Set-off and Counter Claim in civil procedure code.pdf

set off counter claim

1. Set-off and Counter Claim

2. Set-Off
•Set-offisrelatedtodebts.Itisthereciprocalclaimmadebythe
defendant.Set-offcanbeusedonlyunderthesuitforrecoveryof
money.
•Set-offisdealtunderOrderVIIIRule6,anditsaysthatsuchwritten
statementalongwithaset-offshouldbeconsideredbytheCourtas
muchasplaintbecauseittoohasasubjectmatterthatisindispute.

3. Set-Off
Essentials of Set-off
•Defendant hasthe right to claim.
•The plaint must be for therecovery of debts.
•The debt amount must bedefinite and mentioned.
•The amount must be of arecoverable nature.
•It must be within thepecuniary limitof the court.
•Both the parties must fill thesame characteras mentioned in the
plaint.

4. Set-Off
Position of Set-off in CPC, 1908
•Order VIII Rule 6 of the CPCstates the particulars of the set-off to be
given in the written statement. The provision states following
ingredients: -
•The defendantmay submit a written statementcontaining the amount
as debt to set off at the first hearing of the suit and not afterwards.
•It will be on thesame footing as a plaintin a cross-suit. But it willnot
affect the lien.
•Rules for written statement and claim in the form of set-off are same.

5. Set-Off
Types of Set-off
Legal Set-off
•Order VIII Rule 6(1) CPC discusses the Legal Set-off.
•The amountmust be mentionedfor the legal set-off.
•The amount must be of arecoverable nature.
•Defendantmust pay court feesfor the process.
•The set-off under written statement must be filedwithin the period of
limitationprescribed.

6. Equitable Set-off
•It is present in avague mannerunder Order 20 Rule 19(3).
•The doctrine is based on the principle of‘Equity, Justice and Good Conscience’.
•It is governed by the English law.
•It is a claim for anunascertained amount of money.
•It must arise out of thesame transaction or connectedwith the transaction of
money claimed in the petition.
•In the case ofMaharashtra State Farming Corporation Ltd v. Belapur Sugar and
Allied Industries Ltd (2004), it was held that the amount claimed must be out of the
same transaction and must not be barred by time in the equitable set-off.
•It is based on the discretion of the court of law.
•Defendant may or may not pay the court fees.

8. Counterclaim
•It is enshrined in Order VIII Rule 6A –6G of the CPC.
•The 27th Law Commission Report of 1964 recommended to set -up
a right to file counterclaim in the civil procedure a right for the
defendant.
•As an aftermath of the recommendation, CPC (Amendment) Act,
1976 added rules 6B to 6G to the existing act.

9. Concept of Counterclaim
•It is a claim which is independent in nature or can be separated from the claim of the
plaintiff.
•When the cause of action arises against the plaintiff the defendant gets the right to
submit that claim along with the written statement.
•It is considered as a plaint by the defendant against the claim of the plaintiff and is
dealt with in the same manner as a plaint.
•Furthermore, the plaintiff has an opportunity to file a written statement against the
plaint consisting of the counterclaim.
•The Supreme Court held the right to file a counterclaim a statutory right, in Laxmidasv.
Nanabhai(1964).
•The Delhi HC in the case of Gastech Process Engineering Pvt. Ltd. v. Saipem (2009)
deciphered it as a weapon in the hand of the defendant.

10. Counterclaim
Purpose of Counterclaim
•To stop the multiplicity of suits.
•To save the time of the court of law.
•To make the civil procedure convenient for parties.
•To make the timely trials.

11. Counterclaim
When to file a counter-claim?
In the case of Ashok Kumar Kalra vs Wing Cdr, Surender Agnihotr, the court
allows the filing of a counter-claim under the following circumstances:
•The counter-claim can be filed before or after the initiation of the lawsuit.
•It should be filed before the defendant has submitted their written statement.
•It should be filed before the time limit set for delivering the defendant’s defence
expires.

12. Counterclaim
Modus of Filing Counterclaim
•By amending written statement with the leave of the court and setting
up counterclaim;
•By mentioning into the subsequent pleading prescribed under Order 8
Rule 9.

13. Counterclaim
Essentials of Filing Counterclaim
•It must be filed by the defendant.
•It must for an independent or a claim that is separable in nature.
•It must be filed against the plaintiff. It can be filed against co-
defendants in some scenarios.
•It must be in respect of any incident that happened before or after the
filing of the suit.
•It cannot be filed at the appellate stage before the appellate authority.

15. Common points between set -off and
counter-claim
(i)noneshouldexceedthepecuniarylimitsofthejurisdictionoftheCourt,
ii)botharepleadinginwrittenstatement,ifthelawgoverningtheCourtpermitspleabeingrisedby
thedefendantinthewrittenstatement,
ii)theplaintiffisexpectedtofileawrittenstatementinanswertoaclaimforset-offortoacounter-
claim;
v)evenifpermittedtoberaisedtheCourtmayinappropriatecasesdirectaset-offorcounter-
claimbeingtriedseparately,
v)adefendantcannotbecompelledtopleadaset-offnoracounter-claim;hemayaswell
maintainanindependentactionforenforcingtheclaimformingthesubjectmatterofset-offor
counter-claim;

16. The End