New Delhi: The Supreme Court has held that where a suit and a counterclaim are disposed of by a single common judgment, the party aggrieved is not obliged to file two separate appeals, and a composite appeal challenging the decrees in both the suit and the counterclaim would be maintainable, so long as it separately sets out the grounds against each decree and is valued, with court fees paid, as two appeals.
A Bench of Justices J.B. Pardiwala and K. Vinod Chandran was hearing an appeal against a judgment of the High Court, which, in second appeal, had held that a single appeal filed by the defendants against a common judgment decreeing the plaintiffs' suit and dismissing their counterclaim was incompetent. The High Court had relied on a Division Bench decision in Ramesh Chand v. Om Raj and Others, which required two separate appeals to be filed in such a situation, and found the single appeal barred by the principles of waiver and estoppel.
In the suit giving rise to the appeal, the plaintiffs had claimed a half share in a property along with an injunction against interference, while the defendants raised a counterclaim asserting ownership over the entire property. The Trial Court decreed the plaintiffs' suit and dismissed the counterclaim. The defendants' single appeal succeeded before the First Appellate Court, which dismissed the suit and allowed the counterclaim, but the High Court in second appeal set this aside solely on the ground that only one appeal, instead of two, had been filed.
Senior Counsel for the appellants submitted that only a single decree had in fact been drawn up by the Trial Court, and that once the court itself had drawn up only one decree, the defendants' single appeal against it could not have been rejected as incompetent. Reliance was placed on Narhari v. Shanker and Charan Singh v. Ram Saroop.
Senior Counsel for the respondents, while not disputing that only one decree would ordinarily be drawn up, contended that two appeals were nonetheless required to be filed, placing reliance on Ramesh Chand v. Om Raj and Others and on Premier Tyres Ltd. v. Kerala State Road Transport Corporation.
Undertaking a survey of the case law, the Court noted a clear cleavage of judicial opinion on the question, with decisions such as Girija v. Rajan and Ghanshyam Singh v. Narendra Singh holding that two separate appeals were mandatory, while decisions such as Shankar Masu Dokare v. Shobha Subhash Dokare, Abdul Nazer v. Lakshmana Das and K. Kandasamy v. P. Natarajan had taken the view that a single composite appeal was maintainable. The Court also found that Rajni Rani v. Khairati Lal, heavily relied upon by the respondents and by several High Courts to insist on two appeals, had in fact decided only whether a revision or an appeal lay against the rejection of a counterclaim, and did not lay down any requirement of filing two appeals from a common judgment.
Analysing Rules 6A to 6D of Order VIII of the Code of Civil Procedure, the Court held that a counterclaim, though deemed a cross-suit and a plaint by legal fiction, is meant to be so interlinked with the suit that both are tried and decided together to avoid multiplicity of proceedings and piecemeal adjudication. It further noted that Order XLI Rule 1, as amended in 2002, now requires only a copy of the judgment, and not the decree, to accompany a memorandum of appeal, reflecting a clear legislative intent that delay or multiplicity in drawing up decrees should not defeat the appellate remedy.
The Court observed that practice varied across States, with some drawing up two decrees from a common judgment in a suit and a counterclaim, and others, as in the present case, drawing up only one. It held that this distinction was rendered largely inconsequential once the law required only a judgment, and not a decree, to accompany an appeal. At the same time, since a counterclaim is treated as a cross-suit, court fees remain payable on the valuation of both the suit and the counterclaim.
"We hold and declare that a suit and a counterclaim, if adjudicated by a single common judgment; both on the original claim and on the counterclaim, it can be challenged in a composite appeal."
The Court clarified that such a composite appeal must separately set out the grounds urged against the decree in the suit and against the decree in the counterclaim, whether one or two decrees have actually been drawn up, and must be valued, with court fees paid, as two separate appeals. It held that this construction would prevent appeals from being defeated on technical grounds of waiver or res judicata merely because two appeals were not filed, while also avoiding the procedural burden and multiplicity of separately instituting two appeals from what is, in substance, a single adjudication.
Applying this position to the case at hand, and noting that the appellants had filed only a single appeal at a time when the law on the point remained unsettled, the Court set aside the impugned orders of the High Court and the First Appellate Court and restored the defendants' first appeal. It permitted the appellants to file an additional memorandum of appeal with separate grounds, on payment of court fees for the additional appeal, to be heard together with the existing appeal by the First Appellate Court on merits, as expeditiously as possible.
The Court directed that a copy of the judgment be forwarded to all High Courts, and clarified that while an additional appeal was being permitted in this case on account of the earlier lack of clarity in the law, henceforth a challenge to a common judgment deciding a suit and a counterclaim may be brought by way of a single composite appeal, in the manner directed in the judgment.
Appearances:
For the Appellants: Sri Jayant Bhushan, Senior Advocate.
For the Respondents: Sri Sanjay R. Hegde, Senior Advocate.
Case Title: Basudev & Ors. vs. Sanjay Kumar & Ors., SLP (C) No. 4338 of 2025
