1. This revision petition is directed against the order of the District Judge Jammu dated 2-9-1980 and has arisen in the following circumstances : Respondent No. 1 filed a suit for recovery of Rs. 24,948/- as the installments contributed by him towards the Chit Fund Scheme started by the defendant - petitioner. The defendant-petitioner in the written statement inter alia averred that the plaintiff had stood surety for some other members of the Chit Fund scheme who after having received definite amounts stopped paying the installments and, therefore, the defendant-firm adjusted the amount due to the plaintiff against its own claim against the defaulters for whom the plaintiff had stood surety as also against some arrears due from the plaintiff. The plaintiff submitted before the trial court that since the defendant bad not paid the court fee on the amount of set off claimed by him in the written statement, he could not be heard on that plea. The following preliminary issues were raised in the case:

1. Whether defendant No. 1 can claim set off without paying court on the amount of set off? OPD

2 Whether the suit is bad for misjoinder of the parties and causes of action ? OPD 2 to 4.

The learned District Judge vide the impugned order held that the defendant could not claim the set off without paying the court fee on the amount of set off and directed defendant No. 1 to pay the court fee on the amount of set off in case he wanted that plea to be taken i ote of on or before 1-10-1980, The defendant No. 1 has challenged that order by way of this revision petition

2. With a view to properly appreciate the arguments raised at the bar, it would be desirable to first notice the provisions of O.8 R.6 C P. C. Clause (1) of Rule 6 of O 8 reads as follows :-

"Where in suit for the recovery for the money tfce defendant claims to set off against the plaintiffs demand any ascertained sum of money legally recoverable by him from the plaintiff, not exceeding the pecuniary limits of the jurisdiction of the Court, and both parties fill the same character as they fill in the plaintiffs suit, the defendant may, at the first hearing of the suit, but not afterwards unless permitted by the Court, present a written statement containing the particulars of the debt sought to be set-off."

3 By its very nature set-off is a plea in defence which by adjustment would wipe of or reduce the plaintiffs claim A plea of set-off must, however, be distinguished from a plea of payment or adjustment. While set-off extinguishes the debt or reduces the same, a payment refers to a satisfaction or extinguishment of a debt affected prior to the raised of the defence of payment The question of set-off can arise only in respect of dues which are outstanding and which have not already been adjusted. A plea of payment or adjustment on the other hand is essentially a different plea and can be taken note of provided the same was raised before the institution of the suit and not afterwards.

4. One of the basic factors which has to be taken into cornid-eration while determining whether a plea raised in defence is a plea of set-off or of payment by adjustment, is to find out as to whether a separata action could be maintained by the defendant on the basis of the claim made by him. In case a separate claim could be maintained by him and put forward in a separate suit, then the plea would be a plea of set-off and court fee will have to be paid on the claim, On the other hand, if adjustment had been made prior to the filing of the suit, no court fee would be payable on the amount, which stood adjusted prior to the institution to the suit, as the plea in that case would be a plea of adjustment by payment. Under Schedule 1 Art. 1 of the Court Fee Act, ad-valorum court fee is payable on the set-off claimed but no court fee need be paid on the plea of adjustment for the simple reas6n that the plea of adjustment is in the nature of informing the court that prior to the institution of the suit, t

Click Here to Read the rest of this document