JUDGMENT
J.B. Koshy, J.
1. The revision petitioner was the plaintiff-bank. The suit was filed for recovery of an amount of Rs. 32,38,041.20 arising out of several loans on the basis of overdraft agreements secured by hypothecation of stock-in-trade, vehicles and machinery, etc. The defendants were set ex parte and the suit was restored after one year and eight months of
the institution of the suit. The defendants contended that on the oral assurance of sufficient working capital being made available to them by the previous manager and some of the employees, they had spent large amounts for canvassing orders, etc. The defendants claimed that they are entitled to claim from the bank as damages Rs. 57.47 lakhs out of which Rs. 25 lakhs is stated to be profits which were lost on account of their inability to conduct the business due to lack of funds. Therefore, in the written statement it was claimed that it may be set off against the amounts due to the bank and a decree may be passed in favour of the defendants for the balance amount due to them.
2. The learned sub-judge found that even though an amount was estimated tentatively for the loss and damages sustained due to the breach of agreement and inaction in disbursement of further loans, the amount was not quantified. The amount can be quantified only after adjudication and the amount, according to paragraphs 10 and 22 of the written statement, has to be adjusted from the amount due. So it is a case of adjustment and no court fee need be paid on the same until the matter is finally adjudicated and preliminary decree is passed, The learned judge also relied on the decision in Anand Enterprises v. Syndicate Bank, AIR 1990 Kar 175.
3. The revision petitioner urges that in paragraph 4 of the written statement it is clear that what is raised is a claim for set off and counterclaim and their plea for set off and counter-claim is based on the allegations which they could have filed as a separate suit also and in effect it will amount to a counter-claim or claim set off for which court fee has to be paid. If it is a claim for set off court fee has to be paid in view of Section 6(2) of the Code of Civil Procedure, 1908. Section 6(2) of the Code of Civil Procedure states that a written statement claiming a set off shall have the same effect as a plaint in a cross-suit. Section 8 of the Kerala Court Fees and Suits Valuation Act, 1959, was also referred to. Under Section 8 of the Kerala Court Fees and Suits Valuation Act, 1959, a written statement pleading a set off or counter-claim shall be chargeable with fees in the same manner as a plaint. The rates are mentioned under Schedule I, Article 1 of the Kerala Court Fees and Suits Valuation Act, 1959. The claim raised in the written statement is a claim for set off or counter-claim and court fee has to be paid as per Schedule I, Article 1, but such court fee need not be paid if it is a question of adjustment. Therefore, the question to be decided is whether the claim raised by the defendants in the written statement is a question of set off or counterclaim or it is only an adjustment.
4. A Division Bench of this court in Cheria Elias v. Surendra Chit Fund [1989] 1 KLT 449, explained what is set off and what is adjustment (headnote) :
“Set off is a plea open to a defendant by which he could claim wiping off or reducing the plaint claim by adjustment of the amount due to him from the plaintiff. A plea of set off is distinguishable from a plea of payment of adjustment. Set off extinguishes the debt or reduces the same. Payment of adjustment refers to a satisfaction or extinguishment of a debt effected prior to the raising of defence in the written statement. The question of set off can arise only in respect of dues which are outstanding and which have not already been adjusted. Thus, a plea of payment or adjustment is definitely and essentially a different plea and can be pressed into service only if the same was raised before the institution of the suit and not afterwards. To determine whether a plea raised in defence is a plea of set off or of payment by adjustment it has to be ascertained as to whether a separate action could be maintained by the defendant on the basis of his claim. If he could institute a separate suit for realisation of the amount due to him, it is a case of set off. If the adjustment was made prior to the filing of the suit by the plaintiff and a plea is taken to that effect, it would be a plea of adjustment by payment. In such a case no court fee would be payable on the amount as it stood adjusted prior to the institution of suit. As a plea of set off is pleaded in the written statement and not a claim for rendition of accounts or a plea of payment by adjustment, the first defendant cannot contend that he has no liability to pay court fees.”
5. In the decision in Subramoniam v. Subramoniam [1977] KLT 293, it was held that where there has been payment, the party against whom the claim is brought pleads payment or accord and satisfaction which, in effect, alleges that the claim no longer exists. The plea of set off on the other hand, in effect, admits the existence of the claim and sets up a cross-claim as being the ground on which the person against whom the claim is brought is excused from payment and entitled to judgment on the plaintiff’s claim. Therefore, it can be seen that if the defendants pleaded that there was a payment on O. D. account which was not noted by the bank or there was some amount which ought to have been adjusted earlier to the above claim and the plaintiff ought to have sued only for the balance amount it is a clear case of adjustment. Here the case is that because of the non-granting of loan as alleged to have been promised by the previous manager and some of the employees, they lost business and the amount of Rs. 57.47 lakhs is the damages suffered by the defendants. This claim for damages could have been filed as a separate suit also. This amount is not arising out of the transaction which is the subject-matter of the suit. Therefore, according to me, it cannot be an adjustment. It can only be a claim for set off or counter-claim. The Kar-nataka High Court in the decision in Anand Enterprises v. Syndicate Bank, AIR 1990 Kar 175, a similar claim was held to be a claim for set off. In the above case, which is relied on by the learned sub-judge, the Karnataka High Court held that the claim is essentially in the nature of set off and not a counter-claim. Even if it is a claim for set off, court fee has to be paid in view of Section 8 and Schedule I, Article 1, Kerala Court Fees and Suits Valuation Act, 1959. Even in a suit for settlement of accounts, court fee has to be paid on the estimated amount as can be seen from Section 35 of the Kerala Court Fees and Suits Valuation Act, 1959. Here it is true that damages are not finally quantified, Court fee has to be paid on the amount estimated by the defendants. Since Rs. 57.47 lakhs was the estimated amount due to them in the claim for set off, 1 am of the opinion that court fee ought to have been paid on that amount as provided under Section 8 read with Article 1 of Schedule I of the Kerala Court Fees and Suits Valuation Act, 1959, and I order accordingly. The order of the learned sub-judge is set aside. The civil revision petition is allowed.