Andhra Pradesh High Court - Amravati
M/S Vaatsalya Health Care Solutions Pvt ... vs Dr. Malla Venkateswara Rao on 11 March, 2025
Author: Ninala Jayasurya
Bench: Ninala Jayasurya
1
NJS, J & JS, J
COMCA_21_2018
APHC010543782018
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3494]
(Special Original Jurisdiction)
TUESDAY ,THE ELEVANTH DAY OF MARCH
TWO THOUSAND AND TWENTY FIVE
PRESENT
THE HONOURABLE SRI JUSTICE NINALA JAYASURYA
THE HONOURABLE SMT JUSTICE SUMATHI JAGADAM
COMMERCIAL COURT APPEAL No: 21 of 2018
Between:
M/s.Vaatsalya Health Care Solutions Pvt.Ltd ...APPELLANT
AND
Dr.Malla Venkateswara Rao ...RESPONDENT
Counsel for the Appellant:
1. Mr.N ASHWANI KUMAR
Counsel for the Respondent:
1. Mr.N.SIVA REDDY
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The Court made the following Judgment: (Per NJS, J)
The present appeal has been preferred against the orders of the learned
Principal District Judge, Vizianagaram dated 19.04.2018 whereby the counter
claim of the appellant / defendant filed in C.O.S.No.2 of 2017 was rejected.
2. For the sake of convenience, the parties herein are referred to as the
claimant and the respondent.
3. The brief facts leading to the filing of the appeal may be stated thus:
4. The respondent herein, a Doctor, is the absolute owner of property bearing
No.D.No.15-12-16 (A), Near Three Lamps junction, Vizianagaram. He along with
his wife Dr.Padma Kumari are running a hospital with Pediatric and Gynecology
streams and have good reputation in Vizianagaram, Visakhapatnam, Srikakulam
and some parts of Orissa. The claimant, a Private Limited Company dealing with
the administration, development of hospitals etc., offered to take the premises of
the respondent on lease, inter alia for the purpose of making it as a multi
specialty hospital. The respondent and the claimant accordingly entered into
various agreements and deeds including Deed of Lease dated 01.04.2010,
Professional Service Agreement dated 01.04.2010, Lease Agreement dated
01.04.2011, Lab and Service Agreements etc., acted upon as per the terms
contained therein. However, the respondent raising certain disputes, filed
A.O.P.No.524 of 2013 and A.O.P.No.590 of 2013 before the Court of Principal
District Judge, Vizianagaram. During the pendency of the said O.Ps., the
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claimant approached the respondent to settle the issues agreeing to cancel all
the agreements and deeds by paying the amounts payable to the respondent.
Accordingly, the parties reduced the terms and conditions of the settlement into
writing and in pursuance thereof, the lease was surrendered and the agreements
and deeds were cancelled w.e.f., 01.02.2014. However, as the claimant failed to
pay the amounts to the respondent in terms of the agreements arrived at, the
respondent filed O.S.No.11 of 2016 (renumbered as C.O.S.No.2 of 2017),
claiming a sum of Rs.1,16,39,298/- under various heads and Rs.36,48, 893/-
towards interest thereon, till the date of filing of the suit. The respondent also
claimed an amount of Rs.50,00,000/- towards compensation, damages sustained
by him together with interest.
5. The claimant filed a written statement on 25.07.2016 denying the plaint
averments and the amounts claimed by the respondent, that the claimant was
lured by the respondent to invest monies in the hospital which was being run by
the respondent and after making the investments by it, in order to evade the
payments lawfully payable, the respondent indulged in litigation and instituted the
suit. The claimant while reserving it's right to make a counter claim inter alia
stated that an amount of Rs.1,57,96,795.56 ps., is payable to the claimant by the
respondent.
