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2014 (10) S.C - CIVIL APPEAL NO. 6862 OF 2014 [Arising out of S.L.P. (C) No. 6757 of 2012) Rajni Rani & Anr. ... Appellants Versus Khairati Lal & Ors. ...Respondents.

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION


                      CIVIL APPEAL NO.  6862   OF 2014
                [Arising out of S.L.P. (C) No. 6757 of 2012)

Rajni Rani & Anr.                                  ... Appellants

                                   Versus

Khairati Lal & Ors.                               ...Respondents





                               J U D G M E N T



Dipak Misra, J.

The centrirorial issue that has stemmed in this appeal by grant  of  special
leave is whether an order of dismissal of the counter-claim being barred  by
principles of Order 2, Rule 2 of the Code of Civil  Procedure  (C.P.C.)  can
be set aside in exercise of revisional jurisdiction  under  Section  115  of
the C.P.C. or in exercise of power of superintendence under Article  227  of
the Constitution of India or is it required to be assailed by preferring  an
appeal.
The factual score need not be exposited in  detail.   Suffice  it  to  state
that one Phoolan Rani, wife of Om  Prakash,  and  another  instituted  Civil
Suit No. 107B of 2003 seeking   a declaration that they are  the  owners  in
possession of the land admeasuring 1/9th share in the suit land and  further
praying for permanent injunction against the  defendants.   After  issue  of
notice, the defendants entered contest and the defendant Nos.12 to 14  filed
a counter-claim putting forth that they had the right,  title  and  interest
as the original owner, Jeth Ram, had executed  a  Will  dated  18.5.1995  in
their favour.
After the  counter-claim  was  filed,  defendant  Nos.  1  and  2  filed  an
application for dismissal of the counter-claim on the  foundation  that  the
same did not merit consideration as it was barred by  Order  2,  Rule  2  of
C.P.C.  It was set forth in the application that a suit for declaration  was
earlier filed by the  present  appellants  along  with  others  against  the
defendants and a decree was passed in their favour on 21.9.2002  whereby  it
was held that the present  appellants  and  some  of  the  respondents  were
entitled to 1/4th share each.  The judgment and decree passed  in  the  said
suit was assailed in appeal and the appellate court  modified  the  judgment
and decree dated 21.9.2002 vide judgment dated 15.2.2003 holding  that  each
one of them was entitled to 1/9th share and the said modification  was  done
on the ground that the property was ancestral in nature and the sisters  had
their shares.  After disposal of the appeal, one  of  the  sisters  filed  a
declaratory suit to the effect that she is the owner in possession  of  land
in respect of 1/9th share in the suit land and in the said suit  a  counter-
claim was filed by defendant Nos. 12 to 14  stating  that  they  had  become
owners in possession of the  suit  property  on  the  basis  of  a  properly
registered Will dated 18.5.1995 executed by Jeth Ram. In the application  it
was set forth that the counter-claim had been filed in  collusion  with  the
plaintiff as the plea of claiming any status under the Will dated  18.5.1995
was never raised in the earlier suit.  It was urged  that  the  plea  having
not been raised in the earlier suit, it could not have been  raised  by  way
of a counter-claim in the second suit being  barred  by  the  principles  of
Order 2, Rule 2 of C.P.C.
The learned trial Judge adverted to the lis in the first  suit,  the  factum
of not raising the plea with regard to Will in the earlier suit and came  to
hold that the counter-claim could not be advanced solely on the ground  that
the existence of the Will had come to the knowledge of the  defendants  only
in the year 2003.  Being of this view, the learned trial Judge  allowed  the
application filed by the defendant Nos. 1 and 2  and  resultantly  dismissed
the counter-claim filed by the defendant Nos. 12  to  14  vide  order  dated
13.10.2010.
The legal substantiality of the aforesaid order was called  in  question  in
Civil  Revision  No.  900  of  2011  preferred  under  Article  227  of  the
Constitution of India wherein the High Court taking  note  of  the  previous
factual background came to hold that the learned trial Judge had  failed  to
appreciate that the Will dated 18.5.1995 executed by Jeth  Ram,  the  father
of defendant Nos. 12  to 14, was alive at the time of  adjudication  of  the
earlier suit and hence, the said Will could not have  taken  aid  of  during
his lifetime.  The aforesaid analysis persuaded the learned Single Judge  to
set aside the order passed by the learned trial Judge.  However, the  Single
Judge observed that it would be open to the plaintiff  to  raise  all  pleas
against the counter-claim.
We have heard Mr. Arvinder Arora, learned counsel  for  the  appellants  and
Mr. S.S. Nara, learned counsel for the respondents.
7.    At the very outset, we must make it clear that we are not inclined  to
advert to the defensibility or justifiability of the order of  rejection  of
the  counter-claim  by  the  learned  trial  Judge  or  the   annulment   or
invalidation of the said order by the High Court.  We shall only dwell  upon
the issue whether the revision petition could have been entertained or   was
it obligatory on the part of respondents herein to assail the order  by  way
of appeal.
8.    The submission of  Mr.  Arora,  learned  counsel  appearing  for   the
appellants is that the counter-claim is in the nature of a plaint  and  when
it is dismissed it has to be assailed by way of appeal before the  competent
forum by paying the requisite court fee on the basis of the claim  and  such
an order cannot be set at naught in exercise of supervisory jurisdiction  of
the High Court.  Learned counsel for  the  respondents,  per  contra,  would
contend that such an order is revisable and, in  any  case,  when  cause  of
justice has been subserved this Court should not interfere  in  exercise  of
its jurisdiction under Article 136 of the Constitution of India.
9.    To appreciate the controversy in proper perspective it  is  imperative
to appreciate the  scheme  relating  to  the  counter-claim  that  has  been
introduced by CPC (amendment) Act 104 of 1976  with  effect  from  1.2.1977.
Order 8, Rule 6A deals with counter-claim  by  the  defendant.   Rule  6A(2)
stipulates thus:-
“(2) Such counter-claim shall have the same effect as a cross-suit so as  to
enable the Court to pronounce a final judgment in the  same  suit,  both  on
the original claim and on the counter-claim.”

