Counterclaim

• “Counterclaim” may be defined as “a claim made by the defendant in

a suit against the plaintiff”. It is a claim independent of, and separable
from, the plaintiff’s claim which can be enforced by a cross-action. It
is a cause of action in favour of the defendant against the plaintiff.
• It may be set up only in respect of a claim for which the defendant
can file a separate suit. Thus counter claim is essentially a cross
action.
• Before the Amendment Act of 1976, there was no specific provision
for counterclaim in the Code. The Supreme Court, however, held that
right to make a counterclaim statutory.
• In the leading case of Laxmidas v. Nanabhai, the Supreme Court observed, “The question
has therefore to be considered on principle as to whether there is anything in law
statutory or otherwise, which precludes a court from treating a counterclaim as a plaint in
a cross suit. It is difficult to see any. No doubt, the CPC prescribes the contents of a plaint
and it might vey well be that a counterclaim which is to be treated as a cross-suit might
not confirm to all these requirements but this by itself is not sufficient to deny to the
court the power and the jurisdiction to read and construe the pleadings in a reasonable
manner. If, for instance, what is really a plaint in a cross-suit is made part of a written
statement either by being made an annexure to it or as part and parcel thereof, though
described as a counterclaim, there could be no legal objection to the counter treating the
same as a plaint and granting such relief to the defendant as would have been open if the
pleading had taken the form of plaint…to hold otherwise would be to erect what in
substance is a mere defect in a form of pleading into an instrument for denying what
justice manifestly demands.”
• Object
• The provisions relating to counterclaim thus seek to save time of
courts, exclude the inconvenience to the parties to litigation, decide
all disputes between the same parties avoiding unnecessary
multiplicity of judicial proceedings and prolong trials.
• Modes of setting up counterclaim
• There are three modes of pleading or setting up a counterclaim in a
civil suit:
• In the written statement filed under Order 8 Rule 1;
• By amending written statement with the leave of the court and
setting up counterclaim;
• In a subsequent pleading under Order 8 Rule 9.
Who may file counterclaim?
• Normally, it is the defendant who may file a counterclaim against the
plaintiff. But incidentally and along with the plaintiff, the defendant
may also claim relief against the co-defendants in the suit.
• A counterclaim solely against co-defendants is not maintainable.
Effect of Counterclaim
• The effect of counterclaim is that even if the suit of the plaintiff is
stayed, discontinued, dismissed or withdrawn, the counterclaim will be
decided on merits, and the defendant will have a right to get a decree
for a counterclaim as claimed in the written statement.
Distinction between Set-off and counterclaim
• Set-off is a statutory defence to a plaintiff’s action, whereas a counterclaim is
substantially a cross-action.
• Set-off must be for an ascertained sum or it must arise out of the same
transaction; a counterclaim need not arise out of the same transaction.
• In the case of a legal set-off, the amount must be recoverable at the date of
the suit, while in the case of a counterclaim the amount must be recoverable
at the date of the written statement.
• When the defendant demands in a plaintiff’s suit an amount below or up to
the suit claim, it is a set-off stricto sensu, but when it is for a larger amount,
the claim for excess amount is really a counterclaim.