6. After filing of the written statement, on 27.04.2017 the claimant filed the
counter claim stating that various agreements were entered into between the
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parties, including separate professional Service Agreement with the wife of the
respondent, dt.01.03.2012, that the respondent had enjoyed the benefits and
realized huge amounts from the claimant, that the respondent was not prompt in
settlement of the amounts payable to the claimant and that differences arose
between them. In the cause of action para, it referred to Minutes of
Understanding on 24.01.2014 and stated that it was necked out from the Hospital
and that the respondent had retained the entire machinery and equipment
installed by the claimant in the hospital and is utilizing the same, making money
out of it etc., that it is entitled for the written down value on the fixed assets which
comes to Rs.65,02,209/- as also interest of Rs.28,21,785.6 ps., thereon. Apart
from the same, it claimed an amount of Rs.12,75,000/-, Rs.1,94,980/-,
Rs.6,63,420/-, 79,94,793/- towards hospital deposit, electricity deposit, primary
stock and excess variable professional fee paid respectively. The claimant, in all
claimed an amount of Rs.1,57,96,795.65 ps., after deducting an amount of
Rs.36,55,387/- stated to be payable to the respondent.
7. The counter claim filed on 24.07.2017 was returned with objections
including on limitation and the same was represented on 29.11.2017 and the
matter was taken up for hearing by the learned Principal District Judge,
Vizianagaram.
8. Considering the arguments advanced on behalf of both sides, the learned
Judge formulated a point for determination as to whether the counter claim is
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within the limitation of three years, if so, whether the claimant is entitled for filing
the same after filing of the written statement?
9. The learned Principal District Court while stating that it is not going into
merits of the counter claim since it is not the appropriate stage and opining that
the core issue to be determined is whether the counter claim, since it can be
construed as a separate suit, should be filed within the period of limitation, if so,
whether the counter claim of the defendant / claimant is within the limitation,
examined the matter with reference to the decisions relied on by the learned
counsel for the contesting parties, opined that a counter claim has to be treated
as a plaint and all the rules which are applicable to the plaint including the law of
limitation are applicable to the counter claim as laid down in Sugesan and
Company Private Limited, Madras v. Hindustan Machines Tools Private
Limited, Lam Division, Hyderabad1. While opining that the claimant did not file
any satisfactory material before the Court to substantiate its claim, the learned
District Court, took into account the dates regarding filing of the written statement
and the counter claim, so as to ascertain whether the counter claim is within the
period of limitation or beyond the same. Going by the last date of transaction
between the parties i.e., 24.01.2014 as per the claimant and opining that even if
the later date i.e., 1.2.2014 cancelling all the agreements according to the
respondent is taken into consideration, the claimant has to file the counter-claim
within the period of three years from 01.02.2014, but it filed the counter-claim on
1
2004 (3) ALT 267
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24.04.2017 and thus on the face of the counter-claim, is not filed within the
period of limitation, the learned District Judge rejected the same holding that it is
barred by limitation.
10. Assailing the said order, the learned counsel for the claimant inter alia
contended that the order of rejection is erroneous and unsustainable, in as much
as the learned District Court failed to consider the matter in the proper
perspective. In elaboration, he contended that the Limitation is a mixed question
of fact of Law and without framing an issue and adducing evidence thereon, the
learned District Court went wrong in dismissing the counter-claim. He contends
that before framing of the issues, the counter-claim was filed and therefore, the
learned District Court was not right in rejecting the same on the ground of
limitation.
11. Referring to the Minutes and Understanding dated 24.01.2014, he further
contends that as per the agreement arrived at between parties, the due amounts
for follow up treatment from 01.02.2014 to 01.02.2015 shall be reimbursed by the
claimant, that such reimbursement of money can be calculated and paid only
after 01.02.2015 and as such, the limitation period of three years shall be
reckoned from 01.02.2015. However, the learned District Court erroneously held
that Limitation starts from 01.02.2014. He submits that the learned Trial Court
failed to appreciate that the Limitation starts from the date of refusal of payment
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by the respondent and to establish the same, the claimant should have been
allowed to adduce evidence.
12. The learned counsel also places reliance on the decisions of the Hon'ble
Supreme Court in 1) Mahesh Govindji Trivedi v. Bakul Maganlal Vyas &
Others 2 , 2) Balasaria Construction (P) Ltd., v. Hanuman Seva Trust &
Others3, 3) Shakti Bhog Food Industries Limited v. Central Bank of India &
Another4 and 4) Mahendra Kumar & Another v. State of Madhya Pradesh 5
and seeks to allow the Appeal by setting aside the order under challenge.
