Counter-claims Cannot Be Directed Against Co-defendants; Impleadment Does Not Expand Counter-claim Scope, and No Liberty to File Time-barred Suits: Supreme Court

Case Commentary on: Sanjay Tiwari v. Yugal Kishore Prasad Sao & Ors., 2025 INSC 1310 (Supreme Court of India, 12 November 2025)

Bench: K. Vinod Chandran, J.; N. V. Anjaria, J.

Procedural Posture: Civil Appeal arising out of SLP(C) No. 11050 of 2025; challenge to the High Court’s order affirming the Trial Court’s decision to entertain a counter-claim filed by subsequently impleaded defendants (Nos. 2 and 3) against defendant No. 1 in a suit for specific performance filed by the plaintiff.

Introduction

This decision addresses a recurring procedural problem: can a counter-claim in a civil suit be made by one defendant against another defendant, especially after such defendants are impleaded to cure non-joinder? The Supreme Court answers in the negative, reaffirming and applying its earlier precedents to hold that a counter-claim under Order VIII Rule 6A of the Code of Civil Procedure, 1908 (CPC) must be directed against the plaintiff and not against a co-defendant.

The background is a suit for specific performance filed by the plaintiff, Sanjay Tiwari, against defendant No. 1 concerning 0.93 acres (93 decimals) of land, allegedly agreed to be sold pursuant to an oral agreement dated 02.12.2002, with payments made on 03.12.2002. Defendant No. 1, in his written statement, asserted that two other persons (later impleaded as defendants Nos. 2 and 3) had an agreement regarding a portion (50 decimals) of the same land. After being impleaded, defendants Nos. 2 and 3 filed a counter-claim—not against the plaintiff but against defendant No. 1—seeking conveyance of the land. The Trial Court allowed the counter-claim to proceed; the High Court, invoking the need to avoid multiplicity of litigation, refused to interfere under Article 227 of the Constitution. The plaintiff appealed to the Supreme Court.

The key issues before the Supreme Court were:

• Whether a counter-claim under Order VIII Rule 6A CPC can be maintained by one defendant against another co-defendant.
• Whether the High Court was right in invoking “multiplicity of litigation” to defer the maintainability question to final adjudication.
• Whether, on the facts, the counter-claim by defendants Nos. 2 and 3 was maintainable in light of their pleadings (including readiness and willingness) and limitation.
• Whether liberty ought to be reserved to defendants Nos. 2 and 3 to pursue an independent suit.

Summary of the Judgment

• The Supreme Court allowed the appeal and set aside the orders of the Trial Court and High Court insofar as they permitted the counter-claim of defendants Nos. 2 and 3 to proceed.
• Reaffirming the settled law, the Court held that a counter-claim cannot be directed against a co-defendant; it must be directed against the plaintiff and arise out of a cause of action that is incidental or connected to the plaintiff’s claim (Order VIII Rule 6A CPC).
• While the impleadment of defendants Nos. 2 and 3 was proper to address possession and avoid non-joinder, such impleadment does not authorize them to lodge a counter-claim against defendant No. 1.
• On the pleadings, defendants Nos. 2 and 3 did not lay a concrete claim warranting specific performance: they asserted inconsistent positions (entire land versus only 50 decimals), lacked pleadings on readiness and willingness, and, in any case, their claim was ex facie time-barred (cause of action in 2002; counter-claim/impleadment in 2006).
• The Court expressly declined to reserve liberty for defendants Nos. 2 and 3 to file a separate suit because the claim was already barred by limitation when the counter-claim was filed.
• The suit will proceed before the Trial Court, with all contentions open except the counter-claim of defendants Nos. 2 and 3, which stands set aside. The Trial Court will determine questions such as possession and, if appropriate and sought, grant recovery of possession consequent upon a decree of specific performance.

