ORDER 8

Meaning of Set off - Set off is reciprocal

acquittal of debts. “Set-off” means a claim
set up against another. It is a cross claim
which partly off sets the original claim. It is
an extinction of debts of which two
persons are reciprocally debtors to one
another by the credits of which they are
c o m
reciprocally creditors to one another.
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Where there are mutual debts between
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the plaintiff and the defendant, one debt
may be settled against the other. It is a
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To
plea in defence, available to the
defendant. By adjustment, set-off either
wipes out or reduces the plaintiff’s claim in
a suit for recovery of money.
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According to O8R6 in a suit for
recovery of money, a defendant can stake
his claim to any ascertained sum of
moneylegally recoverable by him from the
plaintiff as a set-off against the plaintiff’s
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demand if both parties fill the same
character as they fill in the plaintiff’s case
at the first hearing of the suit or afterwards
if permitted by the Court, present a written
statement containing the particulars of the
debt sought to be set-off. The written
statement shall have the same effect as a
plaint in a cross-suit so as to enable the
c o m
Court to pronounce a final judgment in
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respect of both the original claim and of
the set-off.
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Object- The purpose of set-off is to
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To
obviate the necessity of a fresh suit by the
defendant. The defendant is entitled to
raise the plea of set-off only when
following conditions exist
1) The plaintiff’s suit must be for
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recovery of money. If not it cannot be

claimed thus in a suit for ejectment of
tenant on the ground of non payment
of rent, in which arrears of rent have
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 also been claimed, the defendant-
tenant may plead set-off. However,
in case where ejectment of tenant
has been prayed for but amount of
unpaid rent is not demanded, the
defendant-tenant cannot raise the
plea of set-off since it is no more a
money-suit. Thus, what is necessary
c o m
is that one of the reliefs sought in the
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suit against the defendant must be
for recovery of money. In such a suit,
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the defendant is entitled to raise the
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plea of set-off.
2) The defendant’s claim must be for an
ascertained sum of money-‘It means
that the amount which the defendant
claims against the plaintiff to be set-
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off must be fixed, definite and known.

3) The money must be legally
recoverable.—The term ‘legally
recoverable” means that the debtor
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is liable to pay the sum under any
 law. The defendant shall be entitled
to claim set-off in respect of such
dues only which the plaintiff is bound
to pay under any law. A time-barred
debt is not legally recoverable and
hence set-off cannot be pleaded for
such amount.
4) Both plaintiff and defendant must fill
c o m
the same character as they fill in the
plaintiffs claim. —The defendant may
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plead for set-off only when both the
k e
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parties fill same character as they fill
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To
in the suit. It means that the amount
in respect of which the defendant
pleads set-off must be claimable
from plaintiff in the same capacity as
in the suit. If the amount payable by
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the plaintiff to the defendant is in the

capacity of a “manager’, but the
plaintiff has filed the present suit in
his personal capacity, then the
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 defendant cannot raise the plea of
set-off in respect of such amount.
5) The sum claimed by way of set-off
must not exceed the pecuniary limits
of the court.—It is necessary that the
amount claimed to be set-off by the
defendant is within the pecuniary
limits of the court in which the suit
c o m
has been instituted.
rs .
In Jitendra Kumar v. Peerless
General Finance & Investment Co.
k e
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Ltd it was held that under Order VIII,
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To
Rule 6, CPC certain conditions
precedent are to be satisfied for
application of the said rule.

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Is claiming set off compulsory-

The defendant is not under any obligation
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to necessarily raise the plea of set-off. He
may avoid claiming it. It is the choice of
defendant whether to claim a set-off or
not. If he opts to claim, he must do it at
the first hearing in his written statement. If
he prefers not to claim, he may very well
waive his right. However, where the
defendant omits to claim set-off in his
written statement, he cannot subsequently
c o m
claim it unless permitted by the court. Of
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course, the defendant may bring
independent suit against the plaintiff for
k e
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recovery of such amount. The effect of
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To
raising the plea of set-off is that the
defendant steps into the shoes of plaintiff
in respect of amount claimed by him.
Thus, there are virtually two suits under
the same suit-number The two suits are
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considered to be independent of each

other. Even if the suit instituted by plaintiff
is dismissed or is withdrawn, it makes no
difference. The claim of defendant for
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amount of set-off does not go with the suit
and the court may pass a decree in favour
of defendant in respect of that sum.
Types of Set Off
Two kinds - Legal set-off and Equitable
set-off. Rule 6 speaks of legal set-off only.
In contrast to legal set-off, an equitable
set-of, can be claimed for unascertained

c o m
money but it must arise from the same
transaction. For example, where a servant
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sues his master for recovery of amount of
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an
salary, the master can claim set-off for
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loss sustained by him due to negligence