10.   Rule 6A(3) enables the plaintiff to file  a  written  statement.   The
said provision reads as follows:-
“(3) The plaintiff shall be at  liberty  to  file  a  written  statement  in
answer to the counter-claim of the defendant within such period  as  may  be
fixed by the Court.”

11.   Rule 6A(4) of the said Rule postulates that  the  counter-claim  shall
be treated as a plaint and governed by rules applicable to a  plaint.   Rule
6B provides how the counter-claim is to be stated and  Rule  6C  deals  with
exclusion of counter-claim.  Rules 6D deals  with  the  situation  when  the
suit is discontinued.  It is as follows:-
“R. 6D. Effect of discontinuance of suit. – If in  any  case  in  which  the
defendant sets up a counter-claim, the suit  of  the  plaintiff  is  stayed,
discontinued or dismissed, the counter-claim may nevertheless  be  proceeded
with.”

12.   On a plain reading of the aforesaid  provisions  it  is  quite  limpid
that a counter-claim preferred by the defendant in a suit is in  the  nature
of a cross-suit and by a statutory command even if the  suit  is  dismissed,
counter-claim shall remain alive for adjudication.  For  making  a  counter-
claim entertainable by the court, the  defendant  is  required  to  pay  the
requisite court fee on the valuation of the  counter-claim.   The  plaintiff
is obliged to file a written statement and in  case  there  is  default  the
court can pronounce the Judgment against the plaintiff in  relation  to  the
counter-claim put forth by the defendant as it has  an  independent  status.
The  purpose  of  the  scheme  relating  to  counter-claim   is   to   avoid
multiplicity of the proceedings.   When  a  counter-claim  is  dismissed  on
being adjudicated on merits it forecloses the rights of the  defendant.   As
per Rule 6A(2) the court is required to pronounce a final  judgment  in  the
same suit both on the original claim and also  on  the  counter-claim.   The
seminal purpose is to avoid piece-meal  adjudication.    The  plaintiff  can
file an application for exclusion of a counter-claim and can do  so  at  any
time before issues are settled in relation to  the  counter-claim.   We  are
not concerned with such a situation.
13.   In the instant case, the counter-claim has been dismissed  finally  by
expressing an opinion that it is barred by principles of Order 2, Rule 2  of
the CPC.  The question is what status is to be given to such  an  expression
of opinion. In this context we may refer with profit the definition  of  the
term decree as contained in section 2(2) of CPC:-
“(2) “decree” means the formal expression of an adjudication which,  so  far
as regards the Court expressing it, conclusively determines  the  rights  of
the parties with regard to all or any of the matters in controversy  in  the
suit and may be either preliminary or final.  It shall be deemed to  include
the rejection of a plaint and the determination of any question within  [1][
* * *] Section 144, but shall not include –
any adjudication from which an appeal lies as an appeal from an order, or
any order of dismissal for default.

