Pleading Generally - Order VI

WRITTEN STATEMENT – Order VIII

SET-OFF -Order VIII Rule 6

&
Counterclaim -Order VIII Rule 6A to 6G
'Payment'
'Payment' refers to the satisfaction or extinguishment
of a debt (or part of a debt) effected prior to the
stage of filing defence (written statement). No Court
fee is payable in regard to such a plea.

Adjustment
When there are mutual demands between plaintiff
and defendant, that is monies are due and payable
by each to the other, both are entitled to mutual
adjustment of the monies due and recoverable. An
'adjustment', results in an extinguishment of debt, as
contrasted from a 'payment', where there is an
extinguishment of a debt (or part of debt) by an
actual payment by the debtor to the creditor.
 When the adjustment does not take place before
filing of the suit and the defendant claims
adjustment in the written statement, the plea of
adjustment becomes a plea of set-off. A plea of set-
off requires payment of Court fee.

(State Trading Corporation of India Limited v. Vanivilas

Co-operative Society, Ltd 2001 (5) Kant LJ 570 (DB)
Cofex Exports Ltd. vs. Canara Bank, AIR 1997 Delhi
355)
 Definition
o A claim set up against another. Its a kind of counter-
claim that operates as a defence to a claim.
o Cross-claim which partly offsets the original claim
o Where there are mutual debts between plaintiff and
defendant one debt may be settled against other.
o Its plea in defence, available to the defendant.
o By adjustment, set-off either wipes out or reduces
the plaintiff’s claim in a suit for recovery of money.
 The Law recognizes TWO types of set-off:

1. Legal Set-off - Order VIII Rule 6 of CPC

2. Equitable Set-off
Rule 6. Particulars of set off to be given In
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, of
exceeding to 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 written statement containing the Particulars of
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 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.
1. The suit must be of recovery of money.
2. The sum of money must be ascertained.
3. The sum claimed must be legally recoverable.
4. The sum claimed must be recoverable by all
the defendants against the plaintiff if there
are more than one defendants.
5. The sum claimed must be recoverable from
all the plaintiffs by the defendant if there are
more than one plaintiffs.
6. In the defendant's claim for set off, both the
parties must fill in the same character as they
fill in the plaintiff's suit.
a) A bequeaths Rs. 2,000 to B and appoints C his
executor and residuary legatee. B dies and D takes
out administration to B's effect, C pays Rs. 1,000 as
surety for D: then D sues C for the legacy. C cannot
set-off the debt of Rs. 1,000 against the legacy, for
neither C nor D fills the same character with
respect to the legacy as they fill with respect to the
payment of Rs. 1,000.
b) A dies intestate and in debt to B. C takes out administration to
A's effects and B buys part of the effects from C. In a suit for
the purchase-money by C against B, the latter cannot set-off the
debt against the price, for C fills two different characters, one as
the vendor to B, in which he sues B, and the other as
representative to A.

c) A sues B on a bill of exchange. B alleges that A has wrongfully

neglected to insure B's goods and is liable to him in
compensation which he claims to set-off. The amount not being
ascertained cannot be set-off.

d) A sues B on a bill of exchange for Rs. 500. B holds a judgment

against A for Rs. 1,000. The two claims being both definite,
pecuniary demands may be set-off.
e) A sues B for compensation on account of trespass. B holds a
promissory note for Rs. 1,000 from A and claims to set-off that
amount against any sum that A may recover in the suit. B may do
so, for as soon as A recovers, both sums are definite pecuniary
demands.

f) A and B sue C for Rs. 1,000 C cannot set-off a debt due to him
by A alone.

g) A sues B and C for Rs. 1000. B cannot set-off a debt due to him
alone by A.

