CPC C.A. I – ASSIGNMENT ASSIGNMENT SET OFF AND COUNTER CLAIM
INTRODUCTION
Even though the plaintiff was the first to commence litigation, it may happen that the defendant has a claim of some kind against the plaintiff. If so, the question at once arises, must the defendant file a separate suit for this, or can he set up his claim in the plaintiff’s action? If the defendant’s claim can be tried without inconvenience at the same time and by the same court, the defendant should be allowed to plead in the plaintiff’s action a set-off or a counter-claim. Speaking generally, a set-off may be described as a shield which operates only as a defense to the plaintiff’s action, and a counter -claim as a sword with which the plaintiff may be attacked. A set-off and a counter-claim are not the same. In one sense both are cross-actions. But a set-off is a ground of defense, and if established it affords an answer to plaintiff’s claim wholly or pro tanto. The counter-claim is really a weapon of offence.
SET-OFF
Rule 6 of Order 8, Code of Civil Procedure, 1908 provides for set-off as: R. 6 – Particulars of set-off to be given in the written statement – (1) where in a suit for the recovery of
money the defendant claims to set-off against the plaintiff’s demand any ascertained sum of money legally recoverable by him from the plaintiff, not exceeding the pecuniary limits of the jurisdiction of the Court, and both the parties should fill the same character as they fill in the plaintiff’s suit, the defendant may, at the first hearing of the suit, but not afterwards unless permitted by the court, present a written statement containing the particulars pf the debt sought to be set-off. (2) Effect of Set-off – the written statement shall have the same effect as a plaint in a cross-suit so as to enable the court to pronounce a final judgment in respect of both of the original claim and of the set-off; but this shall not affect the lien, upon the amount decreed, of any pleader in respect of the costs payable to him under the decree. (3) the rules relating to a written statement by a defendant apply to a written statement in answer to a claim of set-off .
Set off means the deduction of one demand from another cross-demand. It is a demand which a defendant makes against the plaintiff for the purpose of getting some relief from either whole or a part of his claim. This rule deals with legal set off as it is restricted only to ‘ascertained sum’.
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SOME GENERAL RULES RELATING TO SET OFF: 1. The written statement in which the claim for set off is made shall have the same effect as a plaint in a cross suit so as to enable the court to pronounce a final judgment in respect of both the original claim and of the set off, but this shall not affect the lien upon the amount decreed of any pleader in respect of the costs payable to him under the decree. 2. Cause of action arising after the filing of the defense cannot be covered by the plea of set off. 3. Every claim of set off has to be accompanied by appropriate court fees. 4.
When the claim of set off was neither raised in the written statement nor any court fee was paid, a claim for set off at the time of hearing is not maintainable.1
5. A claim of set off should have some nexus with the suit; it should not bring about something foreign to the suit. 2 6. Legal set off can be claimed as a matter of right but equitable set off cannot be claimed as a matter of right and the court has the discretion to allow or disallow it. 7. Legal set off is restricted to the suits which includes only ascertained sum of money but equitable set off can be claimed in respect of an unascertained sum of money as well. 8. If a set off is claimed, the whole of it must be claimed, or else, a suit for balance will be hit be Or.2 r.2.3 9. An equitable set off must in any event be a cross-claim for a liquidated amount, which could be ascertained at the date of pleadings and not merely at the date of the decree. 4 10. A separate debt cannot be set off against a joint and several debt. 5 So in a suit by A against B to recover a debt due from him, B cannot claim a set off a debt due from A jointly to him and C.
COUNTER-CLAIM
A counter-claim is not merely a defense to the plaintiff’s action but is a weapon of offence which enables a defendant to enforce a claim against the plaintiff and is considered as a cross-action and affords no defense to the plaintiff’s claim. In a suit f or recovery of possession the defendant can set up a counter-claim for specific performance of an agreement to sell.
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Bank Of Rajasthan v. Pala Ram Gupta AIR 2001 Del 58 2 Aninda Saha v. Amal Saha AIR 2001 NOC 101 (Cal) 3 Rambala Mulaswami v. Sreeramamurti AIR 1960 AP 520; 4 Sankara Pillai v. Parameshwara Pillai AIR 1959 Ker 352 5 See Illustration (g) 3
"Subject matter of counter claim: A counter claim can in general be brought in respect of any claim that could be the subject of an independent action. It is not confined to money claims, or to causes of action of the same nature as the original action; and except where a person other than the plaintiff is also made a defendant to it, it need not relate to or be connected with the original subject of the cause or matter. A claim founded or tort may be opposed to one founded on contract and in an action in ream the defendant may set up a counter claim in personam. The defendant by his counter claim may ask for any form of relief, for example, a declaration a vesting order or relief against forfeiture, an injunction, a receiver, specific performance, a revocation of a patent, an account, payment of money claim, or damages".6 Or. XIX, rule 3 of the English Rules of the Supreme Court and in the While Book the Annual Practice Vol. I provide: "To what extent a counter claim is an independent action: A counter claim is substantially a cross action; not merely a defence to the plaintiff's claim. It must be of such a nature that the court would have jurisdiction to entertain it as a separate action. As per Bowen L.J. in Amon v. Bobbett- “A counter -claim is to be treated for all purposes for which justice requires it to be so treated, as an independent requires it to be so treated, as an independent action.” 7 REQUIREMENTS: 1. It must be of such a nature that the court would have jurisdiction to entertain it as a separate action;8 ( i.e. the essence of a counter-claim is that the party must be able to set up an individual action in respect of the counter-claim made against the plaintiff and that claim need not be of the same nature as the original action) 2. it must be filed within the limitation period ;9 3. the cause of action should arise before the filing of the written statement by the defendant; 4. it is not necessary that the cause of action must be the same ;10 5. proper court fee must be paid; and 6. the claim must be made at the first hearing unless otherwise permitted by the court afterwards .
