THE SET-OFF AS PER CIVIL PROCEDURE CODE(ORDER 8 RULE 6)

   

Set off means a claim set up against another.
   

It is a cross-claim, where there are mutual debts between plaintiff and defendant. then one debt may be settled against another.
   

It is a plea in defense available to the defendant.
   

By adjustment set off either wipe out or reduces the claim of the plaintiff.
   

The doctrine of set-off may  be defined as " the extinction of debts of which 2 persons are reciprocally debtors to one another by the credits of which they are reciprocally creditors to one another"

It is a "reciprocal acquittal of debts between two persons"
   

Setoff is of two types: 1) legal setoff (order 8 rule 6)  

                                    2) Equitable set off (order 20 rule 19 (3)).

 Conditions of set-off (legal set-off)

 1) The suit must be for the recovery of money -      A sues B for 25000 RS.  then B cannot set off the claim for damages for breach of contract for specific performance.

Also,   A borrowed Rs 10000/- from B. B purchased goods worth Rs 5000 from A's shop on credit. A failed to pay the debt. B sued A for the recovery of money. A can claim set off the 5000 RS in his written statement. 

2) The sum of money must be ascertained - the set-off can only be applicable to ascertainable claims. the claim must be definite.

3) Sum must be legally recoverable - for eg: A sue B for RS 50000/- and  B  cannot set off any amount due to him on a promissory note executed by A before  5  years.

4) It must be recoverable by the defendant or by all the defendants - for eg: A sue B&C for RS 50000/- then, B cannot setoff a debt due to him alone by A

5) It must be recoverable by the defendant from the plaintiff or all the plaintiffs -  for eg: A&B sue C for RS 50000/- then, C cannot set off a debt due to him by A alone.

6)It must not exceed the pecuniary jurisdiction of the court - the pecuniary jurisdiction of munsiff court is 10 lakh. hence set off of amount more than the amount cannot raise in munsiff. but the party is free to reduce the claim for making setoff applicable to the respective court.

7) Both the parties must fill, in the defendant's claim to set off, the same character as they fill in the plaintiff's suit.

Effect of set-off 

•     When defendant claim setoff then he will be put in the position of a plaintiff with regard to claims amount.

     There will be two suits - one by the plaintiff against the defendant and vice versa. both the suit will be tried together.

•       Separate suit number will not be given to set off.

    When the suit has been dismissed for default because of plaintiff or plaintiff withdraw the suit, then set off with respect to that suit will exist and will not be affected. if the defendant is able to prove the set-off claim a decree may be passed.

Equitable set-off - (order 20 rule 19 (3) ) 

•    Rule 6 deal with legal set off only.

   In equitable setoff the defendants may claim even an unascertained sum of money provided cross demand arise from one and the same transaction and connected. it must be a part of one transaction.
   

 chishtom v. Gopal Chander -  In this case, the servant file a suit against the master for salary payment. master can claim setoff for loss sustained by him due to negligence or misconduct of the servant. the court held it is possible because it arises from the same relationship.