CALCUTTA HIGH COURT
W. Comer Petheram, C.J, Trevelyan, J., Macpherson, J.
Ramdeo & Anr. - Appellant
Versus
Pokhiram - Respondent
Decided On : 12-09-1893
Jurisdiction - Set-off - Small Cause Court Act (XV of 1882) - Section 18 - Explanation I - Whether a debt admitted by the defendant is a 'set-off admitted by both parties' - Held, No - The word 'set-off' in Section 18 is not equivalent to 'debt' - A debt due by the plaintiff to the defendant on a transaction independent of the one on which his claim is based is a debt, and a debt may be the subject of a set-off, but it only becomes a set-off under certain circumstances, one of which seems to be indicated by Section 18, which requires that the set-off should be admitted by both parties - The right to set off a debt against the plaintiff's demand is with the defendant - If he does not choose to claim the set-off he does not forfeit his right to enforce payment of the debt by bringing a separate action - It is beyond controversy that a plaintiff cannot compel a defendant to plead a set-off - Section 18 of the Small Cause Court Act was not intended to, and does not, extend the jurisdiction of the Small Cause Court so as to enable a plaintiff to prefer in it a disputed claim for a very large amount by setting off against that claim without the defendant's consent a debt which he owes to the defendant on a wholly different account, a debt which, if the defendant wished to enforce it, might be the subject-matter of a separate suit - What is required to be admitted by both the parties is a set-off, by which I understand a set-off of a debt or demand, and not the debt or demand itself.
Fact of the Case:
The plaintiff sued for Rs. 2,148, but sought to reduce the claim to Rs. 1,648 by deducting Rs. 500 owed to the defendant from a separate transaction. The defendant admitted the debt of Rs. 500 but did not agree to its set-off against the plaintiff's claim.
Finding of the Court:
The court held that the defendant's admission of the debt of Rs. 500 did not constitute a 'set-off admitted by both parties' within the meaning of Explanation I, Section 18 of the Small Cause Court Act. The court reasoned that the word 'set-off' in the section is not equivalent to 'debt' and that a debt only becomes a set-off when admitted by both parties. The court further held that the plaintiff cannot compel the defendant to plead a set-off and that Section 18 does not extend the jurisdiction of the Small Cause Court to allow a plaintiff to reduce a large claim by setting off a debt without the defendant's consent.
Issues: Whether the plaintiff's deduction of Rs. 500 owed to the defendant from a separate transaction constituted a 'set-off admitted by both parties' within the meaning of Explanation I, Section 18 of the Small Cause Court Act, thereby giving the Small Cause Court jurisdiction.
Ratio Decidendi: The court held that the word 'set-off' in Section 18 of the Small Cause Court Act is not equivalent to 'debt'. A debt only becomes a set-off when admitted by both parties. The plaintiff cannot compel the defendant to plead a set-off. Section 18 does not extend the jurisdiction of the Small Cause Court to allow a plaintiff to reduce a large claim by setting off a debt without the defendant's consent.
Final Decision: The court held that the Small Cause Court did not have jurisdiction to entertain the suit and dismissed the suit with costs.
JUDGMENT
Macpherson, J. - I think the case has been rightly decided, and I would answer the question submitted in the negative.
2. The amount or value of the subject-matter of the suit is Rs. 2,148 and beyond the jurisdiction of the Court, but the plaintiffs deducting by way of set-off a sum of Rs. 500 which was due by them to the defendant on account of a wholly different transaction, reduced their claim to Rs. 1,648. The defendant says that the sum of Rs. 500 is due to him, but he does not agree to its being set-off against the plaintiffs' claim. The question is whether the plaintiffs are entitled to set off this sum so as to give the Small Cause Court jurisdiction, or in other words, whether there is "a set-off admitted by both parties" within the meaning of Explanation I, Section 18 of the Small Cause Court Act (XV of 1882).
3. Clearly the defendant did not before suit or during the trial agree to the set-off, but he admitted the debt of Rs. 500, if a person can be properly said to admit a debt which is due to himself. The question then seems to be reduced to this, whether the word "set-off" in the section referred to is equivalent to "debt." I know of no authority for holding that it has that meaning, and the words "an admitted set-off of any debt or demand claimed or recoverable by the defendant," in the corresponding sections of the County Courts' Acts of 1856 and 1888, certainly do not indicate that the two words moan the same thing. A sum of money due by the plaintiff to the defendant on a transaction independent of the one on which his claim is based is a debt, and a debt may be the subject of a set-off. But it only becomes a set-off under certain circumstances, one of which seems to be indicated by Section 18, which requires that the set-off should be admitted by both parties. The right to sat off a debt against the plaintiff's demand is with the defendant. If he does not choose to claim the set-off he does not forfeit his right to enforce payment of the debt by bringing a separate action. It is beyond controversy that a plaintiff cannot compel a defendant to plead a set-off. I think that Section 18 of the Small Cause Court Act was not intended to, and does not, extend the jurisdiction of the Small Cause Court so as to enable a plaintiff to prefer in it a disputed claim for a very large amount by setting off against that claim without the defendant's consent a debt which he owes to the defendant on a wholly different account, a debt which, if the defendant wished to enforce it, might be the subject-matter of a separate suit.
4. What is required to be admitted by both the parties is a set-off, by which I understand a set-off of a debt or demand, and not the debt or demand itself.
5. Section 47 of the County Courts Act of 1888 enacts that "where in any action the debt or demand claimed consists of a balance not exceeding 50 after an admitted set-off' of any debt or demand claimed or recoverable by the defendant from the plaintiff, the Court shall have jurisdiction to try such action." There was a provision to the same effect in the Act of 1856. It is clear that what must be admitted is the set-off of a debt or demand, but there has been some discussion in the Courts as to whether the words "an admitted set-off" meant a set-off admitted by both parties.
6. The Small Cause Court Act in force in this country places it beyond doubt that whatever may be meant by a set-off, the admission must be by both parties. In Walesby v. Goulston L.R. 1 C.P. 567 the plaintiff brought an action for 51, but recovered judgment for only 19, a set off having been admitted during trial for 32. The question arose whether he was entitled to his costs. Erle, C.J., held that he was entitled, and added: "I think there is great doubt whether a set-off can be admitted by one party only, but here plaintiff did not admit it himself before action brought."
7. In Percival v. Pedley L.R. 18 Q.B.D. 635, Mathew and Cave, JJ., overruling Baron Huddleston, held th
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