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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Suraj Prakash
  • Isher Singh
Judges
  • Hon'ble Sh. Justice M. A. Shahmiri
Acts
  • Section 12(ii) of the Court-fees Act and Section 149 of the CPC,
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Suraj Prakash
  • Isher Singh
Judges
  • Hon'ble Sh. Justice M. A. Shahmiri
Acts
  • Section 12(ii) of the Court-fees Act and Section 149 of the CPC,
See more information ...
Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

A suit for recovery of possession of 3 kanals and 6 marlas of land in village Udarana, Tehsil Bhaderwah, was instituted in the Court of Subordinate Judge, Bhaderwah on 7th Chet 2007. In the plaint the plaintiffs admitted that possession had been delivered to the defendant by their father, Akbar Joo, and that an agreement to sell had been executed by him. After Akbar Joo's death (25th Chet 2005) the present plaintiffs executed a fresh agreement to sell in favour of the defendant.

The plaintiffs alleged that the transaction was in reality a mortgage and sought restoration of possession free from encumbrances. They further asserted that on 26th Chet 2005 the defendant had executed a document promising to return possession on receipt of Rs. 140.

The defendant admitted receipt of possession and the agreements to sell (including an agreement dated 25th Chet 1999 executed by the father and a fresh agreement dated 25th Chet 2005 executed by the plaintiffs), denied that the transaction was a mortgage, and pleaded entitlement to specific performance, seeking dismissal of the plaintiffs' suit and a decree for specific performance.

The trial Court found the plaintiffs' mortgage story and their asserted 26th Chet 2005 document unproved, dismissed the plaintiffs' suit with costs, and passed a decree for specific performance in favour of the defendant on 29th Katik 2010, making execution conditional on payment of court-fee and the remaining sum of Rs. 60; the defendant paid the court-fee on 10th Maghar 2010.

On appeal the Additional District Judge agreed that the agreement dated 25th Chet 2005 was an agreement to sell and not a mortgage, but held that the trial Court lacked competence to pass a decree for specific performance without a separate suit by the defendant. The appellate Court set aside the trial Court's decree and granted possession to the plaintiffs on condition that they deposit Rs. 140 before applying for execution.

Legal Issues Presented

  1. Whether the transaction between the parties was a mortgage or an agreement to sell.
  2. Whether the defendant, having pleaded entitlement to specific performance in his written statement (a counter-claim), could obtain a decree for specific performance without instituting a separate suit.
  3. Whether a defendant's counter-claim (for specific performance) set up in a written statement can be treated as a plaint in a cross-suit and disposed of together with the plaintiff's action.
  4. Whether an unstamped or insufficiently stamped counter-claim/written statement may be validated by subsequent payment of the requisite court-fee in exercise of the Court's discretion under Section 149 of the Code of Civil Procedure (CPC).
  5. Whether the lower appellate Court correctly relied on the defendant's alleged statement to grant possession to the plaintiffs.

Arguments of the Parties

Defendant (Appellant)

  • Admitted possession and the series of agreements to sell, including an agreement dated 25th Chet 1999 executed by the plaintiffs' father and a later agreement dated 25th Chet 2005 executed by the plaintiffs.
  • Denied that the transaction was a mortgage.
  • Plead entitlement to specific performance and sought a decree for specific performance (plea contained in para (6) of the written statement).
  • Relied on the trial Court's discretion and Section 149 CPC (and supporting authorities) to justify payment of court-fee after filing, and to validate the counter-claim despite earlier stamping deficiencies.

Plaintiffs (Respondents)

  • Alleged that the transaction was actually a mortgage and not a sale.
  • Asserted that the defendant had executed a document on 26th Chet 2005 promising to return possession on receipt of Rs. 140 (a fact which the trial Court found unproved).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Saya Bya v. Mauug Kyaw Shun, AIR 1924 Rang 346 Authority that in a suit for recovery of possession a defendant can set up a counter-claim for specific performance and that the counter-claim can be treated as the plaint in a cross-suit; both suits can be disposed of together. Cited to support the view that the defendant's counter-claim for specific performance may be treated as a plaint in a cross action and disposed of together with the plaintiffs' suit.
Lessco & Sons v. Krishna Bahadur Nepali, AIR 1932 Som 617 Distinguishes a set-off from a counter-claim: a set-off is a ground of defence, while a counter-claim is an independent corrective action enabling the defendant to enforce a claim as effectively as in an independent suit. Used to explain the conceptual difference between set-off and counter-claim and to support allowing counter-claims to avoid multiplicity of proceedings.
Jitendra Nath v. Jnanada Kanta, AIR 1936 Cal 277 Illustrates that a written statement claiming a set-off/counter-claim, accepted through mistake or inadvertence though unstamped, may be validated by subsequent payment of the necessary court-fees (with High Court directions under appropriate statutory provisions). Relied upon to justify allowing payment of court-fees after the event and to treat the unstamped/deficiently stamped written statement as having effect once the requisite fee is paid.
Sripati Chandra v. Kailash Chandra, AIR 1939 Bom 386 Holds that omission to pay requisite court-fees does not necessarily defeat a claim to set-off because courts can call for payment at any stage under Section 149 CPC. Quoted to support the proposition that a court may permit payment of court-fees at a later stage and that such permission preserves the defendant's claim.

