John Wallis, C.J.
1. The appellant in these cases, when sued for rent in respect of faslis 1318. and 1319, set up by way of equitable set-off a claim against his lessor the plaintiff in respect of disturbance of possession in faslis. 1313 and 1314. It is well settled in this Court that claims for unliquidated damages may be raised by way of equitable set-off if they arise out of the same transaction as the plaintiff's cause of action, but I cannot agree that in a case like this, such claim can be so set up even if it was barred at the date of the suit. It would certainly not be equitable or in accordance with the equitable principles administered by the Court of Chancery to allow the provisions of the Statute of Limitations to be evaded in this way. The authorities are referred to in the judgment of my learned brother which I have had the advantage of reading. If Chidambara Mudaliar v. Krishnaswami Pillai 28 Ind. Cas. 221 is inconsistent with the view, I am unable with great respect to follow it. As regards the present case, the defendant was in full possession and enjoyment for the faslis in respect of which rent is sued for Cross-claims on account as between mortgagor and mortgagee, trustee and cestui que trust and the like stand on a different footing and I do not wish my observation to be taken as applicable to such cases. Otherwise I agree in the order proposed by my learned brother.
Seshagiri Aiyar, J.
2. The point for decision in these appeals is whether in a suit by the lessor for rent, it is open to the lessee to plead by way of set-off an unliquidated claim for damages which has become barred by limitation, arising from obstruction to quiet enjoyment in previous years. My answer is in the negative. Under Order VIII, Rule 6, of the Code of Civil Procedure, a set-off is not permissible if the money is not legally recoverable. This would include all unsustainable claims whether barred by limitation or otherwise. It is no doubt true that this rule applies in terms only to what is known as legal set-off. Although in this country it has been held in numerous cases that the Code of Civil Procedure does not prevent the defendant from claiming an equitable set-off in respect of unliquidated damages claimable in connection with the transaction on which the suit is brought, I think that, on the principle that equity follows the law, the plea will be available only in respect of sums legally recoverable. Lord North states the principle very clearly in Fitton v. Macclesfield 1 Vernon 293: 'For when the Legislature had fixed the time at law, it would have been preposterous for equity (which by its own proper authority always maintained a limitation) to countenance laches beyond the period that law had been confined to by Parliament. And, therefore, in all cases where the legal right has been barred by Parliament, the equitable right to the same thing has been concluded by the same bar.' Lord Redesdale in Hovenden v. Lord Annesley 2 Sch. & Lef. 607; 9 R.R. 119 expresses himself with equal clearness: It is said that Courts of Equity are not within the Statutes of Limitations * * * I think it is a mistake in point of language, to say that Courts of Equity act merely on analogy to the Statutes;
they act in obedience to them * * *
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3. I think, therefore, Courts of Equity are bound to yield obedience to the Statute of Limitations upon all legal titles and legal demands, and cannot act contrary to the spirit of its provisions.' The Indian Legislature, it seems to me, has recognised this in Order XX, Rule 19, of the Code of Civil Procedure. Clause (1) of that rule regards the claim to set-off as a plaint in a cross suit, and provides for a decree in favour of the defendant. Clause (3) says that this rule is applicable to the plea of set-off under Rule 6 of Order VIII or otherwise, thereby indicating that equitable set-off is also within the rule. I am, therefore, of opinion that as the defendant's claim was barred by limitation, the plea of equitable set-off was not open to him. An exception to this rule has been recognised in some cases; where there is a fiduciary relationship between the parties, as in the case of trustee and cestui que trust, and there is accountability, even barred claims may be taken into account in passing the final accounts. This exception has been extended in some of the decided cases in India to mortgages, presumably on the ground that there is accountability between the parties. See Parasurama Pattar v. Venkatachalam Pattar 25 M.L.J. 561; Chidambara Mudaliar v. Krishnaswami Pillai 28 Ind. Cas. 221 and Ramdhari Singh v. Permanand Singh 21 Ind. Cas. 716. It is not necessary to say now whether these cases have been rightly decided. I see no reason for extending the exception to suits between a lessor and a lessee.
4. Regarding the memorandum of objections, we think that the defendant is only entitled to simple interest at 9 per cent. but not to compound interest. The plaintiff is entitled to interest at 6 per cent. on the arrears of rent due to him from the dated on which they fell due. We are also of opinion that the defendant is not entitled to interest on the sum of Rs. 5,130 found in the previous litigation to be binding on the mutt, prior to the death of Thandavaraya Desikar. The decree must be modified by awarding interest only from fasli 1312. These conclusions are applicable to Second Appeal No. 1873 of 1913. Subject to this modification, the second appeal is dismissed. Parties will pay and receive proportionate costs in the memorandum of objections to the two appeals and in the second appeal.