JITENDRA KUMAR KHAN AND OTHERS versus THE PEERLESS GENERAL FINANCE AND INVESTMENT COMPANY LIMITED AND OTHERS

Citation: [2013] 7 S.C.R. 1093 · Decided: 07-08-2013 · Supreme Court of India · Bench: ANIL R. DAVE · Disposal: Disposed off
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Judgment (excerpt)

[2013] 7 S.C.R. 1093 
JITENDRA KUMAR KHAN AND OTHERS 
v. 
THE PEERLESS GENERAL FINANCE AND INVESTMENT 
COMPANY LIMITED AND OTHERS 
(Civil Appeal No. 6784 of 2013) 
AUGUST 7, 2013 
[ANIL R. DAVE AND DIPAK MISRA, JJ.] 
Code of Civil Procedure, 1908: 
0. 6, r. 17 - Written statement - Amendment - Equitable 
set-off - Suit for declaration as regards plaintiffs' entitlement 
A 
B 
c 
to certain amounts - Defendants seeking amendment of 
written statement after more than 3 years of its filing and 
seeking to grant of a decree for a certain amount - Held: 
D 
Division Bench of High Court has rightly allowed the 
amendment on the basis that the claim put forth could be 
treated as a plea in the nature of equitable set-off, for it has 
treated the stand taken in the amendment petition to be a 
demand so connected in the nature and circumstances that 
E 
)hey can be looked upon as a part of one transaction. The 
view expressed by the Division Bench has to be treated as a 
prima facie expression of opinion. Whether the claim would 
be allowable or not will depend upon the evidence adduced 
before the court so as to sustain a claim of equitable set-off. 
0. 8, rr. 6 and 6-A - Set off and counter claim - Legal set 
off and equitable set-off - Explained. 
F 
A suit was filed before the High Court for declaration 
that the plaintiffs were entitled to a decree of certain 
G 
amount against defendant-respondent no. 1 company. 
The defendants filed their written statement on 12.8.1994. 
Thereafter, on 7 .4.1998, they filed an application for 
amendment of the written statement seeking to grant of 
1093 
H 
1094 
SUPREME COURT REPORTS 
[2013) 7 S.C.R. 
A a decree for a sum of Rs.4, 19,509.43 in favour of 
defendant No. 1 and a decree for further interest, which 
was resisted by the plaintiffs as impermissible since it 
amounted to introducing a counter claim or set-off. The 
single Judge of the High Court rejected the application. 
B However, the Division Bench of the High Court allowed 
the amendments holding that if the defendants' set-off 
were found to be barred by limitation at trial, they would 
not be entitled to a decree on their. own but only to a 
wiping off pro-tanto of the plaintiffs' claim. 
c 
D 
In the instant appeal filed by the plaintiffs, the 
question for consideration before the Court was: whether 
the claim of equitable set-off, as put forth, was tenable or 
not. 
Disposing of the appeal, the Court 
HELD: 1.1 For application of r. 6 of 0. 8 of the Code 
of Civil Procedure, 1908, two primary conditions are that 
it must be a suit for recovery of money and tile amount 
sought to be set-off must be a certain sum. Besides, there 
E are other parameters to sustain a plea of set-off under r.6. 
[para 12) [1101-D] 
Jai Jai Ram Monohar Lal v. National Building Material 
Supply, Gurgaon 1970 (1) SCR 22 = AIR 1969 SC 1267; 
F Suraj Prakash Bhasin v. Smt. Raj Rani Bhasin and Others 
AIR 1981 SC 485; Nichhalbhai Vallabhai v. Jaswantlal 
Zinabhai AIR 1966 SC 997; Abdul Rahim Naskar v. Abdul 
Jabbar Naskar and Ors. AIR 1950 Cal 379; Baijnath Bhalotia 
v. State Bank of India and Others AIR 1967 Pat 386; I. T.C. 
G Limited v. M.M.P. Lines Pvt. Ltd. and Others AIR 1978 Cal 
298; Mackinnon Mackenzie and Company Pvt. Ltd. v. Anil 
Kumar Sen and Anr. AIR 1975 Cal 150 - referred to. 
1.2 As far as equitable set-off is concerned, the right 
H of set-off exists not only in cases of mutual debits and 
JITENDRA KUMAR KHAN v. PEERLESS GENERAL FINANCE1095 
AND INVESTMENT COMPANY LTD. 
credits, but also where cross-demands arise out of the 
A 
same transaction. From the enunciation of law, it 
emerges that equitable set-off is different than the legal 
set-off; that it is independent of the provisions of the 
Code of Civil Procedure; that the mutual debts and 
credits or cross-demands must have arisen out of the 
B 
same transaction or to be connected in the nature and 
circumstances; that such a plea is raised not as a matter 
of right; and that it is the discretion of the court to 
entertain and allow such a plea or not. The concept of 
equitable set-off is founded on the fundamental principles c 
of equity, justice and good conscience. The discretion 
rests with the court to adjudicate upon it and the said 
discretion has to be exercised in an equitable manner. An 
equitable set-off is not to be allowed where protracted 
enquiry is needed for the determination of the sum due. 
0 
(para 12 and 16] (1101-E; 1103-E-G] 
Raja Bhupendra Narain S
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