The judgment established the requirements for a legal set-off, the applicability of court fees on set-offs, and the discretionary nature of allowing equitable set-offs.

Gruer, J—The plaintiff non-applicant brought this suit for recovery of an amount due on a pro-note for Rs. 4000. By an interlocutory order the lower Court has found that the set-off pleaded by defendant cannot be allowed in this suit and that he is at liberty to bring a separate suit against the plaintiff for his claim. Defendant comes 1940 N/23 & 24 up in revision against this interlocutory order. The alleged set-off appears in defendant's lengthy written statement which is so couched that it is difficult to say whether defendant then envisaged a legal set-off, an equitable set-off or a counter-claim or a plea of satisfaction or a combination of some of these defences. The learned Judge in his order does not state whether he is speaking of legal set-off or equitable set-off. When I asked learned Counsel for the applicant to be precise now at least about his client's claim he says it is a legal set-off. So the position must be examined primarily from that standpoint.

2. The facts pleaded in defence fall under two heads. Defendant says that after the execution of the promissory note plaintiff engaged in some wagering contracts in Bombay in which he lost nearly Rs. 60,000. At his request defendant accompanied him to Bombay and promised to help him out of his difficulties. This defendant did by making several such dealings in Bombay by which he was able to reduce his losses to. the extent of Rs. 50,000. He says that plaintiff had promised to pay him 10 per cent, on such reduction of losses, which amount comes approximately to Rs. 5000. Secondly, he says that while in Bombay both he and defendant made soudas of boxes of silver which resulted in a profit to the defendant of Rs. 2240 which is in deposit with the plaintiff. He claims credit for this also.

3. Now according to Order 8,R.6, Civil P.C., before a legal set-off can be claimed, it must be presented in a written statement which shall have the same effect as a plaint, and it must be shown that it is an ascertained sum of money legally recoverable by the defendant from the plaintiff, and that both parties fill the same character as they fill in the plaintiff's suit. The claim for the commission over reduction of losses is stated approximately and cannot be considered as an ascertained sum of money. It would require accounts to be gone into, and the written statement admits as much. In Bhikanrao v. Shridhar, 1931 AIR(Nag) 12 it was pointed but that an ascertained sum means a sum of money of which the amount is fixed and known and that it excludes such items as unliquidated damages and mesne profits, the amount of which is not ascertainable until the Court determines them.

4. The other item of Rs. 2240 is an ascertained sum, but the objection taken here is that it is not legally recoverable as it arose out of gambling transactions, and secondly that the parties did not fill the same character. Defendant says that in these transactions he acted as plaintiff's servant only, and that money is recoverable on an agreement which is merely collateral to a wagering contract. Although I doubt if this is the true position the pleadings are not clear on the point. Plaintiff says that defendant's position was that of a benamidar or partner and not that of a servant. Further pleadings or evidence would be necessary to clear this up. Similarly, I doubt whether it is made out on the pleadings that the parties held different characters from those they hold in this suit. The characters of debtor and creditor are the same whether the creditor became so in his capacity of servant or agent in one case and in an independent capacity in the other. I do not pursue that however as I think that the lower Court was perfectly entitled to refuse to entertain the claim as a legal set-off as it was not properly presented in that form and no court-fees were paid. 5. It is quite clear from Article 1, Schedule 1, Court-fees Act, that fees must be paid on a set-off, and I agree with the decision in Chhakkan