Court's Reasoning and Analysis

The Court analyzed errors made by both the trial Court and the lower appellate Court. It accepted the factual finding common to both lower courts that the relevant document (agreement dated 25th Chet 2005) was an agreement to sell and not a mortgage.

The Court then examined the procedural posture: the defendant had set up a claim for specific performance in para (6) of his written statement (a counter-claim). The Court noted that although the Code of Civil Procedure contains no express provision for a "counter-claim," legal authority (including Chitaley's commentary and cited cases) permits a court to treat a properly pleaded counter-claim as the plaint in a cross-suit and try the two matters together, provided the court is competent to try the cross-suit.

The Court observed that the principal procedural defect in the present case was the counter-claim's defective stamping. The initial failure to have the counter-claim properly stamped was the defendant's mistake, and if the trial Court had elected to treat the counter-claim as the plaint of a cross-suit it should have ensured correct stamping and given the plaintiffs an opportunity to meet the counter-claim.

The Court criticized the lower appellate Court's reliance on a supposed statement by the defendant (Ghulam) — finding that the appellate Court had misread or misstated the defendant's testimony. The trial Court's allowance for payment of court-fee after decree, and the defendant's subsequent payment, prompted consideration of Section 149 CPC. The Court found established authority for exercising discretion to permit payment of court-fees at a later stage, thereby validating the counter-claim where the fee is paid.

Balancing the interests of justice and procedural regularity, the Court held that both the plaintiffs' suit for possession and the defendant's cross-claim for specific performance should be disposed of together. Because the counter-claim had not been properly presented and the plaintiffs had not been given an opportunity to meet it, the appropriate remedy was to remand the matter to the trial Court for a fresh trial that consolidates the plaintiff's action and the defendant's cross action.

Holding and Implications

Core Ruling: APPEAL ALLOWED; THE LOWER COURT'S DECREE IS REVERSED; THE MATTER IS REMANDED FOR A FRESH TRIAL.

Direct consequences ordered by the Court:

  • The appeal is accepted and the decree passed by the Additional District Judge is reversed.
  • The case is sent back to the trial Court with directions to treat the defendant's prayer for specific performance (contained in the written statement) as the plaint in a cross-suit.
  • The defendant may amplify his plea by filing an additional statement if he so chooses; the plaintiffs shall have a right to file objections to the counter-claim.
  • Fresh issues arising from the consolidated pleadings shall be framed; the parties shall be given opportunity to produce fresh evidence; the consolidated matter (plaintiffs' action and defendant's cross-action) shall then be disposed of according to law.
  • Costs shall abide the event.
  • The court-fee paid on this appeal shall be refunded to the appellant.

The opinion does not purport to lay down any novel legal principle; it applies existing authority on counter-claims, set-offs, and the court's discretion under Section 149 CPC to validate late payment of court-fees and to prescribe remand and consolidation as the appropriate remedy in the circumstances of this case.

V.S.B

Order accordingly.

Show full summary ...

    Ghulam v. Ghulam Ahmad

    1. This is the defendant's second appeal and has arisen in the following circumstances:— A suit for the recovery of possession of 3 kanals and 6 marlas of land specified in the plaint situate in village Udarana, Tehsil Bhaderwah, was instituted in the Court of Subordinate Judge, Bhaderwah on 7th Chet 2007. In the plaint it was admitted that possession of the land had been delivered to the defendant by the plaintiff's father, Akbar Joo, and an agreement to sell this land had been executed by him and that after his death on 25th Chet, 2005, the present plaintiffs had executed a fresh agreement to sell in favour of the defendant.

