Karnataka HC rejects MML’s counterclaim of over Rs 1,100 crore against JSW Steel

Mumbai: The Karnataka High Court has rejected a Mysore Minerals (MML) plea to add a counterclaim of about Rs 1,172.79 crore to a petition of JSW Steel, which is seeking a refund of about Rs 272 crore from the state-owned company.

“The subject application of the respondent (MML) seeking leave to amend the written statement for introducing the counterclaim is dismissed,” Justice Krishna S Dixit said in a January 13 order, which came as a major relief to the Sajjan Jindal-owned JSW Steel.

The judge also asked the lower court to pass an order in the original case within a year.

“The respondent’s (MML) contention that he has already laid the foundation for the filing of counterclaim in the original written statement itself, places into insignificance since what the law of limitation bars is the remedy and not the grounds on which it is founded,” the court said in a 19-page order. “In other words even if the respondent had taken up all the grounds in his written statement as filed originally, a prayer for counter decree cannot be belatedly superadded once the same becomes time-barred.”

JSW Steel had originally filed a plea to claim the refund of excess premium of about Rs 272 crore paid by it in lieu for supply of iron ore. The company had entered into two lease-cum-sale deeds with the state government in 2006 for expansion of its integrated steel plants. However, when the Supreme Court banned mining operations in Karnataka in 2011, this memorandum of understanding MoU was kept on hold, leading to a dispute between JSW Steel and MML.

The case dates back to 2012, JSW Steel had approached the court. MML filed its response in the beginning of 2013. Subsequently, MML sought the court’s permission in 2016 to amend its response and file a counterclaim against JSW Steel for Rs 1172.79 crore along with 18% interest.

The counsel for JSW Steel opposed the counterclaim saying, “A counterclaim is nothing but a ‘deemed suit’ for all practical purposes and therefore it is bound by the same limitation period,” argued the counsel for the Jindal owned company.

Under the Code of Civil Procedure (CPC), the parties can amend their reply within 90 day. The law allows addition of facts which are related to the case only.

MML had entered into the Memorandum of Understanding (MoU) to provide uninterrupted iron ore supply to JSW Steel in 1995.

“Around 2012, when JSW Steel approached the court seeking refund of Rs 272 crore from MML, two lease-cum-sale deeds of the lands allotted to JSW in 2006 for expansion of its integrated steel plant came up for the execution of absolute sale deeds, spokes were put in the wheel of execution,” said a person privy to the development, who did not wish to be identified.

According to Ashish K Singh, managing partner of law firm Capstone Legal, commercial cases see a counterclaim more often than not and companies should keep in mind the limitation period for filing such claims along with the written statement. The court was emphatically clear that time barred claims will not be entertained.

“Applications for amendment take up a lot of court’s time and delay the trial. I believe this judgment would send a clear message that courts will not entertain unnecessary applications,” said Singh.

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