Detailed Analysis

Precedents Cited and Their Influence

1) Rohit Singh & Ors. v. State of Bihar, (2006) 12 SCC 734

• Holding reaffirmed: A counter-claim cannot be directed against a co-defendant. Under Order VIII Rule 6A CPC, the counter-claim is conceptually and procedurally a claim “against the plaintiff,” albeit it can be based on a different cause of action if it is incidental or connected to the plaintiff’s claim.
• Additional procedural guardrails from Rohit Singh:
  • Counter-claims raised after framing of issues and closure of evidence are impermissible.
  • Courts cannot treat a written statement as a counter-claim without appropriate pleadings and opportunities for the opposite party to contest.
  • Reliefs like declaration or specific performance require explicit prayers complying with Order VII CPC standards; vague assertions cannot be bootstrapped into a counter-claim.
• Application to present case: The Supreme Court relied on the core principle that a counter-claim must be directed only against the plaintiff. The Trial Court’s allowance of a counter-claim by defendants Nos. 2 and 3 against defendant No. 1 was thus fundamentally flawed.

2) Rajul Mano Shah @ Rajeshwari Rasiklal Sheth v. Kiranbhai Shakrabhai Patel & Anr., (2025) 10 SCR 152

• Essence of the ratio: A defendant’s counter-claim for specific performance is an independent claim against the estate of another defendant; only upon success against that defendant/estate could any incidental claim against the plaintiff (like partition) arise. In other words, a counter-claim cannot be used to litigate inter se disputes among defendants before establishing enforceable rights against the plaintiff.
• Application to present case: The Court analogized that defendants Nos. 2 and 3 could not, via a counter-claim, litigate their alleged contract with defendant No. 1 within a suit brought by the plaintiff against defendant No. 1. Their proper course, if any, was a separate suit—subject, however, to limitation. The mere fact of impleadment did not transmute their adverse claim against a co-defendant into a maintainable counter-claim.

Legal Reasoning

1. Maintainability is a threshold question, not a matter to be deferred to “avoid multiplicity.”

   The High Court declined interference under Article 227 by invoking the policy against multiplicity of litigation. The Supreme Court clarified that when a counter-claim is legally incompetent ab initio—because it is directed against a co-defendant—it should not be permitted to remain pending until final adjudication. Avoiding multiplicity cannot justify countenancing a legally impermissible pleading.

2. Order VIII Rule 6A CPC confines counter-claims to claims “against the plaintiff.”

   The text and structure of Rule 6A treat a counter-claim as a device whereby a defendant may litigate his claim against the plaintiff in the same suit. Even though the cause of action may be different from the plaintiff’s, it must be incidental or connected and must lie against the plaintiff. Disputes inter se among co-defendants are not cognizable as counter-claims in that suit.

3. Impleadment to cure non-joinder does not open the door to cross-claims between defendants.

   Defendants Nos. 2 and 3 were properly impleaded—if they were in possession, their presence would be necessary to pass an effective decree in specific performance, including recovery of possession. But impleadment under Order I Rule 10 CPC does not expand the scope of counter-claims. Being a necessary party for the limited purpose of effectual adjudication vis-à-vis the plaintiff does not authorize them to litigate an independent cause of action against a co-defendant by way of counter-claim.

4. Pleading deficiencies and lack of readiness and willingness for specific performance.

   Even on their own showing, defendants Nos. 2 and 3 took inconsistent positions: at places asserting a right to the entire 0.93 acres for Rs. 5,50,000 with payment of Rs. 2,95,000; elsewhere conceding that 43 decimals were sold to the plaintiff’s father; and at the end asking for 50 decimals absent a concrete agreement for that part alone. Crucially, they did not plead continuous readiness and willingness to perform their part—a statutory sine qua non for specific performance under the Specific Relief Act. These defects further undercut the counter-claim’s viability.

5. Limitation bars the claim; no liberty to pursue a separate suit.

   Defendants Nos. 2 and 3’s own case put the cause of action in December 2002. Their impleadment and counter-claim came only in 2006. Under Article 54 of the Limitation Act, 1963, a suit for specific performance must be filed within three years from the date fixed for performance, or, if no such date is fixed, when the plaintiff has notice of refusal. On the admitted timeline, the claim was already time-barred when the counter-claim was filed. The Court therefore refused to grant liberty to file a separate suit, noting that reserving liberty would be an empty formality encouraging revival of stale claims.

6. Scope of remand: substance of the original suit remains open.

   While extinguishing the counter-claim, the Court kept all other issues open—particularly possession—so the Trial Court can determine them in the specific performance suit and, if warranted and sought, grant recovery of possession.

