Written Statement: Set-off & Counter Claim: CPC Free Notes

Written Statement: Set-off & Counter Claim: CPC Notes - Prolawctor

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

  1. Set-off applies only and only to money matters for all other matters, set-off does not apply.
  2. Set-off is always a defence.
  3. 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.
  4. Categories of set-off:
    1. Legal
    2. Equitable
  5. Basic features of set-off:
    1. It must be a suit for recovery of money.
    2. It must be an ascertained sum of money.
    3. The sum must be legally recoverable
    4. If there are more than plaintiff, you can recover it from all plaintiffs
    5. It must be within the pecuniary jurisdiction of the court.
  6. Effects of Set-off:
    The two transactions will not have two independent suits to claim the recovery.
  7. Categories of Set-off:
    1. Legal Set-off
    2. 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.

Parties to Suit: CPC Free Notes

Counter Claim:

  1. 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.
  2. Where amount of claim of defendant is more than the amount to be set-off, it is counter claim.
  3. Set-off is a shield (defence) while counter claim is a sword.
  4. Basic features of set-off is counter claim are similar.
  5. Once counter claim is made, plaintiff becomes defendant and vice versa written statement becomes plaint and plaint becomes written statement.
  6. If A is absconding (the previous plaintiff but present defendant):
    1. 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.
    2. 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;

  1. Set-off is a statutory defence to a plaintiff’s claim, counterclaim is a cross-action.
  2. 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.
  3. 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
  4. 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.

Definition: Decree and Order Under CPC


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