The Bombay High Court held that a counter-claim under Order VIII Rule 6-A of the Code of Civil Procedure, 1908 need not concern the same property or arise from the same cause of action as the Plaintiff’s Suit. It must, however, be a claim against the Plaintiff and satisfy the statutory requirements. The Court also clarified that exclusion under Order VIII Rule 6-C requires a judicial exercise of discretion; neither a difference in properties nor the Plaintiff’s preference for a separate Suit is decisive.

Background
Shradhha Realtors sought a perpetual injunction concerning lands bearing Survey Nos. 87/A/1 and 88/A/1 at Palghar. It alleged that the Defendants, who held adjoining lands to the north, had attempted to encroach upon the suit properties and obstruct its possession and development.

The Defendants filed a Written Statement and counter-claim claiming ownership of adjoining lands. They alleged that the Plaintiff had obtained building permissions for land which did not exist at the site as represented and was using those permissions to encroach upon their lands. They sought a declaration of ownership and an injunction against the Plaintiff.

On the Plaintiff’s application, the Trial Court excluded the counter-claim under Rule 6-C because the properties were different and, in its view, had no nexus or physical overlap. The Defendants challenged that order.

The Question Before the High Court:
Could a counter-claim be excluded merely because it concerned different property, and how should the Court exercise its discretion under Rule 6-C?

Scope of Order VIII Rule 6-A
Rule 6-A permits a Defendant to raise any right or claim against the Plaintiff arising before or after institution of the Suit, provided the cause of action accrues before delivery of the defence or expiry of the time for delivering it. The counter-claim must remain within the Court’s pecuniary jurisdiction. It has the effect of a cross-suit and is governed by the rules applicable to plaints.

The High Court emphasised that the restriction concerning accrual of the cause of action does not require identity of subject matter. The provision permits an independent claim and is intended to avoid multiple proceedings by enabling disputes between the same parties to be determined together.

Relying on Jag Mohan Chawla v. Dera Radha Swami Satsang, (1996) 4 SCC 699, the Court reiterated that a counter-claim need not flow from, or have a nexus with, the Plaintiff’s cause of action. It is not confined to monetary claims. A difference in the identity of the properties does not, by itself, justify dismissal or exclusion.

The Plaintiff relied on Satyender v. Saroj, (2022) 17 SCC 154, where a counter-claim concerning properties outside the Suit had been rejected. The High Court explained that Satyender did not depart from Jag Mohan Chawla: it expressly recognised that a counter-claim could rest on a separate or independent cause of action.

The difficulty in Satyender was that the counter-claim was not against the Plaintiffs, who asserted no rights over the additional properties. The decision therefore did not establish a general requirement that the Suit and counter-claim concern identical property. The essential inquiry remains whether the counter-claim is directed against the Plaintiff.

Discretion Under Order VIII Rule 6-C
Rule 6-C allows the Plaintiff, before issues concerning the counter-claim are settled, to seek its exclusion for adjudication in an independent Suit. The Court must consider the grounds advanced, but the Plaintiff has no absolute right to insist on exclusion. Treating that preference as decisive would subordinate judicial discretion to the Plaintiff’s wishes.

Rules 6-A and 6-C must be read harmoniously. Exclusion should not defeat the objective of avoiding multiple proceedings and determining the parties’ disputes together. Relevant considerations include the nature of the counter-claim, the progress of the Suit, the complexity of a joint trial and the likelihood of delay. The discretion must reflect the circumstances of the case, rather than the Plaintiff’s mere insistence.

Application to the Facts and Conclusion
The Trial Court had applied the wrong test by treating different properties as sufficient ground for exclusion. Its finding of no nexus was also incorrect: the Plaintiff’s own pleadings placed the counter-claim properties along the northern boundary of the suit lands. Both sides alleged interference and encroachment concerning adjoining properties.

Joint determination was necessary for complete and effective adjudication. Separate proceedings risked prolonged litigation and conflicting orders. The High Court accordingly set aside the exclusion order and restored the counter-claim for adjudication with the Suit. It expressly clarified that its observations did not decide the merits of the dispute.¹

The judgment confirms that identity of property or cause of action is not a condition for maintaining a counter-claim. A claim against the Plaintiff may proceed independently of the Plaintiff’s cause of action, subject to Rule 6-A. Exclusion under Rule 6-C remains a judicial decision requiring consideration of all relevant circumstances.

By - Chaitanyaa Bhandarkar