13. On the other hand, the learned counsel for the respondent made
submissions to sustain the order under Appeal, inter alia contending that though
the learned District Court agreed with the contention that the counter-claim can
be filed even after filing of the written statement, however examined the matter
as to whether the same is within the period of limitation? He also submits that
there is no dispute that a counter-claim can be made even before framing of the
issues, but the limitation aspect has to be examined, in the same way as in the
case of a suit. Considering the matter on the point of limitation, he contends that
the learned District Court took into consideration 01.02.2014, the date on which
the respondent cancelled all the agreements, for reckoning the period of
limitation of three years, from the accrual of the cause of action for raising the
2
(2023) 11 SCC 516
3
(2006) 5 SCC 658
4
(2020) 17 SCC 260
5
(1987) 3 SCC 265
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claims between the parties. He submits that taking the said date into
consideration, the counter-claims were supposed to be filed on or before
01.02.2017, whereas the same were made on 24.04.2017, which on the face of
it, are beyond the period of limitation. He submits that the order of the learned
District Judge under the said circumstances, cannot be found fault with. Further
that the order under challenge is well considered, based on settled legal
principles of law and contains cogent reasons. He submits that there are no
merits in the appeal and the same is liable to be dismissed.
14. This Court has considered the submissions made and perused the
material on record. On an appreciation of the rival contentions, the point that falls
for adjudication by this Court is Whether the order under appeal rejecting the
counter-claim on the ground of limitation is sustainable, in the facts and
circumstances of the case?
15. Before answering the point, it may be appropriate to refer to the decisions
on which reliance is placed by the learned counsel for the claimant / appellant.
16. Balasaria Construction Private Limited referred to supra, is a case
where the appellant before the Hon'ble Supreme Court, in a suit filed against it,
instead of filing a written statement, filed an application under Order 7 Rule 11
r/w Section 151 of C.P.C., seeking rejection of the plaint. The said application
was dismissed by the Trial Court and a learned Single Judge of the High Court
confirmed the same, however on different grounds. The matter was carried in
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appeal and before the Hon'ble Supreme Court, on behalf of the appellant, it was
inter alia contended with reference to the decision in N.V.Srinivasa Murthy v.
Mariyamma 6 that a plaint could be rejected if the suit is ex facie barred by
limitation. Though the Hon'ble Supreme Court held that conflicting views in
N.V.Srinivasa Murthy and other decisions are referred to a Larger Bench,
however in view of the statement made by the counsel for the parties, disposed
of the appeal while accepting the view taken by the Trial Court that a plaint
cannot be rejected under Order 7 Rule 11 (d) of C.P.C. The relevant para reads
as follows:
"8. After hearing counsel for the parties, going through the plaint, application under
Order 7 Rule 11 (d) CPC and the judgments of the trial court and the High Court, we
are of the opinion that the present suit could not be dismissed as barred by limitation
without proper pleadings, framing of an issue of limitation and taking of evidence.
Question of limitation is a mixed question of law and fact. Ex facie in the present case
on the reading of the plaint it cannot be held that the suit is barred by time. The findings
recorded by the High Court touching upon the merits of the dispute are set aside but
the conclusion arrived at by the High Court is affirmed. We agree with the view taken
by the trial court that a plaint cannot be rejected under Order 7 Rule 11 (d) of the Code
of Civil Procedure."
