Court fees are payable on an equitable set-off as well as on a legal set-off.

1. The only question that arises in this Revision Application is whether court - fees are payable in respect of an equitable set - off. The plaintiff has filed this suit as a building contractor for the recovery of over rupees one lakh, interest and costs. In paragraph 23 of the written statement filed on behalf of the defendant, a co - operative society which had entrusted the work of construction of certain buildings in Poona to the Plaintiff, it has been stated that the plaintiff had not done work according to the contract and that many of the items in the contract had been left undone, and in para 31 of that written statement it is pleaded that loss had been caused to the defendants by reason thereof. It is further pleaded in the said paragraph that, although the loss was much more, the defendants were restricting their claim "by way of equitable set - off" to Rs. 50,000/-. The plaintiff thereafter filed an application dated 11th June 1968 (Ex. No. 11) in which in addition to asking for particulars of the set - off claimed by the defendants, he prayed that the defendants claim for set - off should be rejected for want of court - fees. On that the learned Civil Judge (S. D.) at Poona passed an order dated 3rd September 1968 directing the defendants to give particulars and ordering them to pay court - fees on the equitable set - off claimed by them on or before 13th September 1968. It is from that order that the defendants have approached this court in revision.

2. Apart from the fact that the defendants have, in terms, stated that the set - off claimed by them is an equitable set - off, it does sound in damages and, therefore, though they have sought to limit it to a specific amount, in my opinion, it is really a claim for an unascertained sum arising out of the same transaction and is in the nature of an equitable set - off. On behalf of the defendants reliance was placed on the decision of the Allahabad High Court in the case of Madan Garg v. Bohra Ram, AIR 1934 All 115 in which the view taken was that court - fee is not payable on an equitable set - off. The plaintiff in that case had sued for arrears of rent to which the defendant pleaded a set - off for the value of timber supplied by the defendant to the plaintiff as a legal set - off under Order 8, Rule 6,Civil P. C. The trial Court allowed that set - off though no court - fee had been paid thereon. On Revision, a single judge of the High Court treated it as an equitable set - off and held that the trial court had not acted "illegally" in allowing the set - off observing as follows (at p. 117) :-

"If however the set - off could be claimed as an equitable set - off there is no reason why the Court should not have allowed it without payment of a court - fee. A legal set - off requires a court - fee because it is a claim that might be established by a separate suit in which a court - fee would have to be paid. But there is no such fee required in the case of equitable set - off which is for an amount that may equitably be deducted from the claim of the plaintiff where a court - fee has been paid on the gross amount. An equitable set - off may however only be claimed by the defendant for a claim arising out of the same transaction as the plaintiffs claim."

With respect of the learned Judge who decided that case, I am unable to appreciate his reasoning in the passage quoted above. A legal set - off which must be for an ascertained amount may though it need not, arise out of the same transaction as the plaintiffs claim and be in the nature of a deduction from the claim of the plaintiff. Even so, court - fee would have to be paid on the amount of the legal set - off, so claimed. On the other hand, an equitable set - off, though for an unascertained sum, may also be in respect of a claim that could be established by a separate suit in which court - fee would have to be paid. Neither the fact that an equitable set - off arises out of the same transaction as the plaintiffs c