There is no requirement that the counter-claim must be of the same nature as the claim of the plaintiff or that it must be arising out of the same transaction. It is not necessary that the counter-claim must satisfy the conditions which govern the claim in case of set off. 11
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34 Halsbury page 411 para 720 (1889) 22 QBD 548. 8 Williams v. Agius (1914) AC 522 9 Devendra Kumar v. Rajinder Singh Yadav (2001) 3 Punj LR 169. 10 Mohan Lal v. Bhawani Shankar AIR 2002 Raj 144. 7
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As a general rule, the cause of action should arise before the filing of the written statement by the defendant and it should be mentioned in the written statement .12 The cause of action must arise before filing the written statement but the including of counter-claim in the written statement is not a necessary condition. The defendant may take it ever after the filing of the written statement.
DIFFERENCE BETWEEN SET OFF AND COUNTER-CLAIM
1. Generally speaking, a set of is a statutory defense which provides an answer to the plaintiff’s claim wholly or partially whereas a counter-claim is substantially a cross-action, however, it does not afford an answer to plaintiff’s claim but acts as a weapon of offence which entitles him to enforce a claim against the plaintiff.13 2. One of the requirements for taking the plea of set off is that the claim must be in respect of some ascertained sum of money but it is not so in case of a counter-claim. A counter-claim may arise in case of an unascertained sum of money, like in case of damages. 3. it is necessary that the cause of action for which the set off is claimed must arise our of the same transaction as the plaintiff’s claim, whereas a counter -claim need not arise out of the same transaction. 4. In case of set off, the plaintiff, in order to establish his plea, must prove that the set off was barred when the plaintiff commenced his action. It is not enough to prove that it was barred at the time when it was pleaded. In case of counter-claim, it is enough for the plaintiff to prove that the counter-claim was barred when it was pleaded. 5. when the defendant demands in a plaintiff’s suit an amount below or up to the suit claim, it is a set off stricto sensu, but when it is for a larger amount, the claim for excess is really a counter-claim.14
CONCLUSION
The Rules that we have in India governed by the Code of Civil Procedure are similar to the rules governed by Common law, but under Common law, there are many terms which are used in a very wide manner. The Common Law considers counterclaim as a much wider term and it includes set off and thus consider set off as a particular type of counterclaim. For e.g., where the claims on both 11
Datta Bandu Sadale v. Sridhar Payagondapatil AIR 1992 Bom 422 Mangulu Pirai v. Prafulla Kumar Singh AIR 1989 Ori 50 . 13 Govind Jevat v. Cannanore Spinning AIR 1968 Ker 310; Munshi Ram v. Radhakrishnan AIR 1975 Punj 112; Saktipada Dey v. UOI AIR 1979 NOC 89 (Cal). 14 Mohd. Farooq v. State Government AIR 1984 Ker 126 12
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sides are for payment of debts and where the sums are readily ascertained, then the counterclaim is a set-off. So, set-off is a particular type of counterclaim. Common Law also provides that a counterclaim can be claimed against the plaintiff along with some other person, not already a party to the action. Also, he can plead such a counterclaim against a co-defendant along with the plaintiff. But he cannot counterclaim against any co-defendant or third person alone without the plaintiff, though he can claim contribution, indemnity or other similar relief from such a person as a third party under Order 16. A counterclaim is governed by the same rules of pleading as a statement of claim, and reply to it by the same rules as a defense. The provisions relating to counterclaim are made in such a way that it protects the plaintiff from inconvenient or improper counterclaims. If the plaintiff can show that the counterclaim is one which cannot conveniently be disposed of in the pending action, ought not to be allowed, the court may strike it out or exclude it and order the defendant to file a separate writ. Also, if the counterclaim is frivolous or vexatious, or if it discloses no valid cause of action, or if it may delay the fair trial of the action or is otherwise an abuse of the process of the court, the court may order that it be struck down.
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