17. In Mahendra Kumar's case referred to supra, the Hon'ble Supreme Court
was dealing with an appeal filed against the Judgment of Madhya Pradesh High
Court affirming the order of the District Court, dismissing the counter claim of the
appellants inter alia on the premise that the same was filed after filing of the
6
(2005) 5 SCC 548
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written statement. The Hon'ble Supreme Court allowed the appeal and the
relevant portion of the order reads as follows:
"15. The next point that remains to be considered is whether Rule 6-A (1) of Order
VIII of the Code of Civil Procedure bars the filing of a counter-claim after the filing of a
written statement. This point need not detain us long, for Rule 6-A (1) does not, on the
face of it, bar the filing of a counter-claim by the defendant after he had filed the written
statement. What is laid down under Rule 6-A(1) is that a counter-claim can be filed,
provided the cause of action had accrued to the defendant before the defendant had
delivered his defence or before the time limited for delivering his defence has expired,
whether such counter-claim is in the nature of a claim for damages or not. The High
Court, in our opinion, has misread and misunderstood the provision of Rule 6-A(1) in
holding that as the appellants had filed the counter-claim after the filing of the written
statement, the counter-claim was not maintainable. The finding of the High Court does
not get any support from Rule 6-A (1) of the Code of Civil Procedure. As the cause of
action for the counter-claim had arisen before the filing of the written statement, the
counter-claim was, therefore, quite maintainable. Under Article 113 of the Limitation
Act, 1963, the period of limitation of three years from the date the right to sue accrues,
has been provided for any suit for which no period of limitation is provided elsewhere
in the Schedule. It is not disputed that a counter-claim, which is treated as a suit under
Section 3 (2) (b) of the Limitation Act has been filed by the appellants within three
years from the date of accrual to them of the right to sue. The learned District Judge
and the High Court were wrong in dismissing the counter-claim."
18. Shakti Bhog Food Industries Limited is a case, where Three Judge
Bench of the Hon'ble Supreme Court was dealing with an appeal filed against the
judgment of the High Court of Delhi, confirming the decision of the Civil Court in
allowing the application for rejection of the plaint under Order 7 Rule 11 of C.P.C.
The appellant before the Hon'ble Supreme Court was the plaintiff in the suit. The
Hon'ble Supreme Court while opining that Order 7 Rule 11 C.P.C., gives ample
power to the court to reject the plaint, if from the averments in the plaint, it is
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evident that the suit is barred by any law including the law of limitation, examined
the matter with reference to the facts of the case before it and the various legal
precedents. While holding that it is the bounden duty of the Court to examine the
plaint as a whole and not selected averments therein and further that the factum
of the suit being barred by limitation, ordinarily, would be a mixed question of fact
and law, the Hon'ble Supreme Court allowed the appeal and set aside the orders
under appeal holding that the rejection of plaint under Order 7, Rule 11 (d) of
C.P.C., cannot be sustained.
19. In Mahesh Govindji Trivedi's case referred to supra, the Hon'ble
Supreme Court was dealing with an appeal filed against the orders passed by the
Division Bench of the High Court of Judicature at Bombay in a matter arising
under the Specific Relief Act. Initially, a learned Single Judge dealing with a suit
for Specific Performance of Agreement of Sale, had accepted the notice of
motion moved by the defendant (appellant before the Hon'ble Supreme Court) so
as to take the belatedly filed counter-claim on record. A Division Bench, however
set aside the order and remanded the matter for consideration afresh, on the
premise that the plaintiffs were not afforded an adequate opportunity to file reply
and contest the notice of motion. After remand, the learned Single Judge
entertained the counter-claim, which was filed nearly 13 years after filing of the
written statement and taken on record. The said order was interfered with by a
Division Bench. On appeal, the Hon'ble Supreme Court, examined as to whether
the Division Bench of the High Court was justified in interfering with the order
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passed by the learned Single Judge for taking counter-claim on the record. In the
said case, the defendants / appellants filed written statement in the year 2005.
However, as he had acquired rights in the suit property by virtue of testamentary
succession and by settlement with the other legal heirs of the deceased owner,
filed a counter-claim on 07.09.2018 when the suit was taken up for framing of
issues.
20. Referring to the relevant provisions i.e., Order 8 Rule 6 A of C.P.C., in the
earlier decisions i.e., Ashok Kumar Kalra v. Surendra Agnihotri7, the Hon'ble
Supreme Court at Para No.36 inter alia held as follows:
" 36. In the totality of the facts and circumstances of the present case, we are clearly of the
view that neither the requirements of Order 8 Rule 6-A CPC or Rule 95 of the Rules nor the
principles enunciated and explained in Ashok Kumar Kalra (reported in (2020) 2 SCC 394)
operate as a bar over the prayer of the appellant for taking the belatedly filed counterclaim on
record, which was indeed filed before framing of issues."