h) A owes the partnership firm of B and C Rs. 1,000 B dies, leaving

C surviving. A sues C for a debt of Rs. 1,500 due in his separate
character. C may set-off the debt of Rs. 1,000.
 A set off is still possible in certain situations even
when some of the above conditions are not satisfied.
For example, in a transaction where by goods are
exchanged for services as well as payment, the
defendant may be allowed to claim a set off for an
uncertain amount for damaged goods. In a suit by a
washerman for his wages, the defendant employer
should be able to set off the price of the clothes lost
by the plaintiff. In such a case, driving the plaintiff to
file another suit would be unfair. A set off in such
situations is called an Equitable Set off.
 Where A sues B to recover 50,000/- under a contract, B can
claim set off towards damages sustained by him due to the
breach of the same contract by A. Harishchandra vs Murlidhar
AIR 1957
Bhupendra Narain Singha Bahadur Vs. Bahadur Singh
AIR 1952 SC 201.
“A plea in the nature of equitable set off is not available, when the
cross-demands do not arise out of the same transaction and not
connected in its nature and circumstances. ….. ….. …… A
wrongdoer who has wrongfully withheld money belonging to another
cannot invoke any principles of equity in his favour and seen to
deduct there from the amount that have fallen due to him. There is
nothing improper or unjust in telling the wrongdoer to undo his
wrong and not to take advantage of it”

Lakshmi chand and Balchand Vs. State of Andhra Pradesh

(1987) 1 SCC 19
“When a claim is founded on the doctrine of equitable set-off, all
cross demands are to arise out of the save transaction or the demands
are so connected in the nature and circumstances that they can be
looked upon as a part of one transaction.”
DOBSON & BARLOW Ltd., Vs. Bengal SPG &Wvg. Co.
ILR 1897 -21 Bom 126
Giridharlal Chaturbhuj Vs. Surajmal Chauthmal Agarwal
AIR 1940. Nag.177
“An equitable set-off is not be allowed where protracted
enquiry is need for the determination of sum due”.
Mackinnon Mackenzie and Co (P) Ltd., Vs. Anil Kumar Sen
AIR 1957 Cal.150.
“The provisions of limitations Act do not necessarily bar an
equitable set off and the provision of or 8 R.6 do not do away with
the principles of equitable set off.
Barthels and luders Gmbtt Vs. [Link] AIR.1998 Bombay 380.
“Plaintiff filed suit for recovery under admiralty jurisdiction on
account of repairs of vessel. Counter claim filed by owner of vessel
alleging the repairs were made negligently held there was no
restriction in filing counter claim
Cofex Exports Ltd., Vs. Canara Bank AIR 1997 Del.355.
“Independent of the provisions in CPC the court of Equity in England
allowed a plea of equitable set off being entertained though the amount was
unascertained and there were mutual debt and suit awaiting to cross demand out of
the same transaction so connected in their nature and circumstances so that the
plaintiff should recover and the defendant driven to a cross suit.
 Legal Set Off Equitable Set Off
Sum must be ascertained. Sum need not be ascertained.
Claim need not originate Claim must origination from the
from the same transaction. same transaction.
Legal set off can be claimed
Equitable set off cannot be
as a right by the defendant
claimed as a right but by court's
and the court is bound to
discretion.
adjudicate upon the claim.
Court fee must be paid on set
No court fee is required.
off amount.
The amount may be time barred.
However, if the defendant's claim
The amount must not be time
is time barred, he can claim only
barred.
as much amount as is given in
the plaintiff's claim.
Gunjan Sinha Jain vs Registrar General,High Court Of Delhi – 2012

Q.182. A time barred debt can be claimed:

(1) As a set off. (3) As a fresh suit.
(2) As a counter claim. (4) None of the above.

53. According to the petitioners, option (1) [As a set off] is the correct answer.
But, the Answer Key shows option (4) [None of the above] to be the correct
answer.

54. There can be a legal set-off and an equitable set-off. The question does not
specify which. Therefore, it must be presumed that it refers to both kinds of set-
off. Order VIII Rule 6 of the Code of Civil Procedure, 1908 deals with legal set-
off. But, independent of the provisions of the said Code, there also exists the
concept of equitable set- off.

