AHMAD HASSAN Versus AJAB KHAN.
1. This petition challenges order dated 1‑10‑1987 passed by Additional District Judge No.1, Quetta whereby petitioner has been directed to file a separate suit in respect of counter‑claim set up in the written statement.
2. Facts leading to this appeal are that respondents Nos. 1 to 10, towards 9‑3‑1986 filed a suit for declaration, injunction and refund of Rs.22 lacs. Subsequently amendment of plaint was also sought which was allowed. Thereafter, amended plaint was filed by them on 10‑11‑1986. Prayer clause is reproduced below:‑
2. The plaintiffs thus beg to pray for the grant of decree, against the defendants in the terms as follows:‑
(a) That declaration be granted that in terms of agreement dated 28‑8‑1982, neither the defendant No.l is entitled to payment of further amount of Rs.13 lacs, nor the defendant No‑2 is liable to so pay to the defendant No.l and the letter of guarantee dated 20‑11‑1982 is unenforceable.
(b) Perpetual injunction be granted against the defendant No.l restraining him from claiming or receiving the further amount of Rs.13 lacs on the basis of letter of guarantee and so prohibiting the defendant No.2 to pay the sum of Rs.13 lacs on the basis of Bank guarantee dated 20‑11‑1982 issued by it on behalf of the plaintiffs in favour of the defendant No.l.
(c) That sum of Rs.22 lacs be paid back by the defendant No.l to the plaintiffs.
(d) Any other relief to which the plaintiffs are found entitled against all or any one of the defendants.
(e) Costs of the suit be awarded against the defendant No.l"
3. Initially written statement was filed by petitioner on 10‑4‑1986 repudiating claim in suit. However, amended written statement in respect bf amended plaint was filed on 1D‑11‑1986 whereby besides denial of claim in suit, petitioner also made counter‑claim in the following terms.
4. "In terms of letter of Guarantee No. 1472/1982, dated 20‑11‑1982 the plaintiffs were liable to pay to the answering defendant a sum of Rs.13 lacs as a part of the consideration for the assets sold by the answering defendant to the plaintiff and surrender of the lease of the mine, subject‑matter .of this suit, by the answering defendant in favour of the plaintiff by or before 19‑3‑1986. But the plaintiffs have, with mala fide intention by filing frivolous and malicious proceedings before this Hon'ble Court and by misrepresentation obtained an injunction whereby the payment of Rs.13 lacs to the answering defendant was delayed from 19‑3‑1986 to 6‑10‑1986. On account of the malicious and frivolous proceedings initiated by the plaintiffs against the answering defendant, the defendant No.l has suffered a loss of investment on the profit to the extent of Rs.2,50,000 for which the plaintiffs are liable to the answering defendant with interest.
5. It is pertinent to note that such demand was not raised by petitioner in the original written statement filed on 10‑4‑1986."
6. Respondents Nos. 1 to 10, on 7‑5‑1987 filed written statement to the counter‑claim of petitioner, wherein it was inter alia pleaded that cause of action in the suit was quite different from counter‑claim, therefore, same could not be set up as defence in the suit. Other miscellaneous applications were also moved before trial Court which are pending consideration. However, learned Additional District Judge‑II, Quetta by means of order dated 1‑10‑1987 observed that counter‑claim could not be agitated as set off, within the purview of Order VIII, Rule 6, C.P.C. In the light of facts of this case accordingly Court fee was also returned for presenting separate civil suit in respect of said claim. The Order is reproduced below for ready reference:‑
7. "On 12‑3‑1986 the plaintiffs filed suit for declaration and injunction and refund of Rs.9 lacs from the defendants with the prayer for stay for not paying Rs.13 lacs till disposal of the suit. However by consent order of the learned High Court dated 12‑8‑1986 the same amount was received by the defendant No. 1, later on the plaintiffs by amended plaint prayed for recovery of Rs.22 lacs also. While filing the written statement the defendant No.l claimed that by delaying the payment of Rs.13 lacs from 19‑3‑1986 to 6‑10‑1986 he has suffered a loss of investment to the extent of Rs.2,50,000. He has claimed set off thereof in his amended written statement. The plaintiffs have raised legal objections in respect of the same. Under Order VIII, Rule 6 claim of set off can be made by the defendants where the plaintiffs and defendants are reciprocally debtors of each other and it arises from the same transaction. But here the defendants request for set off in respect of loss suffered by them by the order passed by this Court while issuing stay order. The same is not entertainable. The court‑fee paid by defendants, if any, be returned to defendants for presenting his separate suit thereafter."
