1. This is a plaintiff's Second Appeal against the concurrent findings of the Courts below.
2. The appellant-plaintiff is a Cooperative Wholesale Stores registered under the Co-operative Societies Act.The respondent-defendant is a proprietary concern carrying on business in the name and style of Chandrakant Dall Mill. The parties will be referred to in the course of this order by the position and rank assigned to them in the trial Court.
3. The plaintiff-Society entered into an agreement dated 19-5-1965 with the defendant-Mill for getting certain quantities of paddy hulled. It is unnecessary to set out in detail the terms of the agreement except to state that the defendant Mill was required to deposit Rs. 1,000/ for due performance of the contract which was liable to be forfeited in the event of any default in the performance by the defendant under the contract, in accordance with the terms therein. The agreement provided also for, payment of hulling charges at the specified rate to the defendant-Mill owner. The agreement further provided that per quintal of paddy 65.5 Kgs. of full rice, 1.5 Kgs. of broken rice and 25 Kgs. of husk were to be returned after hulling. The plaintiff supplied both Akkulu variety and fine variety of paddy for hulling between May and July, 1965, 1365 quintals and 76.5 Kgs. of Akkulu variety and 747 quintals and 43 Kgs. of fine variety of paddy were supplied for hulling in the periods aforementioned.
4. The plaintiff's case was that 28 quintals and 30 Kgs of Akkulu rice, 12 quintals and 8 Kgs of fine-rice, 22 quintals and 69 Kgs. of broken rice and 150 quintals and 90 Kgs. of husk were not returned or short supplied by the defendant. Notice was issued by the plaintiff demanding to make good the short supply, as such short supply was due to the negligence on the part of the defendant-Mill owner. The defendant-Mill owner did not accept the contention of the plaintiff-Society. In the result, after some correspondence, the plaintiff Lied the suit 0. S. No. 43/1967 in the Court of the Principal Munsiff, Gulbarga, for recovery of the aforementioned short supply in kind. Later, the plaint was amended, alternatively claiming the value of the short supply in the total sum of Rupees 5,672-75.
5. The suit claim was resisted by the defendant-Mill owner on the ground that there was no negligence on his part and that the quantity of paddy supplied by the plaintiff was poor and therefore the net yield after hulling was less than what was anticipated and as such there was no liability on the part of the defendant either to make good the short supply or pay the cost thereof. When the plaint was amended, the written statement was also amended on 16-12-4968 pleading a set off and counter-claim. The set-off related to the hulling charges due by the plaintiff in the sum of about Rs. 3,000/and also Rs. 1,000/- to be returned which was deposited at the time of the execution of Exhibit-Pl the contract.
6. On these pleadings, the trial Court framed as many as seven triable issues which are as follows:
(1) Does the plaintiff prove that there were shortages as claimed in para 6 of the plaint?
(2) Does the defendant prove that the shortages were due to the supply of inferior quality of paddy?
(3) Whether the defendant proves that the plaintiff has waived his right to recover shortages in view of the fact that the work was done in the presence of the plaintiff's servants?
(4) Whether the defendant proves that he is entitled to recover hulling charges and the deposit made by him?
(5) Whether the counter-claim is barred by time?
(6) Whether the plaintiff proves he is entitled to forfeit the deposit?
(7) Whether the suit is maintainable in the absence of a resolution of the managing committee?
7. After appreciating the oral and documentary evidence the trial Court recorded the findings as follows:
(1) The plaintiff was not entitled to have the short supply of rice, broken rice and husk made good or value paid thereon as the paddy supplied was of inferior quality.
(2) The plaintiff was entitled to the value of broken rice and husk valued at Rs. 1968-09 as the same was not delivered by the Mill-owner.
(3) The defendant was not entitled to the return of deposit which was liable to be forfeited for non-performance of the contract strictly in accordance with the terms of the agreement Exhibit-Pl as the agreement fell within the scope of S. 74 of the Contract Act enabling the plaintiff to forfeit the deposit.
(4) The defendant was entitled to setoff the value of the broken rice and the husk in the sum of Rs. 1968-09 against his claim of hulling charges of about Rupees 3000/-.
8. The excess amount of set-off out of the hulling charges due was treated as counter-claim made on the date of amendment i. e., 16-12-1968 and disallowed as barred by limitation. Accordingly, the suit was dismissed.
9. Aggrieved by the Judgment and decree of the trial Court, the plaintiff filed Appeal No. 67/1972 in the Court of the Additional Civil Judge, Gulbarga, inter alia contending that the trial Court had erred in recording the findings against the plaintiff. Similarly, the defendant filed cross-objections that the trial Court erred in disallowing his counterclaim, The appeal and the cross-objections came to be dismissed by the lower appellate Court concurring with the findings of the trial Court. Therefore, this second appeal.