21. There is no dispute with regard to entertainment of counter-claims before
the framing of issues and the limitation is a mixed question of fact and Law. In
the present case, the learned District Court was examining the matter from the
perspective of the limitation.
22. In Ashok Kumar Karla's case, a Three Judge Bench of the Hon'ble
Supreme Court while answering the question on reference as to whether it is
mandatory for a counterclaim of the defendant to be filed along with the written
statement, opined that the basic principles that procedural law should not be
7
(2020) 2 SCC 394
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construed in such a way that it would leave the Court helpless and that a wide
discretion had been given to the Civil Court regarding procedural elements of a
suit. It also observed that a counter-claim is designed to avoid multiplicity of
proceedings, that time limit for filing a counterclaim is not explicitly provided for,
but there is a limitation as to the accrual of cause of action. The Hon'ble
Supreme Court summed up its' finding at Para No.20, which reads as follows:
"20. We sum up our findings, that Order 8 Rule 6-A CPC does not put an embargo on
filing the counterclaim after filing the written statement, rather the restriction is only with
respect to the accrual of the cause of action. Having said so, this does not give
absolute right to the defendant to file the counterclaim with substantive delay, even if
the limitation period prescribed has not elapsed. The court has to take into
consideration the outer limit for fling the counterclaim, which is pegged till the issues
are framed. The courts in such cases have the discretion to entertain filing of the
counter claim, after taking into consideration and evaluating inclusive factors provided
below which are only illustrative, though not exhaustive:
(i) Period of delay
(ii) Prescribed limitation period for the cause of action pleaded
(iii) Reason for the delay.
(iv) Defendant's assertion of his right.
(v) Similarity of cause of action between the main suit and the counter claim.
(vi) Cost of fresh litigation.
(vii) Injustice and abuse of process.
(viii) Prejudice to the opposite party.
(ix) And facts and circumstances of each case.
(x) In any case, not after framing of the issues."
In a separate Judgment, Mohan M.Shantanagoudar, J., opined as follows:
"1. .......I agree with their conclusion that a court may exercise its discretion and permit
the filing of a counterclaim after the written statement, till the stage of framing of the
issues of the trial. However, in addition to this, I find that in exceptional circumstances,
the subsequent filing of a counterclaim may be permitted till the stage of commencement
of recording of the evidence on behalf of the plaintiff.
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...........
.............
.............
6. It is clear that Rule 6-A(1) only places a limitation on the time within which the cause of action for a counterclaim must arise. Besides this limitation, there is no explicit guidance in Rule 6-A(1) as to the time within which the counterclaim itself must be filed. In this respect, Rule 6-A(4) provides that a counterclaim is governed by the rules applicable to plaints. It is well established that a plaint must be presented within the period prescribed under the Limitation Act, 1963 (hereinafter "the Limitation Act"). For counterclaims as well, the period within which they must be filed can be inferred from Section 3(2)(b)(ii) of the Limitation Act, 1963, which states thus:
"(2) For the purposes of this Act--
(b) any claim by way of a set-off or a counterclaim, shall be treated as a separate suit and shall be deemed to have been instituted--
(ii) in the case of a counterclaim, on the date on which the counterclaim is made in court;"
(emphasis supplied) This provision mandates that in order to determine the limitation period applicable to a counterclaim, it must be treated as a separate suit, which is deemed to have been instituted on the date on which it is made in the court. Thus, evidently, in consonance with the provisions of Order 8 Rule 6-A(4), the Limitation Act also treats a counterclaim like a plaint. This means that much like a plaint, the limitation for filing a counterclaim also depends on the nature of the claim and is accordingly governed by the period of limitation stipulated in the Limitation Act.
...........
