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Reportable

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.

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2. 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.

3. 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  

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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.   

4. 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  

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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.  

5. 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.

6. We have heard Mr. Arvinder Arora, learned counsel for the  

appellants  and  Mr.  S.S.  Nara,  learned  counsel  for  the  

respondents.

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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  

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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.”

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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.   

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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 –

(a) any  adjudication  from which  an appeal  lies as an appeal from an order, or

(b) 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 Others2 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:

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

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(i) There must have been an adjudication in a  suit.

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

(iii) Such determination must  be a  conclusive  determination  resulting  in  a  formal  expression of the adjudication.  

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 Others3 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  

3 (1996) 4 SCC 699

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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  

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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  Others4 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 Pradesh5 and Abdul Rahman v. D.K. Kassim  

and Sons6 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  

4 AIR 1967 SC 1344 5 AIR 1961 SC 794 6 AIR 1933 PC 58

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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  

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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  

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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.

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

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

New Delhi; October 14, 2014

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