Impact and Prospective Significance

• Counter-claim discipline reaffirmed: The judgment settles any residual doubt in trial courts: counter-claims cannot be mounted against co-defendants. If a defendant has an adverse claim against another defendant, the proper course is an independent suit (subject to limitation) or seeking appropriate procedural devices (e.g., transposition where legally tenable), not a counter-claim.
• Impleadment ≠ license for cross-claims: Adding parties to avoid non-joinder in specific performance suits is common, especially where possession is disputed. This ruling clarifies that impleadment for effectuation of the plaintiff’s decree does not transform the suit into a forum for all inter se disputes among defendants.
• Early scrutiny by High Courts: High Courts exercising Article 227 jurisdiction should not defer the maintainability question merely to avoid multiplicity. If a pleading is incompetent as a matter of law, supervisory correction is appropriate at the threshold.
• Limitation rigor and “no liberty” where claims are stale: The Court’s refusal to reserve liberty to sue reinforces limitation discipline. Routine grants of liberty to file separate suits should not be made where the claim was already time-barred at the time of the counter-claim.
• Specific performance pleadings: Defendants seeking specific performance via counter-claims (when directed against the plaintiff) must meticulously plead readiness and willingness and present a cohesive, unambiguous contractual narrative. Inconsistent pleas erode equitable relief.

Complex Concepts Simplified

• Counter-claim (Order VIII Rule 6A CPC): A defendant’s claim against the plaintiff raised within the same suit, enabling both disputes to be decided together. It cannot be directed against a co-defendant.
• Set-off vs Counter-claim: Set-off concerns mutual monetary claims and is typically limited; a counter-claim can seek broader reliefs (e.g., declaration, specific performance) but still only against the plaintiff.
• Necessary vs Proper Party: A necessary party is one without whom no effective decree can be passed; a proper party’s presence aids comprehensive adjudication. Impleadment of necessary parties (e.g., persons in possession) does not authorize them to counter-claim against other defendants.
• Article 227 (Supervisory Jurisdiction): Empowers High Courts to keep subordinate courts within bounds of their authority, including correcting jurisdictional and legal errors in interlocutory orders.
• Specific Performance: An equitable decree compelling performance of a contract for sale/transfer of property. The claimant must demonstrate continuous readiness and willingness to perform contractual obligations.
• Limitation (Article 54, Limitation Act, 1963): Suit for specific performance must be filed within three years from date fixed for performance, or when refusal comes to the claimant’s knowledge if no date is fixed.
• Decimals of land measurement: In several Indian states, land area is measured in decimals; 100 decimals equal one acre. Here, 0.93 acres equals 93 decimals.

Practical Guidance for Litigators and Trial Courts

• Before entertaining a counter-claim, confirm it is directed against the plaintiff and is incidental/connected to the suit’s subject matter as required by Order VIII Rule 6A.
• Implead third parties to avoid non-joinder where possession or effective decree is at stake, but maintain strict boundaries: inter se defendant disputes must proceed in separate suits.
• When confronted with counter-claims that are ex facie time-barred, do not defer limitation scrutiny; and avoid granting “liberty to sue” where the claim is already stale.
• For specific performance, insist on clear pleadings of continuous readiness and willingness and a coherent contract narrative; equivocation about area/consideration undermines equitable relief.
• Use transposition (when legally apt) or independent proceedings rather than attempting “cross-claims” alien to the CPC framework.

Conclusion

The Supreme Court’s decision in Sanjay Tiwari v. Yugal Kishore Prasad Sao & Ors. restates and strengthens core procedural law: a counter-claim is a weapon only against the plaintiff, not against co-defendants; impleadment to address possession does not expand the permissibility of cross-claims between defendants; and courts should not encourage revival of time-barred claims by reserving liberty to sue where limitation has already run its course. Beyond resolving the dispute at hand, the judgment provides clear guidance on pleading discipline in specific performance suits, the proper handling of impleadment and counter-claims, and the prudent exercise of supervisory jurisdiction to weed out legally incompetent claims at the threshold. The ruling will streamline civil trial management and reduce procedural misadventures that complicate and delay resolution of property and contract disputes.