To
of servant since it arises out of same
relationship.
Equitable set-off is provided in Order XX,
Rule 19(3), C.P.C., which states that “the
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provisions of this rule (relating to a decree

for set-off or counter-claim and an appeal
there from) shall apply whether the set-off
is admissible under Rule 6 of Order VIII or
otherwise.”
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Counter claim
Order VIII, Rules 6-A to 6-G
“Counterclaim” may be defined as “a claim
made by the defendant against the
plaintiff”. It is a claim independent of, and
separable from, suit plaintiff’s claim which

c o m
can be enforced by a cross action.

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It is a cause of action in favour of the
defendant against the plaintiff.
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In addition to pleading a set-off in a
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suit, the defendant may also set-up a
counter-claim. The term “counter-claim”
means a claim raised by the defendant
against the claim of plaintiff in a suit. It is
essentially and substantially a cross-
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action of the defendant. It may be

described as a cause of action accruing to
defendant against the plaintiff. However,
such cause of action must accrue before
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filing of written statement by the
defendant.
Following provisions deal with counter
claim-
O8 R 6A TO R 6G

c o m
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Rule 6A-6G of Order VIII provides for
k e
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counter-claim. The Code does not define
'counter claim'. It can be defined as a claim
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To
made by the defendant against the plaintiff
in the suit filed by plaintiff. It is a cause of
action in favour of defendants against the
plaintiff. It is independent and separate
from plaintiff's claim. The defendants may
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in addition to his right to plead set-off, set
up a counter claim. Rules 6A to 6G were
added in Order 8 vide Amendment Act of
1976, which specifically provide for setting
of counter-claim. tr-5A3E7D4B7A
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 Object: To avoid multiplicity of
proceedings.

Rule 6A provides that such counter-claim

against the plaintiff can be set up by the
defendant. The cause of action for such
counter claim may accrue either before or
after filing of the suit by the plaintiff but
c o m
before the defendant has delivered his
defence or before the time fixed for delivery
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of his defence has expired. It further
k e
provides that:
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(a)Such claim does not exceed the pecuniary

To
limits of the jurisdiction of court.
(b) Such claim shall not be barred by
limitation.
It is to be noted that outer limit to file
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counter claim is till framing of issues. After

issues are framed counter claim cannot be
filed.
NATURE – A SWORD
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SCOPE- INDEPENDENT SUIT IN ITSELF
MODES OF SETTING UP COUNTER
CLAIM- IN WRITTEN STATEMENT
WHO MAY FILE AND UPTO WHICH
STAGE- As a general rule defendant can
file counter claim against the plaintiff
however in Ramesh Chand v. Anil
Panjwani, Supreme Court held if

c o m
defendant is filing counterclaim against the
plaintiff he can also file counter claim
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against co-defendants.
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EFFECT

To
Effect of counter claim: Following are the
effects of counter claim:
1. A counter claim has the effect of
a cross-suit and the court can pronounce
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a final judgment both on the original claim
and the counter-claim.
2. The counter-claim of the
defendant will be treated as plaint and
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the plaintiff has a right to file a written
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 statement in answer to such counter-
claim.
3. Even if the suit of plaintiff is
stayed, dismissed or withdrawn, the
counter-claim will be decided on merits.
4. Rules relating to written
statement by a defendant shall apply to a
written statement filed in answer to the
c o m
counter claim.

rs .
e
Difference between legal set off and equitable set
k
off
Particulars
r an
Legal Set off Equitable Set off
p
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To The concept of
legal set off is
The concept of
equitable set off is
provided in Order
provided under O20
Concept VIII Rule 6(1)
R19(3) it comes from
under Code of
“equity, justice, good
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conscience”.
1908.