8. Main point, which requires consideration, is whether counter?claim can be set up as a defence in respect of subject‑matter of claim in suit.
9. In the first instance it may be seen that Order VIII, Rule 6, C.P.C. visualises claims for set off in suit for recoveries of money by raising a demand of debts which are legally recoverable from plaintiff and fall within pecuniary jurisdiction and territorial limits of the Court trying the suit. Therefore, ascertainment of setoff evidently pre‑supposes that suit must be for (i) recovery of money, (ii) amount of set off must be legally recoverable from the plaintiffs, (iii) claim must be for ascertained sum of money (iv) claim of set off should be in respect of debts for which cause of action has accrued within pecuniary and territorial jurisdiction of the Court and (v) must be raised on the first hearing of the suit and not afterwards, unless permitted by the Court.
10. It is, therefore, suggested that set off primarily is a defence against the action of plaintiff. It by no means, can wipe out plaintiff's claim, rather it seeks independent ascertainment and determination regarding additional claim of defendant for ultimate recording of decree as specified under Order 20, Rule 19, C.P.C. which, therefore, may disclose actual amount falling due from the either of the parties.
11. Whereas strictly speaking counter‑claim is not specifically known to the Code of Civil Procedure, it is generally deemed and treated something similar to set off, with of course much wider scope. But practically both are essentially different from each other. Actual similarity appears only to the extent that both types of claims are in the nature of cross actions. Apparently set off is merely a defence, for pleading adjustment of respective claims which are otherwise legally recoverable from each other; and pre‑supposes that same should be an existing debt recoverable from the plaintiff when cause was initiated, whereas counter‑claim is a weapon of offence enabling the defendant to enforce his claim against the plaintiff. It is normally pleaded in the written statement merely to avoid multiplicity. The counter‑claim is relatable to the subject‑matter raised by the plaintiff. In most of tile rulings superior Courts have treated, counter‑claim as a shield, pleaded by defendant to reduce the liability against him. It has also been shown to be weapon of offence which enables the defendant to enforce his claim against the plaintiff as effectually as in an independent action. However, extracts from some of the reported judgments dealing with, distinction between "set off" and "counter?claim" are reproduced below:‑---
(i) Lassoo & Sons v. Krishna Bahadur Nepali A I R 1932 Bom. 617.
12. "In this respect however the distinction between a set off and a counter‑claim must be borne in mind. In one sense both are cross‑actions but a set off is also a ground of defence. If established it affords an answer to the plaintiff's claim either wholly or pro‑tanto for a set off is really a debt claimed by a defendant against the plaintiff balancing a debt claimed by the plaintiff against the defendant. A counter claim on the other hand is really a weapon of offence and enables a defendant to enforce a claim against the plaintiff as effectually as in an independent action."
(ii) Jitendra Nath Ray v. Jananda Kanta Das Gupta A I R 1936 Cal. 277.
13. "As set off may be purely defensive, that is, it may amount to an adjustment or satisfaction of the plaintiff's claim or it may be a counter‑claim under which the denfendant claims a decree for the surplus amount due to him. In a defensive set off, the set off claimed must be recoverable at the date of the plaintiff's suit. In a counter‑claim the sum claimed by the defendant should be legally recoverable at the date when he makes the claim i.e. at the date when he files written statement. The words "legally recoverable in Order VIII, Rule 6, mean legally recoverable at the date of the institution of the suit in one case and mean legally recoverable at the date when the counter‑claim is made in the other case. Although in Order VIII, Rule 6 and Order XX, Rule 19, there is no clear distinction between a mere set off, i.e. a defensive set off and a counter claim, a distinction has been made in Indian Courts in accordance with the law of England, as it is based on a sound principle."
(iii) Bai Harendra Nath Chaudhury v. Bai Sourindra Nath AIR 1942 Cal. 559.
14. "Although the word set‑off only is used in Order VIII, Rule 6 and not the word counter‑claim also, the claim to the ascertained sum of money which the Code permits the defendant to set up in the plaintiff's action for money may not only be what is strictly termed set off but what is also a counter‑claim. If the claim set up by the defendant is in respect of a debt which is less than or equal to the plaintiffs claim in the suit it is a plea of set off pure and simple, but if it exceeds the plaintiff's claim it is to the extent of the excess of a cross‑claim for the excess he is to be given a decree against the plaintiff in the same action".
(iv) Sarawwathiswani v. Sridhora Siverama Moorthy A I R 1949 Mad. 630.