Explanation- A decree is preliminary when further  proceedings  have  to  be
taken before the suit can be completely disposed of.  It is final when  such
adjudication completely disposes of the suit.  It may be partly  preliminary
and partly final;”

14.   In R. Rathinavel Chettiar and Another v. V.  Sivaraman  and  Others[2]
dealing with the basic components of a decree, it has been held thus:-
“10. Thus a “decree” has to have the following essential elements, namely:

      There must have been an adjudication in a suit.

      The adjudication must have determined the rights  of  the  parties  in
respect of, or any of the matters in controversy.

Such determination must be a conclusive determination resulting in a  formal
expression of the adjudication.
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11. Once the matter in controversy has received judicial determination,  the
suit results in a decree either in favour of the plaintiff or in  favour  of
the defendant.”

15.   From the aforesaid enunciation of law, it is manifest that when  there
is a conclusive determination of rights of parties  upon  adjudication,  the
said decision in certain circumstances can have the status of a decree.   In
the instant case, as has been narrated earlier, the counter-claim  has  been
adjudicated and decided on merits holding that it is barred by principle  of
Order 2, Rule 2 of C.P.C.  The claim of the defendants has  been  negatived.
In Jag Mohan Chawla and Another v. Dera Radha Swami  Satsang  and  Others[3]
dealing with the concept of counter-claim, the Court has opined thus:-
“... is treated as a cross-suit with all  the  indicia  of  pleadings  as  a
plaint including the duty to aver his cause of action and  also  payment  of
the requisite court fee thereon.  Instead of relegating the defendant to  an
independent suit, to avert  multiplicity  of  the  proceeding  and  needless
protection (sic protraction), the legislature intended to try both the  suit
and the counter-claim in the same suit as suit and cross-suit and have  them
disposed of in the same trial.  In other words, a defendant  can  claim  any
right by way of a counter-claim in respect of any cause of action  that  has
accrued to him even though it is independent of the cause of action  averred
by the plaintiff and have the  same  cause  of  action  adjudicated  without
relegating the defendant to file a separate suit.”

16.   Keeping in mind the conceptual meaning given to the counter-claim  and
the definitive character assigned to it, there can be  no  shadow  of  doubt
that when the counter-claim filed  by  the  defendants  is  adjudicated  and
dismissed, finality is attached to it as far as the controversy  in  respect
of the claim put forth by the defendants  is  concerned.   Nothing  in  that
regard survives as far  as  the  said  defendants  are  concerned.   If  the
definition of a decree is appropriately understood  it  conveys  that  there
has to be a formal expression of an adjudication as far  as  that  Court  is
concerned.  The determination should conclusively put to rest the rights  of
the parties in that sphere.  When an opinion is expressed holding  that  the
counter-claim is barred  by  principles  of  Order  2,  Rule  2  C.P.C.,  it
indubitably adjudicates the controversy as regards the substantive right  of
the defendants who had lodged the counter-claim.  It cannot be  regarded  as
an ancillary or incidental finding recorded in the suit.  In  this  context,
we may fruitfully refer to a three-Judge Bench decision in  M/s.  Ram  Chand
Spg. & Wvg.  Mills  v.  M/s.  Bijli  Cotton  Mills  (P)  Ltd.,  Hathras  and
Others[4] wherein  their Lordships  was  dealing  with  what  constituted  a
final order to be a decree.  The thrust of the controversy therein was  that
whether an order passed by the executing  court  setting  aside  an  auction
sale as a nullity is an appealable order or not.  The Court referred to  the
decisions in  Jethanand and Sons v. State  of  Uttar  Pradesh[5]  and  Abdul
Rahman v. D.K. Kassim and Sons[6] and proceeded to state as follows:-

