Set-Off
Set-off is related to debts. It is the reciprocal claim made by the defendant. Set-off can be used only under the suit for recovery of money. This can be better under by an example. Suppose, A files a suit against B claiming that the latter is Rs.20,000 due to him. Now, B also has a claim against A that he is Rs.10,000 in debt to the former, i.e., A is Rs.10,000 in debt of B. Here, both are mutually indebted to each other, and they both have to pay off the debts due to each other. Instead of filing a fresh suit altogether, B files a set-off claim along with the written statement in response to the plaint filed by A.
Set-off is dealt under Order VIII Rule 6, and it says that such written statement along with a set-off should be considered by the Court as much as plaint because it too has a subject matter that is in dispute. However, there certain conditions that have to be met for filing a set-off by the defendant. They are:
The suit initiated must be for recovery of money. So, set-off can be filed only in money suits.
The defendant must claim only the amount that he has already lent to the plaintiff. The defendant cannot claim the money he has not already lent. It means the money should be ascertained.
The ascertained money should be legally recoverable by the defendant from the plaintiff. It should not be barred by any laws of limitation.
The recoverable money by the defendant should be defendant or defendants if there are many, and in the same way, it should be recovered from the plaintiff or plaintiffs if there are many.
The set-off should be filed only in the court which has financial jurisdiction.
Counter-claim
Counter-claim is dealt under Order VIII Rules 6-A to 6-G of the Code of Civil Procedure, 1908. It is a claim which is separate and independent from that of the plaintiff. It is also cross-claim but not necessarily arise out of the same cause of action contained in the plaint. Unlike set-off, a counter-claim need not be mandatorily related to the recovery of money. It could be regarding any civil disputes.
The characteristics of counter-claim are as follows:
Counter-claim also should accompany a written statement. If it is not filed along with the written statement, the court usually does not allow the defendant to file the counter-claim at a later stage in the suit, if his intention is to prolong the proceedings of the suit. Nonetheless, the counter-claim can always be filed as subsequent pleading under Rule 9 of the same Order.
Counter-claim was brought into existence to avoid multiplicity of proceedings and thereby save a lot of court’s valuable time.
For example, A files a suit against B and B also wants to file a suit against A for a completely different subject matter. Instead of filing a separate suit, B makes a counter-claim against A. Here, a lot of time is being saved since the counter-claim proceedings are being carried on by the original suit proceedings.
The counter-claim is treated on par with the plaint, and the plaintiff should file a written statement in response to the counter-claim. The court can pronounce final judgement both on the original claim and the counter-claim.
For the defendant, the counter-claim can be filed by the defendant against the plaintiff. In some instances, he can claim from co-defendants along with the plaintiffs. But a counter-claim solely to claim from the co-defendants is not entertained by the courts.
The counter-claim should be filed only when the subject matter is not barred by the Limitation Act.
Difference between Set Off & Counter Claim:
1.Set-off is a statutory defence to a plaintiff’s action, whereas a counterclaim is substantially a cross-action.
2.Set-off must be for an ascertained sum or must arise out of the same transaction as the plaintiff’s claim. A counter-claim need not arise out of the same transaction.
3.Set-off is a statutory ground of defence and has to be pleaded in the written statement. It can be sued as a shield and not as a sword. Counter-claim, on the other hand, does not afford any defence to the plaintiff’s claim. It is a weapon of offence which enables the defendant to enforce his claim against the plaintiff as effectually as in an independent action. It is a sort of cross-action.
4.If the statute of limitation is pleaded to a defence of set-off, the plaintiff in order to establish his plea has to prove that set-off was barred when the plaintiff commenced the action. It is not enough to prove that it was barred at the time when it was pleaded. In the case of a counter-claim, it is enough for the plaintiff to prove that the counter-claim was barred when it was pleaded.
5.An equitable set-off is a claim by the defendant in defence, which generally cannot exceed the plaintiff’s claim. A counter-claim the defendant may, however, exceed the plaintiff’s claim, being in nature of the cross action. Under the provision rule 6-F of Order 6, if in any suit a set off or counter claim is established as a defence against plaintiffs claim and any balance is found due to the defendant as the case may be the court may give judgment to the party entitled to such balance.
