Suit and Counterclaim: Supreme Court held in Basudev v. Sanjay Kumar – No Necessity of Two Decrees; No Need for Two Appeals

Saji Koduvath, Advocate, Kottayam.

Abstract

• The Supreme Court of India, in Basudev v. Sanjay Kumar (11 August, 2026), 2026 INSC 831, considered following questions –  
(i) Whether in every situation where a suit and a counterclaim are disposed of by a single judgment, two decrees should be drawn up; and
(ii) If two decrees were drawn up, should there be two appeals?

• It is answered: No necessity of two decrees. A suit and a counterclaim can be disposed of in a common judgment. And, a common judgment can be challenged in a composite appeal.

• Nevertheless, the composite appeal should be valued as two separate appeals, and the court fees should be paid accordingly. The composite appeal, however, should show the grounds raised against the decree in the suit and the decree in the counterclaim separately, whether there are two decrees or one drawn up.

Importance of Basudev v. Sanjay Kumar

Basudev v. Sanjay Kumar, 2026 INSC 831 (J. B. Pardiwala, Vinod Chandran, JJ.), is a landmark judgment. It resolved several long-standing controversies. The findings therein can be summarised as under:

  • Single Judgment & Decree: A suit and a counterclaim can be validly disposed of through a common judgment without the necessity of drawing up two separate decrees.
  • Composite Appeal: A common judgment and decree can be challenged by a single, composite appeal.

The reasons for the above are pointed out by the Apex Court as under:

  • When there is one suit and a counterclaim, there is only one trial, one finding and one decision.
  • The provision for appeal requires only a judgment to accompany the Memorandum of Appeal.  
  • • The proviso to Order XLI Rule 1 of the CPC enables the certified copy of the judgment to be dispensed with when two appeals are preferred from a common judgment in two suits tried together, whether or not the appeals are filed by the same person.
  • Order XX Rule 19 of the CPC posits that the decree passed in a suit in which a counterclaim is filed, shall be subject to the same provisions in respect of an appeal, if there was no counter claim.
  • As a general rule, the prayer in the suit and the counterclaim are so interlinked that the requirement was only to file one appeal. It is not in contravention of any of the provisions of the CPC.

To enable the appeal to be considered on merits, without the grounds of estoppel and res judicata  –– owing to the non-filing of two appeals –– and to ensure avoidance of procedural rigmarole as also multiplicity of litigations, the Apex Court presented the following directives:

  • The composite appeal should show the grounds raised against the decree in the suit and the decree in the counterclaim separately; whether there are two decrees or one drawn up.
  • When a composite appeal is filed from a common judgment in the suit and the counterclaim, necessarily, court fees have to be paid on the valuation in the suit and the counterclaim as applicable to appeals, whether it be a single decree or two.

Arguments Placed before the Apex Court

First: Argument for a Single Appeal Insufficient (Rejected by the Supreme Court)

In the impugned judgment, the High Court of Himachal Pradesh took the view that the single appeal was incompetent. It mainly relied on:

  • Ramesh Chand v. Om Raj, 2022 (2) SLC 1145.

The High Court also referred –

  • Narhari v. Shanker, 1950 SCC 668,
  • Charan Singh v. Ram Saroop, C.A. No.1585-1586 of 2025 dated 03.02.2025. (The court permitted the appellant to file a separate memorandum of appeal, without a certified copy of the judgment since, Order XLI Rule 1 of the CPC permitted the Appellate Court to dispense with the requirement of filing a copy of the impugned judgment twice when two separate appeals are filed.)
  •  Premier Tyres Ltd. v. Kerala State Road Transport Corporation, 1993 Supp. (2) SCC 146.