The equitable set off is

Legal The legal set off
granted on the facts
aspect shall be claimed
and circumstances and
as 5Aa3E7Dmatter of
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on the discretion of the
 right. court.

In the legal set off

the amount which In the equitable set off
is recovered is the amount which is
Recovery of ascertained and recovered need not be
money within the ascertained and the
pecuniary case is admitted at the
jurisdiction of the discretion of the court.
court.

c o m
rs .
In the equitable set off
the court fees may not

k e
In legal set off the be paid by the
Court fees

r an
court fees are to
be paid by the
defendant and it
depends on different

p
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defendant. facts and

To circumstances of the
case.

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Difference between set off and counter claim
Particulars Set off Counter claim

Counter claim is
The set off is
provided under
provided under Order
Legal
Provision
VIII Rule 6 of the
m
Order VIII Rule 6A

o
to Rule 6G of the
c
Code of Civil
Procedure, 1908.
rs .
code of civil
procedure, 1908.

k e
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The object of set

a
off is to give an 7Q4R7Q6M1P
r The object of the
p
opportunity to the
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counter claim is
Object
To defendant to set
up his claim for
recovery of money
to avoid
multiplicity of
proceedings.
from the plaintiff’s
claim.
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The set off can be The counter claim

claimed in the can be claimed in
Claim all other suits
recovery of money
suits only. such as title,
possession, or in
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 the injunction.

It has a narrow
It has a wider
Scope scope or is related
scope.
to money.

The counter claim

The origin of the
is extention of set
Genesis set off is from
off and has a
“equity”.
m
wider scope.

c o
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General Rules of Denial

To
Order 8 Rule 3,5 and 4

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 ORDER 9

c o m
Order IX of the Civil Procedure Code,
1908 or CPC deals with the appearance
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of plaintiff and defendant before a
k e
court and also
n
highlights
r
consequences of non-appearance.a the

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To
Consequences of Non-appearance of
parties.
there can be three situations in this case-
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i. both parties are absent,

ii. only plaintiff is absent and
iii. only defendant is absent and in each
case, the law provides a different remedy.
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When Both Parties Do not Appear
The basic rule under Rule 3 of Order IX is
that, when both the parties do not appear,
the suit should be dismissed which means
that the plaint should be dismissed.
However, the provision uses the word
‘may’ which makes it a discretionary
power at the hands of the judge. In this
case as per rule 4 of order XI the plaintiff
c o m
may bring fresh suit or may apply to the
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court to set the dismissal aside.
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In H.K. Shah v. T.S. Bhasin, it was
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To
have a right to be heard and given
appropriate opportunities for the same. If
the court fails to provide sufficient
opportunities to be heard before passing
an order of dismissal of the suit, such
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order is ultra vires and can be set aside.

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When Plaintiff Does Not Appear
According to Rule 8, a suit shall be
dismissed by a court in a case where the
plaintiff fails to appear before the court
even after service of summons to the
defendant. In this case, the dismissal of
suit is completely dependent upon

c o m
whether the defendant accepts the claims
raised by the plaintiff or not. If the
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defendant accepts or admits the claims,
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he shall be liable for such claims and for
the remaining the suit shall be dismissed.
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In the matter of Lakshmi Commercial
Bank v. Hansraj, the court held that this
rule would not apply when the hearing
is for some interlocutory matter.
Moreover, in Pirthi Nath, it was
observed that where the issue is
framed in a suit after hearing the
parties, it is not proper for the court to
c o m
dismiss the suit due to the absence of
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the plaintiff. That provision applies
only when the court comes to the
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conclusion that the parties are not at
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issue

To
According to rule 9 of order IX When a
suit is dismissed under this rule, the
plaintiff is precluded from bringing a
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fresh suit for the same cause of action.