55. Once it is clear that there can be two kinds of set-offs and that the question
does not distinguish between either of them, what needs to be seen is whether in
either case a time barred claim can be claimed as a set-off.
56. ….. So, there is judicial precedent that a time barred debt may be
claimed by way of an equitable set-off. Therefore, option (1) cannot
be regarded as a wrong answer. But, at the same time, we must also
keep in mind that some candidates may have had in mind only a legal
set-off. This is so because the question does not specify the kind of
set-off. So, candidates, who worked out the solution on the
understanding that the question dealt with legal set-off and the
provisions of Order 8 Rule 6 CPC, and, consequently, chose option
(4), also cannot be faulted. But, as there cannot be two correct
answers for the same question in the scheme of the 'OMR Sheet'
based test, the question would have to be removed from
consideration so that neither those candidates who chose option (1)
nor those who chose option (4) are negatively marked.
6A. Counter-claim by defendant –
(1) A defendant in a suit may, in addition to his right of pleading a
set-off under rule 6, set up, by way of counter-claim against the
claim of the plaintiff, any right or claim in respect of a cause of
action accruing to the defendant against the plaintiff either
before or after the filing of the suit but before the defendant has
delivered his defence or before the time limited for delivering his
defence has expired whether such counter-claim is in the nature
of a claim for damages or not :
Provided that such counter-claim shall not exceed the pecuniary
limits of the jurisdiction of the Court.
(2) Such counter-claim shall have the same effect as a cross-suit so
as to enable the Court to pronounce a final judgment in the same
suit, both on the original claim and on the counter-claim.
(3) The plaintiff shall be at liberty to file a written statement in
answer to the counter-claim of the defendant within such period
as may be fixed by the Court.
(4) The counter-claim shall be treated as a plaint and governed by
the rules applicable to plaints.
6B. Counter-claim to be stated - Where any defendant seeks to rely
upon any ground as supporting a right of counter-claim, he shall, in
his written statement, state specifically that he does so by way of
counter-claim.

6C. Exclusion of counter-claim - Where a defendant sets up a counter-

claim and the plaintiff contends that the claim thereby raised ought
not to be disposed of by way of counter-claim but in an independent
suit, the plaintiff may, at any time before issues are settled in
relation to the counter-claim, apply to the Court for an order that
such counter-claim may be excluded, and the Court may, on the
hearing of such application make such order as it thinks fit.

6D. Effect of discontinuance of suit - If in any case in which the

defendant sets up a counterclaim, the suit of the plaintiff is stayed,
discontinued or dismissed, the counter-claim may nevertheless be
proceeded with.
6E. Default of Plaintiff to reply to counter-claim. - If the plaintiff makes
default in putting in reply to the counter-claim made by the
defendant, the Court may pronounce judgment against the plaintiff
in relation to the counter-claim made against him or make such
order in relation to the counter-claim as it thinks fit.

6F. Relief to Defendant where counter-claim succeeds - Where in any

suit a set-off or counter-claim is established as defence against the
plaintiff's claim and any balance is found due to the plaintiff or the
defendant, as the case may be, the Court may give judgment to the
party entitled to such balance.

6G. Rules relating to written statement to apply - The rules relating to

a written statement by a defendant shall apply to a written
statement filed in answer to a counter-claim.
 Set off Counter claim
1. Amount claimed should be an 1. Claim can be for an ascertained sum or
ascertained sum of money. for damages or any other relief.
2. Can be claimed only in a suit for 2. The claim can be in any suit.
recovery of money.
3. Is a ground of defence. 3. Is a weapon of offence enabling the
defendant to enforce the claim as
effectually as an independent action.
4. Both parties should fill the same 4. Character of parties in regard to plaint
character, as they fill in the plaintiff's and counter-claim need not be same.
suit.
5. The amount claimed must be 5. The amount must be recoverable on
recoverable by defendant from plaintiff the date of written statement. A cause of
on the date of suit by plaintiff. action accruing after the date of suit by
plaintiff can also be the subject-matter of
the counter-claim.
6. Court is bound to adjudicate upon 6. The Court may on its discretion
the claim for set-off. exclude counter-claim from consideration
in the suit and direct defendant to file a
separate suit.
7. The defendant admits the whole or 7. The defendant need not admit any part
part of the suit claim and then seeks to of the suit claim.
extinguish it by way of adjustment.
1. None should exceed the pecuniary limits of the jurisdiction of the
court;

2. Both are pleaded in the written statement, if the law governing the
court permits such plea being raised by the defendant in the
written statement;

