercial Division, allowed the defendant’s application seeking amendment of its written statement to incorporate a counterclaim of ₹26,08,36,292/-, holding that:
“Since inception, the defendant is making counter claim against the plaintiff… The proposed amendment does not change the nature and character of the suit nor is it prejudicial to the plaintiff.”
Justice Krishna Rao ruled that the counterclaim, though filed after the written statement, was permissible under Order VIII Rule 6A CPC as there was no absolute bar to filing it post-written statement and before issues were framed. The Court directed the department to carry out the amendment within two weeks and allowed the plaintiff to file a reply within 30 days thereafter.
Facts
The suit arose from a commercial dispute wherein the plaintiff alleged breach by the defendant in a contractual relationship regarding supply of a chemical product, ‘Miteshot’. The defendant, while initially filing a written statement, alleged that the product was unsuitable for tea plantations and caused financial losses. The defendant later sought to amend its written statement to introduce a counterclaim of over ₹26 crore based on a Chartered Accountant’s report dated 03.02.2020, which estimated its losses due to the plaintiff’s misrepresentation.
The plaintiff opposed the amendment on grounds of limitation and procedural bars under the amended CPC provisions applicable to commercial disputes.
Issues
- Whether a counterclaim can be introduced by amendment after the expiry of 120 days from receipt of writ of summons?
- Whether such counterclaim is barred by limitation under the CPC as amended by the Commercial Courts Act, 2015?
Petitioner’s (Plaintiff’s) Arguments
The plaintiff contended that the proposed counterclaim was barred by limitation under Order VIII Rules 1 and 10 CPC, as amended by the Commercial Courts Act. They relied on:
- SCG Contracts (India) Pvt Ltd v. K.S. Chamankar Infrastructure Pvt Ltd, (2019) 12 SCC 210, to argue that filing counterclaims after 120 days from receipt of summons is impermissible.
- The Chartered Accountant’s report dated 03.02.2020 showed the cause of action was already known in 2020, making the amendment time-barred.
- The defendant had failed to file the counterclaim in the time mandated under Order VIII Rule 6A CPC.
Respondent’s (Defendant’s) Arguments
The defendant argued that:
- The counterclaim arises from the same transaction as the original suit and is merely elaboration of already pleaded facts.
- The defendant initiated pre-institution mediation under Section 12A of the Commercial Courts Act, but the plaintiff failed to participate, leading to a non-starter report dated 28.11.2024.
- COVID-19 caused delays and the Supreme Court’s judgment in Suo Motu Writ Petition (C) No. 3 of 2020 extended limitation till 28.02.2022.
- The counterclaim was not new, was based on documents already disclosed, and thus not prejudicial to the plaintiff.
Analysis of the Law
The Court examined:
- Order VIII Rule 6A CPC: which permits filing of counterclaims arising before the defendant has delivered his defence or before the time for doing so has expired, but does not fix a rigid timeline.
- Order VI Rule 17 CPC: which bars amendments after trial begins unless due diligence is shown.
- SCG Contracts: held inapplicable since the written statement here was filed with court’s leave within 120 days.
- The distinction between filing a counterclaim by amendment vs filing an additional written statement to counterclaim was emphasized.
Precedent Analysis
- Ashok Kumar Kalra v. Wing CDR Surendra Agnihotri, (2020) 2 SCC 394
The Supreme Court held that Order VIII Rule 6A does not bar filing of counterclaim after the written statement, so long as issues are not framed and discretion is exercised based on factors like prejudice, delay, and similarity of cause of action. - Suo Motu Writ Petition (C) No. 3 of 2020 (Order dated 10.01.2022)
Extended limitation for filings during the COVID-19 period. - Qamrul Hoda v. Md. Wakil Khan, 2011 SCC OnLine Cal 1831
Held that disputed limitation pleas can be decided after allowing amendments.
Court’s Reasoning
The Court noted:
- The written statement was filed within the outer time limit of 120 days with court’s permission.
- Facts supporting the counterclaim were already disclosed in the written statement and the defendant had only omitted to specifically pray for relief earlier.
- The trial had not commenced and no issues were framed.
- The application was filed shortly after the pre-institution mediation process failed and was therefore timely in the factual context.
The Court thus exercised its discretion to allow the amendment in order to avoid multiplicity of proceedings and to secure complete adjudication of the dispute.
Conclusion
The Calcutta High Court allowed the amendment to the written statement, permitting inclusion of the counterclaim of ₹26.08 crores. The amendment was held to be legally sustainable, not time-barred, and within the permissible procedural limits under the CPC and Commercial Courts Act.
Implications
This judgment reaffirms the judicial discretion available under Order VIII Rule 6A CPC to allow counterclaims even after the filing of the written statement, provided:
- It arises from the same transaction,
- It is filed before issues are framed, and
- It does not prejudice the opposing party.
It balances procedural rigour under the Commercial Courts Act with substantive justice, especially in the context of delay caused by the pandemic.
Cases Referred and Their Relevance
- SCG Contracts (India) Pvt Ltd v. K.S. Chamankar Infrastructure Pvt Ltd, (2019) 12 SCC 210: Distinguished; applicable only where written statement is not filed within 120 days. Here, filing was within extended time granted by court.
- Ashok Kumar Kalra v. Wing CDR Surendra Agnihotri, (2020) 2 SCC 394: Applied; clarified that counterclaim can be filed before framing of issues even after written statement.
- Suo Motu Writ Petition (C) No. 3 of 2020 (Supreme Court Order dated 10.01.2022): Applied; COVID-19 period excluded from limitation, extending permissible time for filing claims.
- Qamrul Hoda v. Md. Wakil Khan, 2011 SCC OnLine Cal 1831: Applied; held that amendment should be allowed where limitation is arguable and can be tested during trial.
- A.K. Ghosh & Co. v. Biman Bose, 2025 SCC OnLine Cal 1781: Distinguished; concerned with filing of additional written statement in response to a counterclaim, not amendment to include counterclaim.