Written Statement: Set-off & Counter Claim
CASE: Rajni Rani v. Khairati Lal
It is a cause of action in favour of the defendant in a suit against the plaintiff.
Set – Off
- Set-off applies only and only to money matters for all other matters, set-off does not apply.
- Set-off is always a defence.
- Illustration: A claims that B must pay him Rs. 100. B takes the defence of set-off stating that in an independent earlier transaction. A owes B Rs. 90, therefor B takes claim that only Rs. 10 is to be paid by him. Thus, that Rs. 90 must be a set-off in Rs 100 and only Rs10 is owed.
- Categories of set-off:
- Basic features of set-off:
- It must be a suit for recovery of money.
- It must be an ascertained sum of money.
- The sum must be legally recoverable
- If there are more than plaintiff, you can recover it from all plaintiffs
- It must be within the pecuniary jurisdiction of the court.
- Effects of Set-off:
The two transactions will not have two independent suits to claim the recovery.
- Categories of Set-off:
- Legal Set-off
- Equitable Set-off
Legal set-off is on the principle of money for money. Equitable set-off applies to value of goods or services.
Illustration: Servant breaks a valuable vase and asks the value of the vase to be set-off (excused) based on the years of service.
In legal set-off, there must be an ascertained amount of money. In equitable set-off the act is to be set-off based on gratitude, equity and good conscience.
In legal set-off, money is involved but in equitable set-off it is value act.
- Illustration: A claims Rs 100. B makes claim that Rs 101 is due from A. This is counter-claim.
Till Rs 100, it is set-off. After Rs 100, it is counter claim.
- Where amount of claim of defendant is more than the amount to be set-off, it is counter claim.
- Set-off is a shield (defence) while counter claim is a sword.
- Basic features of set-off is counter claim are similar.
- Once counter claim is made, plaintiff becomes defendant and vice versa written statement becomes plaint and plaint becomes written statement.
- If A is absconding (the previous plaintiff but present defendant):
- Usually, if plaintiff is absent for 3 contentious hearings, suit is dismissed foe default. Usually, if defendant is absent foe 3 continuous hearings then the suit is adjudged ex-parte.
- In counter claim, if A is absent, the suit proceedings continue with B and the judgement is valid and binding. This is an exception to the general rule of dismissal for default and ex-parte.
Distinction Between Set-off & Counterclaim
CASE: Munshi Ram v. Radha Kishan;
- Set-off is a statutory defence to a plaintiff’s claim, counterclaim is a cross-action.
- Set-off must be for an ascertained sum or must arise out of the same transaction. Counterclaim need no arise out of the same transaction.
- Set-off is a good ground of defence to the plaintiff to the plaintiff’s action, counterclaim enables the defendant to enforce the claim against the plaintiff as an independent action
- In a legal set-off, the amount must be recoverable at the date of the suit. In a counterclaim, the amount must be recoverable at the date of the written statement.