    2. But it was alleged that the transaction that had taken place between the parties was really a mortgage and as the defendant had obtained enough benefit from the land possession should be restored to them free from any encumbrances. It was also averred that on 26th Chet 2005, i.e, one day after the plaintiffs had executed the agreement to sell in favour of the defendant, the defendant had also executed a document in their favour in which he had made a promise that he would deliver back possession on getting back Rs. 140/- to the plaintiffs.

    3. The defendant in his written statement admitted that ??? had been delivered to him by the father of the plaintiffs who had executed the agreement to sell the land specified in the plaint for a sum of Rs. 200/- in his favour on 25th Chet 1999 and that after the death of the father of the plaintiffs they had executed a fresh agreement to sell on 25th Chet 2005. The defendant denied that the agreement, to sell was really a mortgage.

    4. In para (6) of the written statement it was clearly stated that the defendant was entitled to specific performance of the agreement and he prayed that the suit of the plaintiffs should be dismissed and a decree for specific performance should be passed in his favour. In the course of the evidence it appeared that the father of the plaintiffs had also executed a fresh agreement to sell on 6th Baisakh 2002 and out of the sale price of Rs. 200/- he had received Ss. 90/- on 25th Chet 1999 and a further sum of Rs. 50/- at the time of the execution of the second agreement to sell and the remaining Rs. 60/- only had to be paid by the defendant at the time of the registration of the sale deed.

    5. In the third agreement to sell dated 25th Chet 2005 executed by the plaintiffs themselves it was admitted that Rs. 145/- had been received by the plaintiffs and only Ss. 55/- were to be paid by the defendant at the time of the registration of the deed. The trial Court found that the story of mortgage set up by the plaintiffs was ??? wrong and that they had failed to prove that the defendant had executed a document dated 26th Chet 2005 in their favour by which he had promised to deliver back possession to thorn an receipt of Rs. 140/-.

    6. The trial Court dismissed the plaintiffs' suit with costs and passed a decree for specific performance of the agreement dated 25th Chet 2005 in favour of the defendant against the plaintiffs. The trial Court further ordered that the decree would be executable only when the defendant paid the requisite court-fee and the remaining sum of Rs. 60/- to the plaintiffs. This decree was passed on 29th Katik, 2010 and the defendant paid the court-fee on 10th Maghar 2010.

    7. On appeal the learned Additional District Judge agreed with the finding of the trial Court that the document in question, namely, agreement dated 25th Chet 2005, was really an agreement to sell and not a mortgage. He, however thought that the trial Court was not competent to pass a decree in favour of the defendant without the defendant bringing a separate suit for specific performance of the contract of sale. He also expressed the view that a set off could be put in by the defendant only in a money suit.

    8. In the result he accepted the appeal and set aside the decree of the trial Court. He passed a decree for possession of the land in suit in favour of the plaintiffs against the defendant on the condition that the plaintiffs should deposit a sum of Rs. 140/- before applying for the execution of the decree.

    9. I have heard the learned counsel for the parties who have taken me through the facts of the case. It is clear that both the trial Court and the lower appellate Court have bungled in this case. A counter-claim had been set up in para (6) of the written statement.

    10. This lower appellate Court is right in so far as the word ‘counter claim’ is not known to the Code of Civil Procedure and a statutory set off is confined to money suits. But there is adequate authority for the view that a counter claim need not be an action of the same nature as the original action or even analogous thereto.

    11. A reference to Note 15, Chitaley's Code of Civil Procedure, Vol. 2, San. 5, under O. 8, R. 6, would show that though there is no provision in the Code for making a counter claim, a Court has power to Treat the counter-claim as the plaint in a cross suit and hear the two together. The only limitation is that the Court should be competent to hear the cross-suit.

    12. Saya Bya v. Mauug Kyaw Shun, AIR 1924 Rang 346 (A) is a clear authority for the proposition that in a suit for recovery of possession the defendant can set up a counter-claim for specific performance of an agreement to sell and the counter-claim can be treated as the plaint in a cross suit and both the suits him be opposed of together. A reference to Lessco & Sons v. Krishna Bahadur Nepali, AIR 1932 Som 617 (B) would show the difference between a set-off and a counterclaim.

    13. As observed therein in one sense both are cross-actions but a set-off is also a ground of defence. On tile other hand counter claim is ??? a weapon of offence and enables a defendant to enforce a claim against the plaintiff as effectively as in an independent action. The main purpose of allowing a defendant to set up a counter-claim is to avoid multiplicity of proceedings between the parties.

