The distinction between a plea of adjustment and a plea of set off is crucial in determining the relevance of production of documents in a case involving loan adjustment.

Hemant Gupta, J.

1. The defendant is in revision aggrieved against the order passed by the learned Trial Court on 17.1.2004 whereby the application filed by the defendant for discovery and production of documents was declined.

2. The plaintiff filed a suit for the recovery of Rs. 1,21,958.83P against the defendant, an ex-employee of the plaintiff who was advanced loan for the purchase of vehicle. Said suit for recovery has been filed on the allegation that the company has right to recover the entire loan amount together with interest in lump sum after the defendant ceased to be in employment of the plaintiff. Said suit has been filed on 8.8.1994. Before filing the said suit, the defendant has served a notice dated July 20, 1994 whereby the defendant has claimed that the company i.e. the plaintiff owed a sum of Rs. 2,42,700/-after settlement of all the dues that were payable by him. The defendant in the written statement has relied upon the said notice and claimed that no loan amount is due against the defendant after adjustment of the amount payable to the defendant by the plaintiff.

3. During the pendency of the said suit the defendant moved an application for production of certain documents i.e. the documents necessary to substantiate the plea by which he has claimed amount payable to the defendant after settlement of all the dues of the plaintiff. Learned Trial Court declined such application on the ground that no counter claim has been filed nor there is any plea of set off. It was further found that since the defendant has filed a separate suit challenging his dismissal therefore, the documents sought for have no relevancy in respect of the present suit.

4. The petitioner has argued that the claim of the petitioner is neither of set off or of counter claim but of adjustment before the filing of the suit and therefore, the production of the documents sought for is necessary for determining the controversy between the parties. Reliance is placed upon Punjab Electric Power Co. Ltd V/s. Suraj Kishan, A.I.R. 1937 Lahore 62; D. Konda Pentiah v. Chenchu Rangiah, A.I.R. 1955 Hyderabad 176; The Tata Iron and Steel Co. Ltd. v. UN. Gupta, A.I.R. 1963 Orissa 174; State of Madhya Pradesh V/s. Raja Balbhadra Singh, A.I.R. 1964 Madhya Pradesh 231; Cheria Elias V/s. Surendra Chit Fund, 1989(1) Kerala Law Times 449.

5. The learned Trial Court has failed to appreciate that in fact the case of the defendant is that of adjustment and that too before the filing of the suit and thus the production of documents sought for would be relevant to determine the controversy between the parties. In D. Konda Pentiah s case (supra) it has been held that a plea of adjustment must be distinguished from a plea of set off. The plea of adjustment or satisfaction premises that the extinction of the plaintiffs claim or satisfaction took place prior to the date on which the defence was raised in the suit. A claim of set off is raised by the defendant for the first time in the written statement. It was held to the following effect:

"3. A distinction has always been observed by Courts of law between an adjustment and a set off. The plea of adjustment or satisfaction premises that the extinction of the plaintiffs claim or satisfaction took place prior to the date on which the defence was raised in the suit. By a claim for set off, on the other hand, the defendant prays that the plaintiffs dues from the outstanding dues owed by the plaintiff to the defendant. It is implicit in such a plea that the mutual indebtedness has not been adjusted till that date and adjustment is sought in the suit itself."

6. Similarly a Division Bench of Orissa High Court in the Tata Iron and Steel Co. Ltd.s case (supra) held to the following effect.

"15. A plea of satisfaction or extinguishment of a debt of a claim set up merely by way of defence is very different. A plea of payment necessarily refers to a satisfaction or extinguishment of a debt effected prior to the stage of th