10. It is necessary at this stage to state that initially in the second appeal the defendant-respondent was represented by counsel. Well before the hearing of this appeal, the counsel for defendant was disabled and a Court notice was issued to him to make alternative arrangements. But in spite of notice being served, no alternative arrangements have been made. In the result the appeal has been heard in the absence of the defendant or his counsel.
11. The two grounds urged by the learned counsel for the plaintiff in this Second Appeal are:
(1) That the Courts below erred in holding that there was no negligence on the part of the defendant resulting in the short supply of rice etc., and (2) that the Courts below erred in allowing the setoff as both the set-off and the counterclaim should be construed as having been barred by limitation inasmuch as the defendant had he filed a suit for recovering the hulling charges on the date the written statement was amended on 16-121968 the suit would be barred by time.
12. The first of the grounds urged should not detain me long. The question is related to finding of fact. The courts below on appreciating the evidence came to the conclusion that the entire hulling operations were supervised or was done in the presence of the servants of the plaintiff-Society and therefore question of negligence on the part of the defendant had not been proved. The Courts also came, to the conclusion on evidence that the, quality of paddy supplied was inferior resulting in the short return of rice. These being findings of fact, it is not for this Court to interfere with them.
13. The next ground relating to the set off being time barred is not well taken. The courts below have applied the well settled principles in regard to setoff and counter-claim. In fact, the courts below have relied upon the decision of the Division Bench of the Calcutta High Court in the case of Harendra Nath v. Sourindra Nath : AIR1942Cal559 . In the said decision, the Division Bench of the Calcutta High Court held as follows:
'Although the word set-off only is used in O. 8, R. 6 and not the word counterclaim 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 are equal to the planitiff's claim in the suit it is plea of set-off pure and simple, but if it exceeds the plaintiff's claim it is to the extent of the excess a cross claim for the excess he is to be given a decree against the plaintiff in the same action.
Where the set-off is merely defensive (for the defendant does not claim a sum in excess of the planitiff's claim), the relevant enquiry would be whether it was a dead claim at the date of the plaintiff's suit. Where however the defendant pleads for a sum of money which is in excess of the plaintiff's claim he occupies to the extent of the excess the position of a plaintiff in a cross suit, and in such a case and for the excess amount time is to be reckoned not from the date of the plaintiff's suit but from the date when he files his written statement: case law referred.'
(Underlining is mine)
14. Undoubtedly, the decision was rendered before the Code was amended in 1976. But nevertheless the principle has remained the same. The important thing to notice is whether the set-off is merely defensive and is not in excess of the claim made in the plaint. The question to ask is whether on the date of the suit the said claim is a dead claim or in other words whether the claim is barred by time. In the case of counter-claim the relevant date for applying the same test would be whether the defendant could recover that amount of counter-claim if he had filed a fresh suit, on the date of the written statement. Thus, the said claim of set-off in defence which is an equitable relief to be given by the Court the point of limitation would be the date of suit and not the date of cause of action. In my view, the Courts below have correctly applied this principle and therefore I do not see any error of law on this account.
In the case of Aiyappan Pillai Krishna Pillai v. Narayan Padmanabhan, AIR 1956 Trav-Co 239 a Division Bench of the High Court of Travancore-Cochin has taken the view in relation to 0. 8, R. 6 of the C. P. C. that for purpose of equitable set off it was essential that there should be knowledge on both sides of an existing debt due to other party and a credit by the other party founded and trusting to such debt as a means of discharging it. In the case on hand, the plaintiff at all times was aware that hulling charges were due to the defendant even when he filed the suit. In fact, it had been alleged by the defendant that admission of this claim in writing had been lost by him. Nevertheless the plaintiff in the plaint failed to disclose that the hulling charges were due to the defendant. This suppression of fact has apparently induced the trial Court and the lower appellate Court to hold against the plaintiff and exercise the discretion of allowing the set-off in favour of the defendant only to the extent of the claim established by the plaintiff and not in excess. The excess alone has been treated as counter-claim and disallowed. I have already held that the Courts below have correctly applied the principles governing set-off and counter-claim which is in accordance with the Civil P. C. before its amendment in 1976. 1, therefore, see no reason to interfere with the judgments and decrees of the Courts below. The judgments and decrees are confirmed and the appeal is dismissed. But in the circumstances of the case, there will be no order as to costs.
15. Appeal dismissed.