1. This suit is for the recovery of a sum or Rs. 86,000, odd with interest at 6 per cent. per annum towards the contract executed by the plaintiff. The plaintiff is an Engineering Contractor, and he entered into an agreement with the defendant, which is a partnership firm, to construct a brick kiln. The brick kiln has been completed. But some of the bills submitted by the plaintiff to the defendants have not been paid for. Hence the present suit.
2. The defence to the suit is that the plaintiff has not constructed the brick kiln according to the specifications contained in the agreement between the parties, that there are a number of defects in the construction and that therefore the plaintiff is not entitled to the suit amount. The defendant filed an additional written statement elaborating the above plea and giving details of the various alleged defects in the brick kiln and also valuing those defects. The additional written statement sums up the position stating that the defects in the construction resulted in a loss of over Rs. 1,60,000 to the defendant's factory.
3. The case was opened and part of the evidence was recorded. At that stage, the learned counsel for the plaintiff contended that the defendant should not be allowed to plead and cross-examine the plaintiff, who was in the witness box, on the plea regarding the value of the alleged defects in the construction of the brick kiln, before paying Court-fee on the written statement. His contention is that the defendant has pleaded a set-off in the written statement and that therefore, under Section 8 of the Court-fees and Suits Valuation Act, it is bound to pay Court-fee on the same. Per contra, the contention on behalf of the defendant is that the plea in the written statement is neither a counter-claim nor a set-off but it is only a defence to the suit claim and that therefore there is no question of payment of Court-fee on the written statement.
4. The learned counsel for the plaintiff referred to a number of decisions in support of his contention that Court-fee is payable on the written statement, whether a claim in the written statement is a set-off coming under Order VIII, Rule 6, C.P.C. or whether it is an equitable set-off. The contention is that in the present case, the plea taken in the additional written statement is an equitable set-off. There is really no dispute regarding the proposition that Court-fee is payable even if the set-off pleaded is not one coming under Order VIII, Rule 6 of the C.P. Code but it is only an equitable set-off. In Sitarama v. Ramanuja : AIR1933Mad203 , it is pointed out that there is nothing to show that the set-off mentioned in Article I, Schedule I of the court-fees Act 1870 (corresponding to Section 8 of the present Court-fees and Suits Valuation Act) is confined only to legal set-off coming under order VIII, Rule 6, C.P. Code and the prima facie the expression 'set-off' used in that Article may well nigh include an equitable set-off also. In Lakshmana Chettiar v. Ramanatha Chettiar : AIR1935Mad115 , it is again pointed out that an equitable set-off is a legally recognised one and no distinction should be drawn between that and a legal set-off and that therefore an equitable set-off pleaded in a written statement must bear the appropriate Court-fee, as there is nothing to show that the set-off mentioned in Article 1 of Schedule I of the Court-fees Act of 1870 is confined only to a legal set-off coming under Order VIII, Rule 6 of the C.P. Code. A.Z.M. Peasai Karim v. Mohd. Israil : AIR1939Cal415 , Girdharilal v. Surajmal and Ratanlal v. Madari : AIR1950All237 , are also on the same lines. It is also well settled that if the defendant pleads set-off, Court-fee is payable on the whole amount of the set-off claimed and not merely on the difference between the set-off and the amount claimed in the plaint. But the question here is whether the defendant is pleading a set-off. As I said earlier, the learned counsel for the defendant contends that the plea taken is only a defence to the plaint claim and not set-off. I think he is right.
5. In order to determine whether the plea in the written statement is a set-off or a mere defence, one has to take into consideration the entire plea and not merely a particular portion of the plea. In the last sentence of the additional written statement, it is stated that in any event, inasmuch as the loss to the defendant, exceeds in a huge measure the plaintiff's claim as adumbrated in the plaint, no moneys would be due to the plaintiff and the suit has to be dismissed on this ground also. It is this sentence that is pressed into service by the learned counsel for the plaintiff to support his stand that is pressed into service by the learned counsel for the plaintiff to support his stand that the defendant has pleaded set-off. But on a reading of the entire written statement as well as the additional written statement, I am convinced that the defendant is not pleading any set-off but has detailed the defects in the construction of the brick kiln with the value of those defects, only to show that the plaintiff is not entitled to the suit claim because of defective work. That is really a defence to the suit claim and not a set-off. If the defendant is able to prove that the work done by the plaintiff is defective as detailed in the written statement and further proves that the amount required to rectify those defects would be more than the suit claim, then the plaintiff would not be entitled to the suit claim. The plea of the defendant would amount to a set-off, only if the plaint claim as well as the claim in the written statement can stand together. In other words, only when the plaintiff is entitled to recover the suit claim the question of set-of would arise. If, on the plea taken by the defendant, the suit claim itself is to be negatived, on the defendant establishing the plea, then there would be no question of set-off. In Ambika Palayakot Co. v. Kannappa Pillai : AIR1952Mad91 , the suit was for the recovery of the price of goods sold by the plaintiff to the defendant and the defendant claimed damaged under two heads, (1) a sum of Rs. 2200 odd as damages for breach of warranty, viz., that the goods did not answer the description of the goods in respect of which the contract of sale was entered into; and (2) a sum of Rs. 3000 as damages for loss of reputation. The trial court held that the damages of Rs. 3000 for loss of reputation claimed in the written statement is a set-off and on that amount the defendant has to pay court-fee and in respect of the sum of Rs. 2200 odd claimed as damages for breach of warranty, no Court-fee is payable on the principle that that was not a set-off but that was an amount which could be considered in diminution of the price that was claimed by the plaintiff. The matter came up in revision before Satyanarayana Rao, J. as the defendant challenged the trial court's order directing him to pay Court-fee on the sum of Rs. 3000. The revision petition was dismissed, Satyanarayana Rao, J. accepting the decision of the trial court. It is pointed out that only in respect of the sum of Rs. 2200 and odd claimed as damages for breach of warranty, the defendant was entitled to claim the same without paying Court-fee because it is the amount which could be considered in diminution of the price that was claimed by the plaintiff. As I said earlier, in the present case, if the defendant proves the defects in the construction of the brick kiln pleaded in the written statement and the additional written statement, then the plaintiff's claim would get negatived. Therefore, in my opinion, what is pleaded in this case is only a defence to the plaint claim and not a set-off. The defendant need not pay Court-fee on the written statement.
6. Repost the suit for further trial.
7. Order accordingly.