    14. After careful consideration of the facts of this case I consider that both justice and equity require that this suit for recovery of possession and the counter claim set up by the defendant for specific performance of agreement to sell should be disposed of together.

    15. But for this purpose the counter-claim contained in the written statement should have been properly stamped and the initial mistake was that of the defendant appellant but if the trial Court wanted to treat the counter-claim as plaint in the cross suit it should have got it properly stamped and given an opportunity to the plaintiffs to meet the counter claim of the defendant.

    16. As it is, I think the lower appellate Court is right in pointing out that the trial Court could not have passed a decree for specific performance of contract to sell in favour of the defendant against the plaintiffs.

    17. The lower appellate Court in granting a decree for possession to the plaintiffs respondents appears to have been mainly influenced by the statement of Ghulam defendant as his own witness. It appears that the learned Additional District Judge has not perused the statement with care and has fallen into a grave error. He has stated in his judgment that this witness had deposed that the agreement to sell dated 25th Chet 2005, executed by the plaintiffs was not signed by him and that he was prepared to restore possession of the land to the plaintiffs if he were paid back the purchase-money.

    18. Both these assertions are gross mis-statements and this is conceded by the learned counsel for the plaintiffs respondents. What Ghulam defendant, as his own witness, in his statement dated 13th Katik 2010, has said is that the agreement dated 25th Chet 2005 bears his signatures and that he had never said that if the plaintiffs paid back the purchase-money he would hand over possession to them.

    19. The question now to be determined is how to dispose of this appeal where both the Courts below have so gravely erred. As has already been indicated above, it is a fit case in which both the suit instituted by the plaintiffs and the counterclaim set up by the defendant should be deposed of together. The difficulty is that the counterclaim was not properly stamped. But the trial Court allowed the defendant to pay court-fee after the decree and he has paid it.

    20. The learned counsel for the defendant appellant has drawn my attention to Section 149 of the CPC under which the Court may in its discretion, at any stage, allow the person by whom any fee prescribed for any document is payable, to pay it and upon such payment the document is to have the same force and effect as if such fee had been paid in the first instance and he has further submitted that in the case of set-offs even the appellate Courts had allowed the payment of court-fee.

    21. Jitendra Nath v. Jnanada Kanta, AIR 1936 Cal 277 (C), a written statement claiming a set-off was accepted by the trial Judge through mistake or inadvertence although it was not stamped. The trial Judge subsequently, however, directed the party to pay court-fee. But it appears again through mistake the full court-fee was not realised. The High Court under Section 12(ii) of the Court-fees Act and Section 149 of the CPC, directed the defendant to make good the deficiency in court-fee. It was held that on such payment being made the question of the validity of the claim for set-off by the defendant can no longer arise. Another case to which my attention has been invited by the learned counsel for the defendant appellant is Sripati Chandra v. Kailash Chandra, AIR 1939 Bom 386 (D). It was observed in this case:—

    “It is true that the defendants should have paid the requisite court-fees, but their omission to pay the court-fees does not affect their claim to the set-off since they can be called upon to pay the necessary court-fees at any stage of the proceedings under Section 149 of the CPC”

    22. I, therefore, confirm the discretion exercised by the trial Court and direct that the written statement filed by the defendant should be treated as the plaint in the cross action instituted by him. One difficulty, however, remains. The lower appellate Court has rightly pointed out that the plaintiffs have not been able to meet the case set up in the written statement as the counter-claim. After careful consideration of the circumstances narrated above I think that this is a fit case which should be remanded to the trial Court for fresh, trial.

    23. For the foregoing reasons I accept this appeal, reverse the decree passed by the Court below and send the case back to the trial Court with the direction that it shall treat the prayer of granting the defendant a decree for specific performance of the agreement to sell the land in suit as the plaint in the cross suit filed by the defendant against the plaintiffs. The defendant may, if he so likes, amplify this plea by putting in additional statement. The plaintiffs shall then have a right to file objections to this counter-claim. Fresh issues arising from the pleadings of the parties shall be struck. The parties shall be afforded an opportunity of producing fresh evidence and then the case, which would be a consolidation of the plaintiffs' action and the defendant's cross action, shall be disposed of according to law. Costs shall abide the event. The Court-fee paid on this appeal shall be refunded to the appellant.

    V.S.B

    24. Order accordingly.

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    Comments

    Ghulam v. Ghulam Ahmad
    (Jan 5, 1956)