Counterclaim Cannot Be Directed Against a Co-Defendant, Even If Competing Rights Over Same Property Are Alleged: Supreme Court

“Impleadment Does Not Cure a Fundamentally Incompetent Claim; Counterclaim Must Be Against the Plaintiff Alone” —  Supreme Court of India struck down a counterclaim filed by two co-defendants in a pending specific performance suit, holding it to be legally unsustainable under Order 8 Rule 6A of the Code of Civil Procedure and barred by limitation, while also refusing to allow those defendants to bring a separate suit on the same cause.

The judgment authored by Justice K. Vinod Chandran, with Justice N. V. Anjaria concurring, held that a counterclaim must necessarily be directed against the plaintiff, and cannot lie against a co-defendant, even if the counterclaimant alleges a competing contractual right over the very same property.

“The counter claim though can be based on a different cause of action... it has necessarily to be directed against the plaintiff and cannot be directed against the co-defendant,” the Court observed, applying the principle laid down in Rohit Singh v. State of Bihar and reaffirmed recently in Rajul Mano Shah v. Kiranbhai Patel.

“Limitation Is Not a Mere Technicality When the Entire Suit Itself Was Filed Years After the Alleged Agreement”

The controversy arose from a suit filed by Sanjay Tiwari against a sole defendant for specific performance of an oral agreement to sell 0.93 acres of land entered into on 2 December 2002, with the claim that full payment had been made and possession was handed over. In defence, the original defendant alleged that two others — Yugal Kishore Prasad Sao and one more individual, later impleaded as defendants — were also claiming rights over part of the same land under a separate agreement dated 1 December 2002.

These newly added parties not only filed a written statement but also raised a counterclaim seeking specific performance of their alleged agreement against the original vendor — i.e., not against the plaintiff.

Rejecting the argument that such a counterclaim should be entertained to avoid multiplicity of proceedings, the Court held that procedural rules cannot be bent to accommodate time-barred and structurally defective claims.

“We find no reason to leave liberty to the defendants 2 & 3 to file a separate suit at this stage, when the claim would be grossly delayed, which was hit by limitation even at the time of filing of the counter claim,” the Bench held unequivocally.

“Shifting Positions and Absence of Concrete Plea: No Legally Enforceable Agreement Made Out by Defendants”

The Court noted that defendants 2 and 3 failed to provide a consistent or credible version of their alleged right. Initially, they claimed to have agreed to purchase the entire land for ₹5,50,000 with partial payment of ₹2,95,000. Later, they conceded that 43 decimals were sold to the plaintiff’s father and that their claim was only to the remaining 50 decimals. In yet another assertion, they accused the plaintiff of fraudulently altering a receipt from 43 to 93 decimals.

The Supreme Court was unimpressed with such shifting stands.

“They are found to have no concrete claim against the property... Their first assertion was an agreement to purchase the entire land, then they admit part was sold to the plaintiff’s father... finally they seek at least 50 decimals with no agreement to support it,” the Court remarked.

This absence of a definitive contractual basis, coupled with admitted delay in asserting their rights, rendered the counterclaim both legally incompetent and factually unconvincing.

“High Court Erred in Permitting Trial to Decide Maintainability of a Legally Impermissible Claim”

While the High Court had refused to intervene under Article 227 of the Constitution, opining that the maintainability of the counterclaim could be addressed during the trial, the Supreme Court disapproved this reasoning.

“When the law is settled that counterclaim cannot be directed against a co-defendant, permitting such a counterclaim to proceed is impermissible,” the Court held, reiterating that procedural rules serve substantive justice and cannot be bypassed on vague grounds of judicial convenience.

“Impleadment Saves Non-joinder But Not a Counterclaim”

Importantly, the Court clarified that though the impleadment of defendants 2 and 3 was valid — particularly since they were allegedly in possession of the suit property — this did not legitimise the counterclaim. Their presence may be necessary to avoid a decree passed in their absence, but that procedural necessity does not create substantive rights where none exist.

“The impleadment of the 2nd and 3rd defendants though voluntarily made by themselves, saves the suit from the defect of non-joinder... even if it is so found. We make it clear that we have not held on merits regarding the possession,” the Court clarified, remanding the matter back to the Trial Court for a determination on the issue of possession, should it be raised by the plaintiff.

“Appeal Allowed — Counterclaim Set Aside — Trial to Proceed on All Other Issues”

Concluding the matter, the Supreme Court allowed the appeal, holding:

“The Civil Appeal is hence allowed, and the parties are left to agitate their cause before the Trial Court, leaving open all contentions except – that of the counter claim of the defendants 2 & 3, which stands set aside.”

The decision affirms the Court’s commitment to ensuring procedural discipline even while addressing substantive property disputes, and serves as a cautionary precedent against delayed or improperly directed claims in civil litigation.

Date of Decision: 12 November 2025