Jyanti Lal And Anr. vs Abdul Aziz And Anr. on 28 November, 1955

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72
Patna High Court
Jyanti Lal And Anr. vs Abdul Aziz And Anr. on 28 November, 1955
Equivalent citations: AIR 1956 Pat 199
Author: R K Prasad
Bench: R K Prasad


JUDGMENT

Raj Kishore Prasad, J.

1. This rule was obtained by the defendants, against an order dated 1-2-1955, of the Munsif of Giridih, directing court-fee to be paid on Rs. 1,295/- under Schedule 1, Art. 1 of Court-fees Act, which the petitioners claimed in their written statement as adjusted and satisfied towards the rent of the disputed house.

2. The opposite party brought a suit for house rent, at the rate of Rs. 35/- per month, from October, 1950, to August. 1953 for a total sum of Rs. 1,445/-. The petitioners filed their written statement, and in paragraphs 8-10 of their written statement they pleaded adjustment and satisfaction of Rs. 1,2957- towards the house rent from 1-10-1950 to 31-10-1053. The rase of the petitioners was that they were not willing to continue in the house, because it was a bit out of repair.

The opposite party asked them to continue, and -said, that as they had no money with them at that time to construct a pucca roof and floor the petitioners should invest money for that purpose from their own pocket, and the entire cost thus incurred would be adjusted in the rent month by month, and as long as the entire cost Incurred by the petitioners was not adjusted, the rent would not be realized, and would continue to be adjusted in the account of the plaintiffs.

According to this agreement the petitioners spent money, and the full details of the expenses incurred were entered in the ‘bahi khata’ maintained by the petitioners, on the approval of the plaintiffs, as their current account, and the rent had been deposited in this current account of the plaintiffs as agreed to between the parties. The further case of the petitioners was that on 17-7-1953 the plaintiffs stood in need of money, and, therefore, they took Rs. 200 in cash, as advance, from the defendants.

Their case in paragraph 10 of the written statement is that after accounting the cost incurred towards the construction of the house, and the cash advanced came to Rs. 1,347/2/- which was due to the petitioners from the plaintiffs, and out of this Rs. 1,295/- representing the rent from 1-10-1350 to 31-10-1953 was adjusted and satisfied, and Rs. 527-2/- remained due to the defendants from the plaintiffs.

3. The learned Munsif took the view that as the defendants made certain improvements, and advanced certain money, they could maintain a cross suit in respect thereof, and, therefore they were to pay the court-fee on the amount they claimed as adjusted and satisfied towards the rent as it was in the nature of a set-off within the meaning of Schedule 1, Art. 1 of the Court-fees Act.

In that view of the matter he directed the defendants to pay the court-fee within 15 days, failing which this part of the defence was to be struck off. Against this order, the petitioners have come up in revision before this Court.

4. In support of the rule Mr. Sudhir Chandra Ghose has argued that the claim of the petitioners in the written statement was in the nature of defence, or confession and avoidance, and not in the nature of a counter claim, or a set-off, and, therefore, no court-fee was leviable on the sum claimed by them as having been adjusted and satisfied.

5. Mr. Mojibur Rahman, appearing for the opposite party, has conceded that the test in such a case is if a cross suit can be filed in respect of the amount claimed by the defendants and if they can bring a separate suit in respect of this amount then certainly they are liable to pay court-fee, because, the claim in such a case would! be in the nature of legal, or, equitable set-off, and Schedule 1, Article 1 of the Court-fees Act would apply to such a case.

He has, therefore, attempted to show that the claim of the defendants was such that a separate suit could be instituted in respect thereof, and, as such, court-fee was leviable on the amount claimed by the defendants.

6. Mr. Ghose, in support of his contention that the claim was in the nature of an adjustment or a plea of payment, and not in the nature of a set-off, has relied on these decisions: ‘Katic Graham v. Colonial Government of British-Guiana’, 12 Cal LJ 351 (A), ‘Abdul Majid V. Abdul Rashid’, AIR 1950 All 201 (B), ‘Punjab Electric Power Co. Ltd. v. Suraj Kishan’, AIR 1937 Lah. 62 (C), ‘Shiva Prasad Singh v. Lalit Kishore’, AIR 1943 Pat 152 (D), and ‘Pramada Prasad Mukherjee v. Sagarmal Agarwalla’, AIR 1954 Pat 439 (E),

7. The plea of set-off is to be found in Order 8, Rule 6 of Civil P. C. Clause (1) of Rule 6 of Order 8 runs as follows:

“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 parties 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 a written statement containing the particulars of the debt sought to be set off”.

In its original and strict sense, set-off is a plea in defence, pure and simple, which by adjustment would wipe off, or, reduce the plaintiff’s claim. In its enlarged sense, and that is of statutory creations, as in this rule, it is a defence and a counter claim combined, defence to the extent of the plaintiff’s claim, and, a claim by the defendant in the suit itself for the balance.

8. The doctrine of set-off may be defined as ‘”the extinction of debts of which two persons are reciprocally debtors to one another by the credits of which they are reciprocally creditors to one another”.

9. A plea of set-off must be distinguished from a plea of payment. A payment refers to a satisfaction, or extinguishment of a debt effected prior to the raising of the defence of payment, while a plea of set-off prays for a satisfaction or extinguishment thereof commencing in the future after the date of the plea. A question of set-off, therefore, can arise only in respect of dues which are outstanding, and which have not already been adjusted, A plea of satisfaction by adjustment is essentially different from a plea, or claim of set-off.