3. The plaintiff is expected to file a written statement in answer to

claim for set off or to a counter claim;
4. Even if permitted to be raised, the court may in appropriate cases
direct a set off or counter claim being tried separately;
5. A defendant cannot be compelled to plead a set off nor a counter
claim: he may as well maintain an independent action for enforcing
the claim forming subject matter of set-off or counter claim;
6. Both are liable to pay court-fee;

7. Dismissal of suit or its withdrawal would not debar a set off or

counter claim being tried may be followed by a decree against the
plaintiff.( Cofex Exports Ltd. v. Canara Bank AIR 1997 Delhi 355
(DB))
 None of the restrictions that are applicable to a claim for set-
off, apply to a counter-claim.

 Before amendment to the Code of Civil Procedure,

by Amendment Act of 1976, there was no provision for a
counter-claim in the Code of Civil Procedure. If a claim is not
one falling under Order 8, Rule 6 dealing with set-off, it will
fall under Order 8, Rule 6-A dealing with counter-claims.
Insofar as procedure is concerned, there is virtually no
difference between set-off and counter-claim.

 Both are in the nature of cross suits and both attract the
same Court fee.
Three modes of pleading or setting up a counter-claim in a civil suit
Ramesh Chand Ardawatiya v. Anil Panjwani, AIR 2003 Sc 2508, The Hon'ble
Supreme Court in the decision reported in held that there are three
modes of pleading or setting up a counter-claim in a civil suit.
 Firstly, the written statement filed under Rule 1 may itself contain a
counter-claim which in the light of Rule 1 read with Rule 6-A would be a
counter-claim against the claim of the plaintiff preferred in exercise of
legal right conferred by Rule 6-A.
 Secondly, a counter claim may be preferred by way of amendment
incorporated subject to the leave of the Court in a written statement
already filed.
 Thirdly, a counter-claim may be filed by way of a subsequent pleading
under Rule 9.
In the latter two cases, the counter-claim though referable to Rule 6-A
cannot be brought on record as of right but shall be governed by the
discretion vesting in the Court, either under Order 6, Rule 17 of the
C.P.C., if sought to be introduced by way of amendment, or, subject to
exercise of discretion conferred on the Court under Order 8, Rule 9 of
the C.P.C., if sought to be placed on record by way of subsequent
pleading. … …. …. A counter-claim is not entertainable when there is no
written statement on record
 Gurbachan Singh vs Bhag Singh & Ors - 1996 SCC (1) 770
Suit for perpetual injunction. Defendants filed the
written statement contending that plaintiff had
trespassed into their land of an extent of 3 kanals
and they are in unlawful possession. Thereby, they
raised counter claim, in the written statement, for
possession. The Trial Court, while dismissing the
suit, granted decree for possession of two kanals,
two marlas and one biswas comprising survey
numbers mentioned therein. On appeal, it was
confirmed and the High Court. Supreme Court,
held, that in a suit for injunction, the counter-claim
for possession also could be entertained, by
operation of Order 8 Rule 6 (A)(1) of CPC.
 Sh. Jag Mohan Chawla vs Dera Radha Swami Satsang AIR 1996 SC 2222
Whether in a suit for injunction, counter-claim for injunction in respect of the same or
a different property is maintainable? Whether counter-claim can be made on
different cause of action?
In sub-rule (1) of Rule 6A, the language is so couched with words of wide width as to
enable the parties to bring his own independent cause of action in respect of any
claim that would be the subject matter of an independent suit. Thereby, it is no
longer confined to money claim or to cause of action of the same nature as
original action of the plaintiff. It need not relate to or be connected with the
original cause of action or matter pleaded by the plaintiff. The words "any right
or claim in respect of a cause of action accruing with the defendant" would show
that the cause of action from which the counter-claim arises need not necessarily
arise from or have any nexus with the cause of action of the plaintiff that
occasioned to lay the suit. The only limitation is that the cause of action should
arise before the time fixed for filing the written statement expires. The defendant
may set up a cause of action which has accrued to him even after the institution
of the suit.