He can apply to the same court to set
aside the order of dismissal under Rule
9 on showing sufficient cause for his
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non-appearance.
 When Defendant Does not Appear (Ex-
Parte Proceedings)
In any proceeding, a defendant may not
appear before the court on first hearing for
three circumstances as mentioned under
Rule 6 of Order IX. These are:
1. The defendant chooses to remain
absent despite proper service of
c o m
summons.
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2. The defendant was not served with the
summons.
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3. The defendant was served with the
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summons but he does not have time to
o
appear on the date of hearing.
T
Thus, since there are three scenarios, the
consequences are also threefold. When
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the defendant absents himself from the

hearing even in spite of proper service of
summons, the court is entitled to continue
with the proceedings of the suit by hearing
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only the plaintiff. These proceedings are
called ex-parte proceedings.
Further, when the defendant is not served
with the summons at all, a second
summons has to be issued and served
upon him. In such cases, the court cannot
pass any adverse order against the
defendant.

c o m
Lastly, when the summons is served
but was delayed such that the defendant
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did not get sufficient time to appear, the
k e
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court shall adjourn the proceedings for
that date and fix a later date to hear the
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matter.
To
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Ex-Parte Proceedings
Sub-rule 1(a) of Rule 6 along with Rule 13
of Order IX deal with ex-parte
proceedings..
Rule 13 talks about Setting aside decree
ex parte against defendant.—In any case
in which a decree is passed ex parte
against a defendant, he may apply to the
c o m
Court by which the decree was passed for
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an order to set it aside; and if he satisfies
k e
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the Court that the summons was not duly
served, or that he was prevented by any
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sufficient cause from appearing when the
suit was called on for hearing, the Court
shall make an order setting aside the
decree as against him upon such terms as
to costs, payment into Court or otherwise
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as it thinks fit, and shall appoint a day for

proceeding with the suit.

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According to explanation provided in rule
13 where there has been an appeal
against a decree passed ex parte under
this rule, and the appeal has been
disposed of on any ground other than the
ground that the appellant has withdrawn
the appeal, no application shall lie under
this rule for setting aside that ex parte
c o m
decree.
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To
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  Rules concerning the framing of
issues. (ORDER 14 R/W 10 AND 15)

Object-Framing of issues curtail the area

of dispute and it clearly brings up what
specific points are to be recognized in
order to decide the case in a most
appropriate manner.
c o m
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When one party affirms and another party
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denies a material proposition of fact or
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To
law, then only issues arise. If there is no
denial, the question of framing the issue
does not arise.
Material propositions are those
propositions of law or fact which the
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plaintiff must allege in order to show his

right to sue or a defendant must allege as
to constitute his defence. Unless each
material proposition is affirmed by the one
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party and denied by the other, issue does
not arise.
Basically, at the first hearing (order 10) of
the suit, the Court shall ascertain upon
what material propositions of fact or law
the parties are at variance. For that, three
essential points are to be taken into
account
c o m
1. reading the plaint
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and. written
statement;
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2. examination under Rule 2 of Order X of
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C.P.C; and

To
3. hearing the parties or their pleaders;
The Court, after considering the above
points shall ascertain upon what material
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propositions of fact or law the parties are
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at variance, and shall thereupon proceed

to frame and record the issues on which
the right decision of the case appears to
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R3 provides for materials from which
issues may be framed.—The Court may
frame the issues from all or any of the
following materials:—
(a) Allegations made on oath by the
parties, or by any persons present on their
behalf, or made by the pleaders of such
parties;
c o m
(b) Allegations made in the pleadings or in
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answers to interrogatories delivered in the
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suit;
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(c) The contents of documents produced

To
by either party.

According to R 2 the court to pronounce

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judgment on all issues but where issues
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both of law and of fact arise in the same

suit, and the Court is of opinion that the
case or any part thereof may be disposed
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of on an issue of law only, it may try that
issue first if the issue relates to
(a) the jurisdiction of the Court, or
(b) a bar to the suit created by any law for
the time being in force and may deal with
the suit in accordance with the decision on
that issue.

c o m
R 5 provides for power to amend and
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strike out, issues.—(1) The Court may at
any time before passing a decree amend
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the issues or frame additional issues on
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such terms as it thinks fit, and all such

To
amendments or additional issues as may
be necessary for determining the matters
in controversy between the parties shall
be so made or framed.
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(2) The Court may also, at any time before

passing a decree, strike out any issues
that appear to it to be wrongly framed or
introduced. 6D1F
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 c o m
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To
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