15. "A counter claim may be set up only in respect of claims as to which the party could bring an independent action in the Court in which the counter‑claim is brought. Because the plaintiff has brought an action which he was entitled to do, it does not mean that the defendant's right to put forward a counter‑claim became limitless e.g. to put forward a claim which nobody else could put forward as a plaintiff."
16. (v)Abdul Majid v. Abdul Rashid and others A I R 1950 All. 201.
17. "The essence of a counter‑claim is that the defendant should have a cause of action against the plaintiff. The counter‑claim is in the nature of a cross‑action; and not merely a defence to the plaintiffs claim."
(vi) Shoebanchan Pandey and another v. Madho Sarah Chowbay and others A I R 1952 Pat. 73.
18. "In P.S. Moideen Baba v. Chettyar Firm A I R 1934 Rang. 190; it has been held that for either to be able to sue for specific performance there must be mutuality. Once there is that mutuality that one party can sue the other for specific performance, there is no reason why the other party also cannot enforce specific performance. In Carangdhar Singh and. another .v. Lakshmi Narayan Wahi A I R 1955 Pat. 320 it has been held that 'A counter‑claim is substantially a cross7action and need not be an action of the same nature as the original action or even analogous thereto. Though there is no provision in the Code of making a counter‑claim, a Court has got the power to treat tire counter‑claim as a plaint in the cross‑suit and hear them together if the counter‑claim is properly stamped."
(vii) Sarangdhar Singh and another v. Lakshmi Narayan Wahi AIR 1955 Pat. 320.
19. "A counter‑claim is substantially a cross‑action and need not be an action of the same nature as the original action or even analogous thereto. Though there is no provision in the Code of making a counter‑claim a Court has got the power to treat the counter‑claim as a plaint in the cross‑suit and hear them together, .if the counter‑claim is properly stamped."
(viii) Syed Naimat Ali and others v . Dewan Jairam Dass P L D 1983 SC. 5,
20. "However, there is a well‑recognized distinction between a set off and a counter‑claim. Although in one sense both are identical inasmuch as they are cross‑actions on the part of the defendant but a set off is essentially a weapon of defence if the defendant succeeds in establishing it, it serves the purpose of answering to the plaintiff's claim either wholly or pro‑tanto because a set off is really a debt claimed by the defendant against the plaintiff to counter balance a debt claimed by the plaintiff against the defendant: A counter‑claim on the other hand, is essentially a weapon of offence and is not really relevant as a plea in defence to the claim of the plaintiff. It enables a defendant to enforce a claim against the plaintiff as effectually as in an independent action. Its essential nature is that ‑of a cross suit pleaded through the means of the written statement in the same suit. Having regard to these essential features of the character of a counter‑claim, it is plain that a right to make a counter‑claim is not admissible if it does not fall within the ambit of Order VIII, Rule 6,‑C.P.C. or qualify as an equitable set off. The right to make a counter‑claim has been always held to be a statutory right and as already observed there is nothing in the Code of Civil Procedure conferring the right, to plead such counter‑claim, upon a defendant. Thus, it has been held in certain decisions of the Privy Council and of the High Courts that a counter‑claim was not admissible in the Muffasil Courts."
21. There is yet another aspect which has considerable importance for determining contentions raised on behalf of the parties in this matter. Order VIII, Rule 6, C.P.C. clearly suggests that set off can be in respect of "ascertained sum" which may be legally recoverable. It, therefore, requires to be seen whether claim for compensation, tentatively fixed by the defendants to a particular amount could legitimately be deemed "ascertained sum" within the meanings assigned to it by law. Some of the reported judgments have dealt with the meaning of "ascertained sum".‑ It would be profitable here to refer to some of those:
(i) Har Prasad and another v. Firm Ram Sarup Radha Kishen AIR 1924 All. 87,2.
22. "What the defendants say is that there were definite sums of debit and credit between the parties and that on the date of suit a definite known balance, the amount of which is given in the written statement, was due to the defendants from the plaintiff and that this balance is shown in their account books as due on the date of suit. In any ordinary meaning of the term the sum so claimed is an ascertained sum. The learned counsel for the respondent has argued that a sum can only be treated as ascertained when it has been either admitted by the plaintiff or decreed by the Court. None of the authorities to which he has referred, supports this proposition, and the case of Edward Dalgleisn v. Ramdin Sing Chowdhry definitely contradicts it. The commentators on the Code are also all agreed that the words 'ascertained sum are used to exclude such items as unliquidated damages and mesne profits the amount of which is not ascertainable until the Court determines'."
