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JSW Steel, Karnataka Minerals spar over limitation, counterclaim

The case has come up in appeal (by Karnataka State Minerals Corporation Ltd) from the High Court of Karnatka, where a single bench quashed a Civil Court decision to grant leave to amend the appellant’s written statement for incorporating the counterclaim in it.

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ILNS: A critical case of a point of law – and procedural issues in the Code of Civil Procedure – has come up before the Supreme Court bench of Justices Vineet Saran and Dinesh Maheshwari, in which Karnataka State Minerals Corporation Ltd (KSMC) and JSW Steel Ltd are involved in a claim and counter-claim of dues, while the former applied for an amendment post the limitation period. (KARNATAKA STATE MINERALS CORPORATION LTD V JSW STEEL LIMITED)

The case has come up in appeal (by Karnataka State Minerals Corporation Ltd) from the High Court of Karnatka, where a single bench quashed a Civil Court decision to grant leave to amend the appellant’s written statement for incorporating the counterclaim in it.

The top court bench heard arguments at length after allowing the appeal and issued notices on Tuesday.

During the hearing, Senior Advocate K.V. Vishwanathan, on behalf of the appellant Karnataka State Minerals Corporation, argued that this is a formal amendment and trial court had rightly allowed that. he referred to the judgment in (Ashok Kumar Kalra v Wing CDR.Surendra Agnihotri and ors ,(2020)2 SCC 394 ) which was in his favour.

Justice Maheshwari observed that if limitation is the operative factor, then amendment is not allowed. However, if nothing is to be adjudicated, then limitation will operate. Regarding the formal nature of the amendment, the judge said “Mr Counsel, every amendment is a formal amendment.”

The issue is somewhat complex. The bench asked counsel for KSMC: “You have yourself claimed compensation in your written statement. Not even a set-off will work here, even if, for a second, we assume that counterclaim is barred by limitation.”

Justice Saran said: “That we are detached with the cause of action of suit. Prayer is for compensation.” Vishwanathan contended that the trial court allowed amendment before framing of issues.

Senior Counsel Harish Salve, on behalf of JSW Steel, argued that the counsel for the appellant admitted that this is an application for amendment. It could have amended in prayer. Slave also referred to paragraph 20 of the Karla Judgment, which talks about the amendment having to be in the limitation period.

JSW Steel had filed a recovery suit of Rs 270,11,91,123 on 5.10.2012 against  Mysore Minerals Limited. The written statement was filed on 17.04.2013.

Thereafter on 29.07.2016, an application under order VI rule 17 was filed for adding a counterclaim in the Written statement by way of amendment.

A separate claim by way of a counterclaim suit was raised by Mysore Minerals Limited for the sum of Rs 1,172.219 crores with interest at the rate of 18% p.a.

JSW Steel raised an objection, mainly on ground of bar of limitation. However the trial court allowed appellant amendment.

The High Court was to consider whether a separate counter-claim can be filed after filing Written Statement, or can it be introduced by way of amendment in the written statement itself, which is already on record. The High Court referred to the case of Ashok Kumar Kalra v Wing CDR. Surendra Agnihotri and ors ,(2020)2 SCC 394, wherein the apex court in paragraph 20 gave its findings as follows:

“We sum up our findings, that Order 8, Rule 6A of the CPC does not put an embargo on filing the counter-claim 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 counter-claim with substantive delay, even if the limitation period prescribed has not elapsed. The court has to take into consideration the outer limit for filing the counter-claim, which is pegged till the issues are framed.”

The High court allowed the writ petition of JSW Steel Minerals Ltd. holding the view that trial court had not discretion to disobey mandate of law, particularly of section 3(1) r/w 3(2)(b)(ii) of Limitation Act.

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