Opportunity also has been provided under Rule 6-C to seek deletion of the counter-
claim. …. …… Even otherwise, it being an independent cause of action, though
the identity of the property may be different, there arises no illegality warranting
dismissal of counter-claim. Nonetheless, in the same suit, both the claim in the
suit and the counter-claim could be tried and decided and disposed of in the
same suit.
Mahendra Kumar Vs. State of M.P. (1987 (3) SCC 265)
The Hon'ble Supreme Court has held "15. The next point that remains
to be considered is whether Rule 6A(1) of Order VIII of the Code of
Civil Procedure bars the filing of a counter-claim after the filing of a
written statement. This point need not detain us long, for Rule
6A(1) does not, on the face of it, bar the filing of a counter-claim
by the defendant after he had filed the written statement. What is
laid down under Rule 6A(1) is that a counter-claim can be filed,
provided the cause of action had accrued to the defendant before
the defendant had delivered his defence or before the time limited
for delivering his defence has expired, whether such counterclaim
is in the nature of a claim for damages or not. The High Court, in
our opinion, has misread and misunderstood the provision of Rule
6A(1) in holding that as the appellants had filed the counter claim
after the filing, of the written statement, the counter-claim was not
maintainable. The finding of the High Court does not get any
support from Rule 6A(1) of the Code of Civil Procedure. As the
cause of action for the counter claim had arisen before the filing of
the written statement, the counter-claim was, therefore, quite
maintainable. "
Rohit Singh & Ors vs State Of Bihar - AIR 2007 SC 10
 A counter-claim, no doubt, could be filed even after the written
statement is filed, but that does not mean that a counter-claim can
be raised after issues are framed and the evidence is closed.

 If there is no relief is claimed, there is no counter-claim in terms of

Order VIII Rule 6A of the Code.
 Written statement to be treated as a counter-claim and an
opportunity to be given to defendants to file their pleas in answer.
The defendants should be called upon to answer the counter claim.

 Normally, a counter-claim, though based on a different cause of

action than the one put in suit by the plaintiff could be made.

 A counter- claim has necessarily to be directed against the plaintiff

in the suit, though incidentally or along with it, it may also claim
relief against co-defendants in the suit. But a counter-claim directed
solely against the co-defendants cannot be maintained. By filing a
counter-claim the litigation cannot be converted into some sort of
an inter-pleader suit.
2014 (1) CTC 79 T.M. Durairaj Vs S. Arulprakash
 CPC - order 8, Rule 6-A – Counter-Claim – Filling of Counter-claim
after commencement of Trial – Effect thereof – Counter-claim
cannot be filed once recording of evidence has commenced –
Provision for Counter-claim is to avoid plurality of proceedings –
Counter-claim was filed after commencement of Claim by way of
additional Written Statement – Counter-claim cannot be filed
belatedly and Law of Limitation squarely applies to Counter-claim –
Order of Trial Court refusing to entertain Counter-claim in form of
additional Written Statement does not suffer from any illegality.

2011 (2) L.W. 679 ( [Link] [Link] and Others).

 The High Court held that a counter claim shall be made by the
defendant before he could deliver his defence and the same cannot
be made after the time prescribed under Rule 6A.
1999 (III) CTC 577 (Ramalathumi Ammal Vs. [Link] ).
 The High Court held that if the counter claim in respect of a relief is
barred by limitation, then the said claim cannot be permitted to be
raised.

Mahendra Kumar Vs. State of M.P. (1987 (3) SCC 265)

 The Supreme Court held that a counter claim to seek a declaration
of a document as void cannot be made after the period of limitation.
Karuppayammal and another Vs. [Link] Pillai and others
(2000-1- L.W. 593)
 Suit for recovery of possession and for mesne profits. In the said
suit, a third party filed an application seeking to implead himself as
third defendant and also prayed for a declaration of his title to the
suit property and for direction to the defendants 1 and 2 therein to
deliver possession of the same. The Hon’ble High Court held that
the counter claim by a defendant can be maintained only as against
plaintiff and not as against the defendant.