The respondents placed the following decisions, in the Supreme Court:

  • Premier Tyres Ltd. v. Kerala State Road Transport Corporation, 1993 Supp. (2) SCC 146. (It is held: “Where no appeal is filed, as in this case from the decree in connected suit, it has the same effect of non-filing of appeal against the judgment or decree. Thus, the finality of finding recorded in the connected suit, due to non-filing appeal, precludes the court from proceeding with appeal in other suit.”)
  • Girija v. Rajan, 2015 (1) KerLT 695 (The High Court of Kerala found that a single appeal would fail on the ground of res-judicata because of the findings in the companion decree. Relied on: Premier Tyres Ltd. v. Kerala State Road Transport Corporation, 1993 Supp. (2) SCC 146)
  • State of Punjab v. Bakshish,  (1998) 8 SCC 222 (It was pointed out that Order XLI Rule 33 — the Appellate Court shall have power to pass any decree even if no appeal is filed — is discretionary and the scope of appeal cannot be enlarged, and also that the principles of res judicata would be attracted where one appeal alone was filed.)
  • T.K.V.S. Vidyapoornachary Sons v. M.R. Krishnamahary, AIR 1983 Mad 291. (Counter claim is to be treated as a plaint, by a legal fiction employed by sub-rules (2) and (4) of Rule 6A CPC. According to Rule 19(1) of Order XX CPC, homogeneity clearly indicates that it is a unified proceeding. A suit-claim and a counterclaim constitute a unified proceeding.)
  • Ghanshyam Singh v. Narendra Singh, Second Appeal No.76 of 2022 decided on 22.07.2022 by High Court of Uttarakhand.
  • Gumai Singh v. Baburam Second Appeal No. 144 of 2012 decided on 28.07.2025 by Madhya Pradesh High Court at Gwalior, 2026 SCC OnLine Mad 14 (It relied on Rajni Rani v. Khairati Lal, 2015-2 SCC 682, to find that a suit and a counterclaim when disposed of by a single judgment, there are two decrees drawn up, and both have to be appealed separately in two different appeals). 

Second: Argumnet for Single Appeal Sufficient (Accepted by the Supreme Court)

The Appellants placed reliance on the following decisions:

  • Shankar Masu Dokare v. Shobha Subhash Dokare, 2014 SCC Online Bom 1859
  • Abdul Nazer, 2016 SCC OnLine Ker 41103; Girija v. Rajan, 2015 (1) KerLT 695, was reversed and held – single appeal filed would be maintainable.
  • K. Kandasamy v. P. Natarajan, Second Appeal No. 144 of 2012 decided on 28.07.2025 by Madhya Pradesh High Court at Gwalior, held – Order VIII Rule 6A of the CPC treats the counterclaim as a cross-suit which culminates in a single judgment and a composite decree, does not necessitate multiplicity of appeals.

Supreme Court Distinguished Rajni Rani and Ramesh Chand

The Apex Court found it proper to distinguish Rajni Rani v. Khairati Lal, 2015-2 SCC 682, on facts, and pointed out:

  • In Rajni Rani, the trial court rejected the counterclaim under order VII Rule 11 CPC for reason that it was barred by Order II Rule 2.
  • The suit was still pending before the Trial Court.
  • The rejection of counterclaim had to be challenged in appeal.
  • The question of two appeals being filed from a decree in the counterclaim as well as that in the suit did not arise at all in Rajni Rani.

Ramesh Chand v. Om Raj, 2015-2 SCC 682, relied on in the impugned judgment, is distinguished by the Apex Court holding as under:

  • “17. Ramesh Chand, as relied on in the impugned judgment, also found that where both the suit and the counter claim are disposed of by a common judgment, regardless of whether separate decrees have been prepared, there shall be two appeals filed (Para 42 (iv)). The appellants argued that that this would in fact be contrary to the principle enunciated in the very same decision in Para 42 (i), that when two suits are consolidated and tried together, the same can be subjected to challenge by way of a single appeal; while, two suits, which were not consolidated but are decided by a common judgment, require a challenge by way of two appeals (Para 42(iii)), as held in Rajni Devi (Rajni Rani, 2015-2 SCC 682). It was found that there could be situations when the suit is dismissed; in default or as withdrawn, then the counter claim is continued.”

Conclusion

In Basudev v. Sanjay Kumar (2026 INSC 831), the Supreme Court of India streamlined the procedure by affirming that a suit and a counterclaim disposed of by a common judgment do not require two separate decrees or separate appeals. The importance of this decision lies in its nuanced approach to eliminating procedural hurdles and prioritising substantive justice over hyper-technical pedantry.

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