7. From the foregoing discussion, it is clear that a counterclaim can be filed if two conditions are met: first, its cause of action complies with Order 8 Rule 6-A(1); and second, it is filed within the period specified under the Limitation Act. Clearly, by itself, Rule 6-A does not specifically require that a counterclaim has to be filed along with the written statement. In the absence of a particular mandate under this Rule, it is necessary to look to other provisions of CPC to determine whether a counterclaim can be filed after a written statement.
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...........
11. A conjoint and harmonious reading of Rules 6A, 9 and 10 of Order VIII as well as Order VI Rule 17, CPC thus reveals that the Court is vested with the discretion to allow the filing of a counter claim even after the filing of the written statement, as long as the same is within the limitation prescribed under the Limitation Act, 1963...."
23. Thus, while examining the outer limit for filing counter claim before framing of issues, the prescribed limitation period for the cause of action pleaded is a factor to be taken into consideration. At this juncture, it is relevant to refer to the relevant averments in the counter claim in the case on hand, which reads as follows:
"c)...... There was a minutes of understandings took place on 24.01.2014 in the presence of Mr.Ashwin, CEO, Vaatsalya Hospitals and the respondent, by which the respondent had necked out the claimant from the hospital. The respondent had retained the entire machinery, equipment, deposits and pharmacy stock.
d) The respondent had failed to stuck to the minutes of understandings took place on
24.01.2014 and failed to pay the amounts payable to the claimant. ......"
24. Thus, the cause of action with reference to the claims made in the counter claim accrued on 24.01.2014 and reckoning the said date, the same should have been filed within a period of three years from the said date, as it is settled Law that the counter claim is akin to a suit.
25. In the present case, admittedly, it was filed on 27.04.2017, though a right to file the same was reserved while filing the written statement on 25.07.2016. Further, even as per the pleaded case of the respondent / plaintiff, all the deeds 16 NJS, J & JS, J COMCA_21_2018 and agreements were cancelled w.e.f., 01.02.2014. Therefore, the counter claim on the basis of the alleged Minutes of Meeting and Understanding dated 24.01.2014 also stands cancelled and the cause of action, as noted by the learned District Court atleast would arise from 01.02.2014 and even if the same is taken into account, the period of limitation of three years expired even before the filing of the counter claim. It may also be pertinent to state here that there is no mention about the said Minutes and Understanding dated 24.01.2014 which is the basis for the counter claim in the written statement. A copy of the said Minutes and Understanding dated 24.01.2014 filed along with the appeal contains some blanks and indicates that the parties agreed to execute a document on a stamp paper. Be that as it may. Nothing was stated in the counter claim as to the demand if any made on failure of the respondent to adhere / comply with the terms mentioned therein, muchless reference to issuance of a notice in the cause of action para. Even as per grounds of appeal, it is the claimant who has to reimburse the respondent and in such an event, the contention that limitation starts from 01.02.2015 is misconceived and the same would not save the period of limitation for making counter claim.
26. Though the issue of limitation is a mixed question of Law and fact, if the claim is barred by limitation on the face of it, the same could be rejected at the threshold. In the present case, a close reading of the counter-claim ex facie discloses that the claims as made are beyond the period of limitation. The counter claims should have been made with the prescribed period of limitation of 3 years 17 NJS, J & JS, J COMCA_21_2018 from the date of accrual cause of action i.e., from 24.01.2014 or 01.02.2014 and as such the same are barred by Limitation. Accordingly, the contentions raised on behalf of the claimant are rejected and the point is answered against the claimant.
27. On a consideration of the matter, this Court is of the opinion that the order under challenge is well considered, contains cogent reasons, valid in law and see no reason to take a different view as that of the learned District Court.
28. In the light of the conclusions referred to supra, the Appeal is dismissed. No order as to costs. Consequently, the Miscellaneous Applications pending, if any, shall stand closed.
____________________ NINALA JAYASURYA,J ___________________ SUMATHI JAGADAM,J Date: 11.03.2025 BLV 18 NJS, J & JS, J COMCA_21_2018 THE HONOURABLE SRI JUSTICE NINALA JAYASURYA THE HONOURABLE SMT JUSTICE SUMATHI JAGADAM COMCA 21 of 2018 Date: 11.03.2025 BLV