A sues B for Rs. 50,000. B claims set-off of Rs. 30,000 and counter-claims Rs. 20,000. How should court decide?

Understanding the Three Claims on the Table

A's suit is straightforward: a claim for Rs. 50,000, presumably a money claim, which is the necessary foundation for a set-off under Order VIII, Rule 6. B responds with two distinct weapons — a set-off of Rs. 30,000, which operates as a statutory defence to A's claim, and a counter-claim of Rs. 20,000, which functions as a cross-suit, independent of the set-off.

The distinction between these two instruments is fundamental and must not be confused. A set-off is a shield — it operates as a ground of defence and extinguishes or reduces the plaintiff's claim. It must be for an ascertained sum of money legally recoverable by the defendant from the plaintiff, and both parties must fill the same character in the defendant's claim as they fill in the plaintiff's suit. A counter-claim, on the other hand, is a sword — it is substantially a cross-action enabling the defendant to enforce a claim against the plaintiff as effectively as in an independent suit. The cause of action for the counter-claim need not arise from or have any nexus with the cause of action of the plaintiff.

How the Court Proceeds

The written statement filed by B will have two parts: particulars of the set-off under Rule 6 and the counter-claim specifically stated as such under Rule 6B. Once the counter-claim is set up, the plaintiff A is at liberty to file a written statement in answer to the counter-claim within the period fixed by the court; the counter-claim is treated as a plaint and governed by the rules applicable to plaints. If A fails to file such a reply, the court may pronounce judgment against A in relation to the counter-claim under Rule 6E.

Both the original suit and the counter-claim are then tried together as a unified proceeding. The beauty of the scheme is that the court is empowered to pronounce a single final judgment covering all three claims simultaneously.

The Arithmetic of the Final Decree

Order VIII, Rule 6F, which is the governing provision for the outcome, provides that where a set-off or counter-claim is established as a defence against the plaintiff's claim, and any balance is found due to the plaintiff or the defendant, the court may give judgment to the party entitled to such balance. And Order XX, Rule 19 further reinforces that when set-off or counter-claim is allowed, a decree shall be drawn up accordingly.

Assuming both B's set-off and counter-claim are fully established, the court will work through the figures as follows:

• A's claim: Rs. 50,000

• B's set-off: Rs. 30,000 — this is applied as a defence, reducing A's claim by Rs. 30,000

• Remaining balance in A's favour after set-off: Rs. 20,000

• B's counter-claim: Rs. 20,000 — this operates as a cross-suit and is established against A

The net result is that the Rs. 20,000 remaining after the set-off is exactly extinguished by the Rs. 20,000 counter-claim. The court will therefore pass a single decree declaring that both claims stand satisfied — there is no net balance in favour of either party — and the suit as well as the counter-claim will both be decreed accordingly but with no money payable by either side to the other.

The Form of the Decree and the Question of Appeal

It is worth noting that only one decree is drawn up, covering both the original claim and the counter-claim together. The suit and counter-claim proceedings are unified proceedings, and the valuation of any appeal would be a combination of the valuation of the suit and the valuation of the counter-claim. A defendant who fails in his counter-claim need not file a separate appeal; a single appeal before the appropriate court challenging both findings is maintainable.

One important procedural safeguard also bears mention: if A were to withdraw or discontinue the suit after B has filed the counter-claim, the counter-claim may nevertheless be proceeded with independently under Rule 6D — the counter-claim does not fall with the suit. This ensures that B's right to prosecute his independent claim is not held hostage to A's conduct of the main suit.