PRESTIGE INSTITUTE OF MANAGEMENT AND
RESEARCH,GWALIOR
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Code Of Civil Procedures Presentation
PRESENTRD BY.
PRESENTED TO. AYUSHI GIDWANI
[Link] Sharma
Set off and Counter Claim
MEANING OF SET-OFF
• Set-off is a reciprocal acquittal of debt. It can be availed in
money suit. If plaintiff has filed money suit against defendant
and defendant also has a specific claim for money against
plaintiff; set-off can be demanded by defendant.
• The defendant can use set-off in CPC as a defense in a lawsuit
brought by the plaintiff.
• In the case of B. Seshaiah v. B. Veerabhadrayya, the Andhra
High Court explained set-off as “cancelling debts between two
individuals who owe each other money.”
DEFINITION OF SET-OFF
According to Order VIII Rule 6, the provision of set-off is outlined as
follows:
In a lawsuit where the plaintiff is seeking to recover money, the
defendant can assert a set-off if they have an established and legally
recoverable sum of money owed to them by the plaintiff. This amount
should not exceed the monetary limits of the court’s jurisdiction.
• Additionally, for the defendant to present a set-off, both parties must
have the same roles in the lawsuit as they do in the plaintiff’s claim.
CONDITIONS FOR SET-OFF
• The suit must be for recovery of money
• The amount of set-off must be ascertained sum of money
• It must be legally recoverable from plaintiff.
• It must not exceeds pecuniary limits of the Court.
• It must be recoverable by the defendant claiming set-off, (where there are
more defendants) and against the plaintiff or all plaintiffs
• Both plaintiff and defendant fill the same character as they fill in the
plaintiff's suit.
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 both of the original claim and of the set-off.
• The rules relating to a written statement by a defendant apply to
a written statement in answer to a claim of set-off.
TYPES OF SET-OFF UNDER CPC
• The law recognizes two types of set-offs:
• Legal set-off, which is explicitly provided under Order VIII Rule 6 of the Civil Procedure Code (CPC),
and Legal set-off in CPC has specific requirements, as discussed earlier. It is limited to the scope of the
original lawsuit and cannot introduce new elements. It allows the defendant to assert an independent cause
of action, and the claims of both parties are adjusted in favour of the party with the higher amount.
• Equitable set-off, which is based on principles of fairness. Equitable set-off in CPC is available when legal
set-off is not applicable. It is based on the concept of fairness and can be used when the case does not meet
the requirements of Order VIII Rule 6. In equitable set-off, the defendant can claim even an unascertained
sum of money if the cross demands arise from the same transaction or are closely connected. This prevents
the need for filing a separate lawsuit.
DIFFERENCE BETWEEN LEGAL SET-OFF AND
EQUITABLE SET-OFF
LEGAL SET OFF EQUITABLE SET OFF
• It is for ascertained sum of money. • It is for unascertained sum of money.
• Cross demand must arise out of same transaction.
• Cross demand may or may not arise out
of same transaction. • Court is not bound to entertain equitable set-off.
• Amount claimed as set-off may not be legally
• Court is bound to entertain legal set-off.
recoverable and may be event barred by
• Amount claimed as set-off must be legally limitation.
recoverable and not barred by limitation.
MEANING OF COUNTERCLAIM
• Counterclaim means a claim made by the defendant in a
suit against the plaintiff. It is a claim independent of, and
separable from, the claim of the plaintiff which can be
enforced by a cross-action. Generally, it is a cause of
action against the plaintiff but in favour of the defendant.
It is treated as plaint of the defendant against the plaintiff
and governed by the rules applicable to the plaints. A
plaintiff may file a written statement against the
counterclaim of the defendant.
DEFINITION OF COUNTER CLAIM
• Sub-rule (i) of Rule 6-A permits the defendant to present a counter-claim against the plaintiff’s claim, encompassing
any right or claim that the defendant may have against the plaintiff.
• As per Black’s Judicial Dictionary, a “counter-claim” refers to a claim made by the defendant against the plaintiff in
a lawsuit. Hence, in addition to the option of pleading a set-off, the defendant in a civil suit can raise a counter-claim.
• A counter-claim is an independent and separate claim from the plaintiff’s, which can be enforced through cross-
action. It represents a cause of action in favour of the defendant against the plaintiff. Consequently, a counter-claim
constitutes a valid cross-action, and the court can render a final judgment on both the original claim and the counter-
claim.
• In the case of Ramesh Chand v. Anil Panjwani, the Supreme Court outlined the three modes of pleading or
presenting a counter-claim in a civil suit:
• In the written statement filed under Order 8 Rule 1
• By amending the written statement with the court’s permission to include a counter-claim and
• In a subsequent pleading under Order 8 Rule 9.
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.
• Generally, the court permits filing a counter-claim after the defendant has submitted their written
statement but before the issues are formulated. However, the counter-claim may be allowed in
exceptional cases even after the issues are framed. This is done to avoid the commencement of
multiple proceedings on the same matter.
EFFECT OF COUNTER-CLAIM
• The effect of the counterclaim is that even if the suit of the plaintiff is stayed, discontinued,
dismissed or withdrawn, the counterclaim will be decided on merits and the defendant will have a
right to get a decree for a counterclaim as claimed in the written statement. If the plaintiff does not
file any reply to the counterclaim made by the defendant, the court may pronounce the ex parte
judgment against the plaintiff in relation to the counterclaim made against him or make such order
in relation to the counterclaim as it thinks fit.
• According to Rule 6-A(4), the counterclaim shall be treated as a plaint and will be governed by the
rules applicable to the plaints. Similarly, according to Rule 6-G, a reply filed in answer to a
counterclaim shall be treated as a written statement and governed by rules applicable to written
statements.
DIFFERENCE BETWEEN SET-OFF AND
COUNTER CLAIM IN CPC?
SET-OFF COUNTER CLAIM
• It is a cross action. • It is statutory defense.
• It is a weapon of offence. (Like a sword)
• It is a ground of defense. (Like a shield)
• Where plaintiff's suit is stayed, discontinued or
dismissed; counter claim proceeds. • Where plaintiff's suit is stayed, discontinued
• This is not arising out of same transaction.
or dismissed; set-off also extinguished.
• It can be availed in any type of suit • This is arising out of same transaction.
• Where amount claimed by defendant is higher than • It can be availed in money suit only.
plaintiff, it is counter claim..
• Amount claimed by the defendant is always
less than amount claimed plaintiff