(ii) Bhikanrao v. Shridhar A I R 1931 Nag. 12.
23. "The defendant's claim for a set off was obviously in respect of an ascertained sum of money. The expression 'ascertained sum' does not mean a sum admitted by the plaintiff. It is used in contra‑distinction to unliquidated damages. An ascertained sum means, according to the ordinary significance of the words, a sum of money of which the amount is fixed and known: See Edward Dalgleish v. Ramdin Singh An 'ascertained sum' used in the Code excludes such items as unliquidated damages and mesne profits the amount of which is not ascertainable until the Court determines them. See Har Prasad v. Firm Ram Sarup Radha Kishen.
(iii) Girdharilal Chaturbhuj v. Surajmal Chauthmal Agarwal A I R 1940 Nag. 177.
24. "Now according to Order VIII, Rule 6, Civil P.C. before a legal set off can be claimed, it must be presented in a written statement which shall have the same effect as a plaint, and it must be shown that it is an ascertained sum of money legally recoverable by the defendant from the plaintiff, and that both parties fulfil the same character as they fill in the plaintiff's suit. The claim for the commission over reduction of losses is stated approximately and cannot be considered as an 'ascertained sum' of money. It would require accounts to be gone into and the written statement admits as much. In AIR 1931 Nag. 12 it was pointed out that an 'ascertained sum' means a sum of money of which the amount is fixed and known and that it excludes such items as unliquidated damages and mesne profits, the amount of which is not ascertainable until the Court determines them."
(iv) Sankara Pillai v. Parameswaran Pillai A I R 1959 Ker. 352.
25. "Taking up first, the aspect of legal set off it is no doubt true that the defendant was putting forth the claim for th specific amount of Rs.204 and odd for purpose of set off. Bu every claim for a specified sum is not necessarily for a 'ascertained sum' of money 'legally due' within the meaning of Order VIII, Rule 6, C.P.C. It is unnecessary in this connection to go to the extent of the dictum in Mr. Dilter Koer v. Harkhoo Sing A I R Pat. 167 that the claim to be ascertained must be 'beyond challenge and beyond dispute, concluded and conclusive'. "
26. It may for example, be a sum not admitted by the other side and not decreed by Court. But it must in any event be a cross‑claim for a liquidated amount, that is debts due for liquidated sums or 1 demands, which can be ascertained with certainty at the time of the pleading and not what may ultimately be ascertained by the Court at the time of passing of the decree.
(v) A I R 1964 Mad. 108.
27. In order to effectively elucidate observations in aforequoted judgments it would be appropriate to also record meanings of unliquidated debt. Unliquidated has been described in Black's Law Dictionary revised 4th Edition at p.1706 as under:‑---
28. "UNLIQUIDATED. ???? 'Not ascertained in amount' not determined; remaining unassessed or unsettled; as unliquidated damages;
29. "A debt is spoken of as 'unliquidated' if the amount thereof cannot be ascertained at the trial by a mere computation, based on the terms of the obligation or on some other accepted standard. Hattrick Mfg. C . V . Barish, 120 Misc. 673. 199 N.Y. S.755. 767."
30. Thus, carefully considering aforequoted judgments and meaning attached to terminology used in Order VIII, Rule 6, C.P.C. obvious conclusions are, that claim of compensation, for which cause of action has arisen subsequent to the filing of suit, or was not asserted at initial stage of filing original written statement or is not of an ascertained sum, or is beyond territorial or pecuniary jurisdiction of the Court and otherwise is not legally due, would not be appropriately entertainable.
31. I have given my anxious thought to all aspects of counter‑claim put forth by defendant in the case. Since cause of action evidently relates to period subsequent to institution of suit amount of compensation needs enquiry and determination, and does not arise from transaction which is subject‑matter of the suit, therefore, same cannot be permitted to be put up as counter‑claim.
32. Similarly mere assertions of a fixed amount of compensation cannot be assumed to be ascertained amount within the purview of order VIII, Rule 6, C.P.C. On this analogy thus claim for money which is not conclusively and definitely identifiable and otherwise is not legally recoverable cannot constitute basis of set off or counter?claim.
33. For the foregoing reasons I do not find any justification to interfere with impugned judgment. However, petitioner is not precluded from separately approaching Court of competent jurisdiction in respect of claim set up by him in written statement, if otherwise law so permits.
34. Petition is accordingly directed to be dismissed however with no order as to costs..
35. M.B.A. /305/ B . ????????????????????????????????????????????????????????????????????? Petition dismissed.