| CPC |
1. Introduction
A plea of payment refers to the extinguishments of the debt prior to the raising of such debt after such plea is raised. Set-off can only be claimed where the plaintiff and defendant are reciprocally debtors of each other. Where a set-off is claimed the whole of it must be claimed or the balance will be hit.
(I) Effect of Set-off
The effect to a set-off pleaded in a written statement is that such written statement shall have the same effect as a plaint in a cross suit.
(II) Conditions, as to set-off
A defendant may claim a set-off, if the following conditions are present
i. The suit must be one for the recovery of money.
ii. The amount claimed to be set-off an ascertained sum of recovery.
iii. It must be legally recoverable.
iv. It must be recoverable by the defendant or by all the defendants, from the plaintiff or all the plaintiffs.
v. The claim must not exceed the pecuniary limits of the jurisdiction of the court in which the suit is brought.
vi. Both parties must filed, in the defendants claim to set-off the same character as in the plaintiff’s suit.
vii. The claim must be made at the first hearing.
(III) Defendant’s status in set-off case
The amount claimed as set-off the defendant has the status of a plaintiff and a decree can also be passed in his favor. Where the plaintiff fails to appear his suit can be dismissed in default and ex-parte decree, on the basis of the set-off can be passed against him.
(IV) Withdrawal of Plaintiff
Even where the plaintiff withdraw his suit, a decree can be passed against him in favor of a defendant claiming a set-off.
(V) Time regarding set-off
The set-off should be specifically pleaded in the written statement, otherwise it may be disallowed. It must be raised at the first hearing. As such it cannot be raised for the first time in appeal, or in execution but the court may allow the written statement, to be amended to enable a set-off.
(VI) Time regarding set-off
A set-off can be claimed in any suit in which the relief sought is the recovery of money, as for instance a suit on a negotiable instrument.
But a suit for dissolution of partnership and accounts or a suit for redemption, or for the enforcement of a mortgage where the right to personal decree is barred, are not money suits.
(VII) Fixed Amount Claim
The set-off should be claimed for a known and fixed amount, regardless of whether it is admitted or denied by the plaintiff i.e. for liquidated amount.
(VII) Illustration
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.
But where the amount has to be ascertained after taking accounts or determining the defendant’s share, set-off cannot be claimed. But the mere fact that calculation is necessary does not rendered the claim uncertain where the defendant’s claim is not f an ascertained sum he can bring a cross suit against the plaintiff.
(IX) Equitable Set-off
Where the amount claimed is unascertained, equitable set-off may be allowed, apart from the legal set-off permissible under this rule and a claim for this can be made in the written statement. The ‘distinction between the two is that a legal set-off is claimable as a matter of right, but not so an equitable set-off where in Court has the discretion either to adjudicate upon it or order it to be determined by a separate suit. But the claim to equitable set-off must have arisen out, of the same transaction. Where it arises out of a different transaction equitable set-off cannot be claimed. In England, legal setoff was allowed by Courts of Common Law and equitable set-off by Courts of Equity.
(X) Amount as to set-off
A sum cannot said to be legally recoverable where the plaintiff is not bound by law to pay it, or where he is not liable to the defendant in respect of that debt.
(XI) Examples
Following are examples of claims which are not le all recoverable
(i) A claim which is barred by res, judicata.
(ii) or a claim barred by limitation on the date of the suit.
(iii) Or a claim based on a decree incapable of execution. In cases of equitable set-off a barred debt can be pleaded.
(XII) Mutual Dealing
The claim and the set-off should be for debts due from and to the same parties in the same legal character i.e., the dealing should be mutual.
(i) Illustration
A dies intestate and in debt to B. C takes o administration of A’s effects and B buys parts of the effects from C. In a suit for the purchase-money to 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.
A joint debt and a separate debt cannot be set-off against one another unless the liability is joint and several.
(XIII) Extent of Claim
Claim should not exceed pecuniary jurisdiction of the Court. The value of the claim and the set-off separately, should be within the Combined they exceed such limits. The same rule applies to an equitable set-off.
(XIV) No Bar to Subsequent suit
A defendant is not bound to claim as set-off and where he omits to do so, a subsequent suit for the same will not be barred but if a set-off is claimed, it should be for the entire amount due.
(XV) Court Fee
Court fee is payable on the full amount claimed by way of set-off legal or equitable and a counter-claim as if such written statement were a plate. Where proper court fee has not been affixed the defendant must be directed to do so is the case with plaint.
(XVI) Appeal
A preliminary order disposing of a claim to set-off is not appealable but it may be attacked.