“In deciding the question whether the order is  a  final  order  determining
the rights of parties and, therefore, falling within  the  definition  of  a
decree in Section 2(2), it would often become necessary to view it from  the
point of view of both the parties in the present case — the  judgment-debtor
and the auction-purchaser. So far as the judgment-debtor  is  concerned  the
order obviously does not finally decide his rights since  a  fresh  sale  is
ordered. The position however, of the auction-purchaser is  different.  When
an auction-purchaser is declared to be the highest bidder  and  the  auction
is declared to have been concluded certain  rights  accrue  to  him  and  he
becomes entitled to conveyance of the property  through  the  court  on  his
paying the balance unless the sale is not confirmed by the court.  Where  an
application is made to set aside the auction  sale  as  a  nullity,  if  the
court sets it aside either by an order on such an application  or  suo  motu
the only question arising in such a case as between him  and  the  judgment-
debtor is whether the auction was a nullity by reason of  any  violation  of
Order 21, Rule 84 or other similar mandatory provisions. If the  court  sets
aside the auction sale there  is  an  end  of  the  matter  and  no  further
question remains to be decided so far as  he  and  the  judgment-debtor  are
concerned. Even though a resale in such a case  is  ordered  such  an  order
cannot be said to be an interlocutory order as the entire matter is  finally
disposed of. It is thus manifest that the order setting  aside  the  auction
sale amounts to a final decision relating to the rights of  the  parties  in
dispute in that particular civil proceeding, such a proceeding being one  in
which the rights and liabilities of the parties  arising  from  the  auction
sale are in dispute and wherein they are finally  determined  by  the  court
passing the order setting it aside. The parties in such a case are only  the
judgment-debtor and the auction-purchaser, the only issue between  them  for
determination being whether the auction sale is  liable  to  be  set  aside.
There is an end of that matter when the court  passes  the  order  and  that
order is final as it finally, determines the rights and liabilities  of  the
parties, viz., the judgment-debtor and the auction-purchaser  in  regard  to
that sale, as after that order nothing remains to be determined  as  between
them.”
      After so stating, the Court ruled that the order  in  question  was  a
final order determining the rights  of  the  parties  and,  therefore,  fell
within the definition of a decree under Section 2(2) read  with  Section  47
and was an appealable order.
17.         We have referred to the aforesaid decisions  to  highlight  that
there may be situations where an order can get the status of  a  decree.   A
Court may draw up a formal decree or may not, but if by virtue of the  order
of the Court, the rights  have  finally  been  adjudicated,  irrefutably  it
would assume the status of a decree.  As is evincible, in the case at  hand,
the  counter-claim  which  is  in  the  nature  of  a  cross-suit  has  been
dismissed.  Nothing else survives for  the  defendants  who  had  filed  the
counter-claim.  Therefore, we have no hesitation in holding that  the  order
passed by the learned trial Judge  has  the  status  of  a  decree  and  the
challenge to the same has to be made  before  the  appropriate  forum  where
appeal could lay by paying the  requisite  fee.   It  could  not  have  been
unsettled by the High Court in exercise of the power under  Article  227  of
the Constitution of India.  Ergo, the order passed  by  the  High  Court  is
indefensible.
18.   Consequently, the appeal is allowed and the order passed by  the  High
Court is set aside.  However, as we are annulling the order  on  the  ground
that revision was not maintainable, liberty is granted  to  the  respondents
to prefer an appeal before the appropriate forum as required under law.   We
may hasten to add that we have not expressed any opinion on  the  merits  of
the case.  There shall be no order as to costs.


                                             .............................J.
                                                               [Dipak Misra]



                                             .............................J.
                                                                         [V.
Gopala Gowda]

New Delhi;
October 14, 2014




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[1]    The words and figures “section 47 or” omitted by CPC (Amendment) Act
104 of 1976, S 3 (w.e.f. 1-2.1077)
[2]    (1999) 4 SCC 89
[3]    (1996) 4 SCC 699
[4]    AIR 1967 SC 1344
[5]    AIR 1961 SC 794
[6]    AIR 1933 PC 58

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