1. [His Lordship narrated the facts of the case, discussed the evidence, and came to the conclusion that the plaintiffs' claim came to Rs. 1,925, The judgment then dealt with the question of set-off: ] Defendants claim to set-off Rs. 1,175 against the plaintiffs' claim, The plaintiffs contend that this Court has no jurisdiction to entertain the set-off, and that in any event they are not liable to pay Rs. 1,175 to the defendants, but Rs. 300 less, that is to say, Rs. 875, [His Lordship held on evidence that the defendants were entitled to put forward a claim in respect of the full amount of Rs. 1,175, and then preceded: ]
2. The important question, however, is whether the defendants are entitled to set off the full sum of Rs. 1,175 against Rs. 1,925 due by them to the plaintiffs. Under Order VIII, Rule 6, of the Civil Procedure Code, a defendant is entitled to set off any ascertained sum of money against the plaintiff if inter alia it is legally recoverable. In this case the amount sought to be set off was in respect of dealings which took place in Calcutta, and as the plaintiffs carried on business in Kashmir, it was argued that this Court had no jurisdiction to entertain the set-off. It is clear from the terms of Order VIII, Rule 6, that the amount of the set-off must be within the pecuniary limits of the jurisdiction of the Court in which the plaintiff's suit is brought, that is to say, it cannot exceed the pecuniary jurisdiction of that Court. The nature of the set-off must also be within the cognizance of the Court, and a Court cannot entertain a set-off, if its nature is such that if it is made the subject matter of a separate suit, it will not come within its jurisdiction, Plaintiffs' counsel relied on Beni Madho v. Gaya Prasad I.L.R. (1893) All. 404 but that decision is based upon the facts of that case. It was a suit for arrears of rent in a revenue Court, and it was held that the revenue Court was not competent to deal with the set-off of a nature which was not within its jurisdiction. The same principle is also laid down in Halsbury, Vol. XXV, p. 484, wherein it is stated that no Court has jurisdiction to entertain a defence of set-off, unless the subject of the set-off is in its nature such that it may be made a subject of a cross-action or counter-claim in the Court. It cannot be said that this Court cannot take cognizance of a claim of Rs. 1,175, but it was argued that this Court cannot entertain the set-off, because it would have no jurisdiction if a cross-suit was filed in respect thereof against the plaintiffs. 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 plaintiffs' 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. It is allowed to be pleaded by the defendant at his option, subject to certain rules, in order to avoid multiplicity of proceedings between the parties. Reliance was placed by counsel for the plaintiffs on Order VIII, Rule 6, sub-rule (2), which says that a written statement containing a set-off shall have the same effect as a plaint in a cross-suit, bot that is so in order to enable the Court to pronounce a final judgment in respect of both the original claim and the set-off. A set-off and a counter-claim, therefore, are essentially different, and in India we are governed by Order VIII, Rule 6, of the Civil Procedure Code, and the High Court Rules as regards set-off, and by the High Court Rules only as regards counter-claim. This distinction has been brought out by the Appeal Court in Vithaldas v. Hyderabad Spinning & Weating Co. Ltd (1022) 21 Bom. L.R. 328 in which it was held that if the defendants were to file a separate suit on the subject-matter of their claim in that suit, this Court would have no. jurisdiction to try it, as the plaintiff resided outside jurisdiction and the whole cause of action arose outside jurisdiction. A set-off, however, cannot only be the subject-matter of a separate action, but it can also be pleaded as a defence when the claim to the set-off, one against the other, exists in the same right. A question might arise whether a defendant would be entitled to get a decree for the amount of excess over the plaintiff's claim, that is, if the amount sought to be set off exceeds the amount of the plaintiff's claim. This, however, is a point which does not arise here for decision. Rule 136 of the High Court Rules provides that where in any suit a set-off or counter-claim is established as a defence against the plaintiff's claim, the Court may, if the balance is in favour of the defendant, give judgment for the defendant for such balance. Whether that rule will also apply if the amount in excess is in respect of a claim on which a separate action cannot for want of jurisdiction be brought in this Court is a point which is not free from doubt. It was argued that the words legally recoverable in Order VIII, Rule 6, do not necessarily mean legally recoverable in the same Court in which the plaintiff's suit is brought; but for the purposes of the decision in this case, it is not necessary to deal with the point any further. The amount of the defendants' claim which they are entitled to set off against the plaintiffs' claim of Rs. 1,925 is Rs. 1,175, and, therefore, in my opinion, the plaintiff is entitled in terms of Order VIII, Rule 6, sub-rule (2), to a judgment for the balance.
3. [After recording findings on issues raised, his Lordship concluded:] I order the defendants to pay to the plaintiffs costs of issues Nos. 2 and 3, and the plaintiffs to pay to the defendants the costs of issues Nos. 4 and 6. The costs payable by the defendants to the plaintiffs to be set off against the costs payable by the plaintiffs to the defendants, subject to the attorneys' lien, if any.
4. There will be interest on judgment in favour of the plaintiffs on Rs. 750 at six per cent, per annum from this date till payment.