Code of Civil Procedure - Set-off and Counter-claim

A civil suit is instituted by filing a plaint in the appropriate court which has jurisdiction over the subject-matter. A plaint is filed by the plaintiff. Similarly, the defendant has to file a written statement, i.e., response to the content in the plaint. This written statement, in some cases, is accompanied by set-off and counter-claim. So, set-off and counter-claims are the cross-claims done by the defendant and these cross-claims cannot be contested unless they are accompanied by the written statement. A written statement is a reply to the plaint, and such reply has to be given within 30 days the date of the filing of the plaint.

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.

Earlier, set-off or counter-claim were supposed to be filed for only money suits. But an amendment to CPC in 1976 has covered the concept of counter-claim under Order VIII Rules 6-A to 6-G as discussed above to include other civil natured claims against the plaintiff and also to save the time by reducing suits between the same parties. As a final note, set-off can be used for recovering money in suits related to money and counter-claim can be used for any civil natured claims. Both have to be filed along with the written statement, and both have to be filed by the defendant against the plaintiff. These two concepts are so similar in nature that they tend to reduce the burden of filing a fresh suit against the plaintiff with regard to their claims.

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Frequently Asked Questions

Common questions about Set.

A set-off is a reciprocal claim made by the defendant related to debts owed by the plaintiff, which can be used only in suits for recovery of money. On the other hand, a counter-claim is a separate and independent claim that the defendant can make against the plaintiff, which need not necessarily arise from the same cause of action as the plaintiff's claim and can be related to any civil dispute.

While it is preferable to file a counter-claim along with the written statement, the Code of Civil Procedure allows the defendant to file a counter-claim as a subsequent pleading under Rule 9 of Order VIII if it was not filed initially.

The primary purpose of allowing set-offs and counter-claims is to avoid multiplicity of proceedings and save the court's valuable time. By allowing the defendant to raise their claims against the plaintiff in the same suit, it prevents the need for filing separate suits, thereby streamlining the process.

No, a counter-claim cannot be filed solely against a co-defendant. A counter-claim can be filed by the defendant against the plaintiff, and in some instances, the defendant may also claim from co-defendants along with the plaintiff, but not against the co-defendants alone.

Yes, there are certain conditions that must be met for filing a set-off by the defendant. These include: the suit must be for recovery of money, the defendant must claim only the amount already lent to the plaintiff, the amount must be ascertained and legally recoverable, and the set-off must be filed in a court with financial jurisdiction.

A counter-claim is treated on par with the original plaint (plaintiff's claim). The plaintiff is required to file a written statement in response to the counter-claim, and the court can pronounce a final judgment on both the original claim and the counter-claim.

No, a counter-claim cannot be filed if the subject matter of the claim is barred by the Limitation Act, which sets time limits for filing various legal actions.

The 1976 amendment to the Code of Civil Procedure expanded the concept of counter-claims under Order VIII Rules 6-A to 6-G, allowing counter-claims to include civil claims beyond just money suits.

No, a set-off can only be filed in a suit for the recovery of money. It cannot be used in non-money suits or suits related to other civil disputes.

The requirement to file set-offs and counter-claims along with the written statement is meant to prevent the defendant from prolonging the proceedings of the suit by introducing claims at a later stage. It ensures that all claims are presented together, facilitating a more efficient and streamlined legal process.