Kulwant Singh V/s Gurcharan Singh Kumar AIR 2003 (P & H) 1

 The counter-claim against the codefendant cannot be sustained
under Order 8 Rule 6C of C.P.C.
[Link] Sulaiman vs [Link] Beevi (Deceased) (2013 -2 CTC- 735)
 Suit is for partition and therefore the status of the parties in this suit
cannot be equated with the status of the parties in other suits with
other reliefs. It is well settled that in a partition suit the defendant can
be considered to be a person suing. This position has been reiterated
by this court in a decision reported in 1998 (1) MLJ 137 ([Link]
Vs. [Link] Servai and Others). Therefore, when a defendant in a
partition suit can be considered to be a person suing, then a counter
claim can also be made against such defendant by another co-
defendant. In fact, when a counter claim is made, the person viz., the
defendant who makes such claim becomes the plaintiff insofar as that
claim is concerned and person against whom such claim is made
becomes the defendant. Sub-clause (2) of Rule 6A of Order 8 CPC
makes it clear that such counter claim shall have the same effect as a
cross suit. Even if the plaintiff in the said suit discontinues or the suit
itself is stayed or dismissed, still the counter claim can be proceeded
with as contemplated under Order 8 Rule 6D . Therefore a combined
reading of Order 8 Rule 6A(2) with Order 8 Rule 6D makes it
abundantly clear that the counter claim in a partition suit can be
made even against the co-defendant.
A.Z.M. Reazai Karim v Mohammad Israil Ostagar and Another AIR 1939 Cal 415
(G)
Sadasheo Krishnarao Buty v Nathu Bala Mahar AIR 1943 Nag 314 (F)
 it is held that there is no difference between a legal set-off and
equitable set-off in the matter of Court fee and in both cases, Court
fee must be paid ad valorem on the amount claimed. It was also
held payment of Court fee after decision is impermissible.

Smt. Parvathamma v KM. Lokanath and Others, AIR 1991 Karnataka

283
 "The first defendant has not paid the Court fee and has not
requested the Court to register it as a counter-claim. Counter- claim
is a plaint in a cross suit. Therefore, if a counter-claim is set up in
the written statement and no Court fee is paid, it is as good as filing
a plaint without a Court fee. … If the defendant fails to pay
requisite Court fee, it would be open to the Court to reject the
counter-claim.
State Trading Corporation of India Limited v. Vanivilas Co-operative Society, Ltd
2001 (5) Kant LJ 570 (DB)

The position regarding Court fee may be summarised thus:

 A defendant who wants to claim set-off or make a counterclaim should state
specifically in the written statement that he is claiming set-off or making a
counter-claim. He should show the valuation regarding the set-off or counter-
claim for purposes of Court fee and pay Court fee. The Court shall decide
whether the Court fee paid on the written statement in proper as done in the
case of plaint.

 Where the defendant fails to specify in the written statement that he is

making a claim for set-off or counter-claim or fails to pay any Court fee at all,
then, the question of Court fixing a date for payment of Court fee does not
arise.

 The amount sought to be set-off or the subject-matter of counter-claim

should be specified. If the claim of defendant is for damages, then the
amount claimed should be stated. The claim for set-off or counter-claim
cannot be tentative.
State Trading Corporation of India Limited v. Vanivilas Co-operative Society, Ltd
2001 (5) Kant LJ 570 (DB)
Conti….
 If the relief of set-off or counter-claim is properly valued, but only a part of
the Court fee is paid thereon by the defendant, the Court shall fix a time for
payment of deficit Court fee as contemplated under Order 7, Rule 11(c) of
the CPC. If there is no valuation and if no Court fee is paid, then there is no
need for the Court to grant time for payment of the Court fee under Order 7,
Rule 11 or any other provision of the CPC.

 Where no Court fee is paid, there is no need to frame any issue on the set-off
claimed or counter-claim. On the other hand, if necessary Court fee is paid
by defendant, after giving due opportunity to the plaintiff to file his defence
(written statement) regarding such claim for set-off or counter-claim, the
Court should frame appropriate issues thereon in addition to the issues on
the claim in the plaint, and then proceed with the evidence.

 Where no Court fee is paid, it is impermissible for the Court to examine the
claim for set-off or counter-claim in the judgment and grant relief and then
permit the defendant to pay Court fee.
THANK YOU