CPC | 'Suit & Counterclaim Are Treated As Unified Proceedings Which Can Form Basis Of Filing Appeal': Gujarat High Court

The Bench comprising Justice Nisha Thakore at the Gujarat High Court has held that in a suit where counter claim is filed, the suit and the counterclaim are required to be treated as unified proceedings. This unification of the proceedings forms the basis of filing of appeal.

The High Court has further explained that the term 'plaint' provided u/s 2(c) of the Gujarat Court Fees Act, 2004 also includes 'counterclaim.' Even as per Order VIII Rule 6A(4) of the Code, counterclaim has to be treated as a plaint for all purposes. Therefore, once the suit and the counterclaim are treated as 'unified proceedings' and the same involves two or more distinct cause of action, the aggregate valuation of the plaint and the counterclaim shall be considered for the purpose of determination pecuniary jurisdiction, Justice Thakore explained.

In the case at hand, the aggregate of the plaint was Rs. 1,000 and the counterclaim was Rs. 1.2 crore which amounted to Rs. 1,20,01,000 as the total valuation of the subject matter.

The Respondent party herein had raised a preliminary objection with regard to the appeals that the High Court was hearing on the ground of pecuniary jurisdiction. They submitted that only in case the suit was valued at more than INR 50 lacs, the High Court could hear the Appeal. However, the original suit was valued at INR 1,000 and therefore, the appeal against the same would lie before the District Court at Vadodara. Primarily, it was argued that Order XX Rule 19(2) of CPC had expressly laid down that where any set off or counterclaim was concerned, the decree would be subject to the same provisions in respect of appeal as if now counterclaim had been preferred. Further, the Court should interpret the statute to promote the object and purpose of the enactment and therefore, the Appeal was not maintainable as under Rule 19(2). The Respondent party also submitted that merely because the Gujarat Civil Courts Act contained provisions regarding the jurisdiction of Civil Courts, pecuniary jurisdiction was not a subject of enactment. Order XX Rule 19(2) was a special provision whereas Section 15 of the Civil Courts Act was a general provision dealing with appeals. Consequently, Rule 19(2) would prevail over Section 15 as Code of Civil Procedure is a Central Enactment while the Civil Courts Act was a State legislation.

The Appellants opposed these contentions on the ground that the Preamble of CPC clearly indicated that it does not purport to be a statute to govern the pecuniary jurisdiction of the Courts. Further, Section 15 of the Civil Courts Act affixed the pecuniary limits of the Appellate Courts for appeals arising from original proceedings.

Additionally, attention was drawn to Order 8, Rule 6A(2) which envisages 'final judgement in the same suit both on original claim and on counter claim.' It was clarified by the Appellants that the suit has two components but is still one suit which has a unified proceeding. Significantly, it was argued that Order 8 Rule 6C provided that the Plaintiff has the option to file an application 'contending that the claim made in the counter claim ought not to be disposed of by way of counter-claim but in an independent suit.' This provision allows the High Court to pass an order directing the counterclaim to be heard independently. However, where Rule 6C is not invoked, the counterclaim, would not be heard independently.

Affirming these contentions, the High Court clarified that even though the Civil Courts Act is a State enactment, it has been enacted to consolidate and amend the law relating to Civil Courts in the State of Gujarat. Such powers have been conferred upon State in consultation with the High Court which power of 'Administration of Justice' under the Constitution. The term' Administration of Justice' includes necessary exercise of powers, including conferring jurisdiction on various basis to courts within the State of Gujarat. Therefore, this follows that the High Court has general power and jurisdiction, including territorial and pecuniary jurisdiction.

As regards the controversy under Rule 19(2), the High Court explained:

"Ordinarily, "suit" under the CPC is a civil proceeding instituted by the presentation of a plaint. Under Section 26(1) of the Code, every suit shall be instituted by the presentation of a plaint or in such other manner as may be prescribed. Thus, the term suit is a comprehensive term which includes whole proceedings of the trial."

It was affirmed that under Order VIII Rules 6A-6G, the term 'counterclaim' is a claim which is separate and independent from that of the plaint. However, in order to avoid multiplicity of proceedings, the Defendant has a right to raise a plea of set-off in addition to counter-claim in the same suit. Even the term 'proceedings' u/s 15 of the Civil Courts Act had a wide connotation and the term 'amount' or 'value' in the same provision has to be interpreted widely including plaint and counterclaim. The High Court admitted that the term 'plaint' was not defined under CPC, but it generally implies that whenever a cause of action arises, the Plaintiff has a right to make claims of rights and present it to the Court.

Keeping in view these provisions and interpretations, particularly Order VIII Rule 6A(4) of the Code, a counterclaim has to be treated as a plaint for all purposes.

Accordingly, the preliminary objection to maintainability of Appeals stood rejected.

Case No.: C/AO/122/2022

Case Title: SANJAY BHULABHAI PATEL v/s PANKAJ VINODKUMAR PATNI

Citation: 2022 LiveLaw (Guj) 377