10. Set-off is of two kinds: (1) legal set-off and (2) equitable set-off. The right to set-off dealt with by Order 8, Rule 6 of the Code is called a legal set-off. Legal set-off can be claimed under this rule only in respect of an ascertained sum of money legally recoverable by the defendant from the plaintiff arising out of two different transactions. A defendant may claim a set-off under this rule only if the conditions laid down in Rule 6 of Order 8 are satisfied, but not otherwise.

11. The provisions of Order 8, Rule 6, which deal with legal set-off, are not exhaustive, because apart from a legal set-off, which is expressly provided in the Code, an equitable set-off may also be pleaded, if the defendant’s claim shows to have arisen from the same transaction as the plaintiff’s claim.

The rule does not take away from the parties any right to set-off which they would have had independently of the Code. Thus in cases of mutual debits and credits, and in cases where cross demands arise out of same transaction, or, are so connected in their nature and circumstances as to make it inequitable that the plaintiff should recover, and the defendant driven to a cross suit, courts have allowed a plea of set-off even though the amount may be an unascertained sum. This set-off is known as an equitable set-off.

12. A set-off is a statutory defence to a plaintiff’s action; a counter claim is substantially a cross action. The plea of set-off is a weapon of defence, upto the amount of the plaintiff’s claim, but it is one of attack so far as the amount is in excess of the claim.

13. The essence of a counter claim is that the defendant should have a cause of action-against the plaintiff, and the counter claim is in the nature of a cross action; and not merely a defence to the plaintiff’s claim, A counter claim must be of such a nature that the Court would have jurisdiction to entertain it as a separate action. A counter claim is, therefore, to be treated for all purposes, for which justice requires it to be so treated, as an independent action.

The essence of a set-off is that the defendant should have a cause of action against the plaintiff apart from the suit and not merely as a defence to the plaintiff’s claim. To put it differently, the set-off is in the nature of a cross action which could be separately entertained. The cases cited by Mr. Ghose lay down the above proposition of law.

14. The distinction between legal set-off and equitable set-off is that while in the former case the Court is bound to entertain and adjudicate upon the plea when raised, the defence of equitable set-off cannot be claimed as a matter of right, but the Court has a discretion to adjudicate upon , it in the same suit, or to order it to be dealt with in a separate suit.

15. Under Schedule 1, Article 1 of the Court-fees Act, ‘ad valorem’ Court-fee is payable on the set-off claimed in either description, whether it is legal set-off or equitable set-off. (See ‘Lakshmi Narayan Sukhani v. Kamakhya Narayan’, AIR 1954 Pat 30 (F)).

16. The sole question, therefore, to be considered in the present case is, if a separate action can be maintained on the basis of the claim made by the defendants in paragraphs 8 to 19 of their written statement if this claim could be put forward in a separate suit, then, surely, court-fee would be payable on the claim, but if this claim could only be put forward as a defence to the suit, it can hardly, in that view of the matter, be called a counter claim.

The claim made by the defendants is that the amount of Rs. 1,295/- has already been adjusted and satisfied towards the rent from October, 1950, to October, 1953. In such circumstances, if the defendants were to bring a separate action in respect of this claim against the plaintiffs, they would at once be met by a plea by the plaintiffs that on their own case in their written statement, this amount is no longer due to them from the plaintiffs, and therefore, the defendants cannot bring a separate suit.

In the case of 12 Cal LJ 351 (A), referred to before, it was held that when under Clause (f) of Section 108 of the Transfer of Property Act the lessee makes a deduction of the expenses of repairs from the rent as it accrues due, the deduction is really in the nature of a payment to the landlord and does bear the character of a set-off. In the case of AIR 1937 Lah 62 (C), the plaintiff brought a suit against the defendant for a certain sum.

The defendant ‘inter alia pleaded that the plaintiff owed to him another amount which was adjusted with the claim in suit and only little balance had remained due to him. The plaintiff contended that the defendant could not claim the adjustment unless he paid court fee on it. It was held that it was an adjustment that was claimed, and not a set off, and hence no court fee was necessary.

In the Division Bench decision of this Court, referred to before, in similar circumstances, it was held that for a relief of this description the defendant cannot be asked to bring a separate suit.

The claim of the defendant is really a claim in the nature of defence, and not a legal or equitable set off, and, therefore, no court fee is leviable on the value of that claim under the provisions of Schedule 1, Article 1, Court fees Act.

This case is very much similar to the present case. In the present case, in my opinion, a separate suit is not maintainable at all in view of the allegations made in the defence.

In such circumstances, the claim of adjustment and satisfaction pleaded by the defendants petitioners is really in the nature of a plea of payment that is, a plea of satisfaction by adjustment, and not in the nature of either legal or equitable set off.

17. It follows, therefore, that the claim of the petitioners, as regards Rs. 1295/-, was really a claim in the nature of defence. I am, therefore, of the opinion that no court-fee is leviable on this sum under the provisions of Schedule 1, Article 1 of the Court-fees Act.

The question whether the allegations made in paragraphs 8 to 10 of their written statement by the defendants are true or not, will be considered at the trial. A mere allegation in the written statement is no proof. The onus lies on the defendants to establish their plea of satisfaction by adjustment to the satisfaction of the court below, before it can be given effect to.

18. For the reasons set forth above, I allow the application, and set aside the order dated
1-2-1955 of the learned Munsif. In the result the rule is made absolute. In the circumstances of the case, there will be no order for costs.

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