A counterclaim directed solely against a co-defendant is typically impermissible; however, if it intertwines with a plaintiff's claim, it may hold validity under commercial agreements.

ORDER :

M.NAGAPRASANNA, J.

The petitioner-defendant No.2, who is common in both these petitions, is at the doors of this Court calling in question two separate orders passed by the Commercial Court in Commercial O.S.No.145 of 2023 and Commercial O.S. 146 of 2023, both dated 03-09-2025, by which the applications filed by the petitioner in I.A.Nos.24 and 25 under Order VII Rule 11 of the CPC, in the respective suits, seeking rejection of the counter claim made by the 1^st defendant come to be rejected. For the sake of convenience, the facts obtaining in Civil Revision Petition No.679 of 2025 would be narrated.

2. Heard Sri S.Manjunath, learned counsel appearing for the petitioner, Sri S.Varun, learned counsel appearing for respondent No.1 and Sri Shivaraj N. Arali, learned counsel appearing for respondent No.2.

3. Facts in brief, germane, are as follows:

3.1. 1^st respondent-plaintiff / Housing Development Corporation is said to have sanctioned a housing loan to the 2^nd respondent-1^st defendant for purchase of an apartment in the apartment project “The Greens” of the petitioner-defendant No.2. A sale agreement, construction agreement and a tripartite agreement come to be executed between the 1^st respondent-plaintiff, the 2^nd respondent-1^st defendant and the petitioner-2^nd defendant on 19-11-2014 and 25-04-2015. As per the said agreements, the petitioner-defendant No.2 was required to retain possession of the apartment purchased by the 2^nd respondent-1^st defendant until the completion of the project. The petitioner-defendant No.2 was thereafter required to execute a registered sale deed in favour of the 2^nd respondent-1^st defendant. As per the terms of the tripartite agreement, the petitioner-defendant No.2 could not have cancelled the allotment or refused to execute a registered sale deed in favour of the 2^nd respondent-1^st defendant, without obtaining a no- objection certificate from the 1^st respondent-plaintiff. However, the petitioner-defendant No.2 executes a registered sale deed in favour of respondent No.3-defendant No.3 in respect of the apartment purchased by 2^nd respondent-1^st defendant. Therefore, the 1^st respondent-plaintiff files a suit in Commercial O.S. No.145 of 2023 seeking specific performance of the tripartite agreement and a direction directing the petitioner-defendant No.2 to execute a registered sale deed in favour of the 2^nd respondent-1^st defendant and to declare the sale deed dated 10-03-2020 executed by the petitioner-2^nd defendant in favour of the 3^rd respondent-3^rd defendant to be null and void.

3.2. The petitioner/2^nd defendant files its written statement contending that there was no cause of action against the present petitioner, as the 1^st defendant had failed to pay the entire sale consideration. Therefore, the agreement stood cancelled and after such cancellation, a sale deed was executed in favour of defendant No.3. The 1^st defendant/2^nd respondent herein also files his written statement, and along with the written statement, files a counterclaim not only against the plaintiff, but also against defendant No.2, the co-defendant. By way of counterclaim, the 1^st defendant sought multiple reliefs including declaration of obligations against the 2^nd defendant under the agreements. The petitioner- defendant No.2 files an application in I.A. No.24 to reject the counter claim, on the score that a counter claim against a co- defendant is not maintainable. The application so filed by the petitioner comes to be rejected. Therefore, the petitioner-defendant No.2 is now before this Court in the subject petitions.

4. The learned counsel appearing for the petitioner would vehemently contend that a counterclaim is not maintainable against a co-defendant. He would seek to place reliance upon the judgment of the Apex Court in the case of ROHIT SINGH v. STATE OF