Principle of Set-off in the CPC

Shivendra Pratap Singh

Advocate

High Court Lucknow

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The principle of set-off in the Code of Civil Procedure (CPC) in India allows a defendant to claim a deduction or adjustment in their liability by setting off a debt or claim they have against the plaintiff. It is a procedural mechanism that enables the simultaneous adjudication of competing claims between parties in the same lawsuit, promoting fairness and efficiency in resolving disputes.

The provisions relating to set-off in the CPC are primarily governed by Order 8 Rule 6 to 10. Here are the key principles of set-off in the CPC:

  1. Definition: Set-off is defined in Order 8 Rule 6 as a “justiciable claim.” A defendant can assert their right to have the plaintiff’s claim against them set off by establishing that they have a reciprocal claim against the plaintiff.
  2. Mutual Debts or Claims: For a valid set-off, there must be a mutual relationship of debts or claims between the plaintiff and the defendant. This means that the defendant’s claim must arise out of the same transaction or contract as the plaintiff’s claim or must be closely connected to it.
  3. Written Statement: To claim a set-off, the defendant must raise it in their written statement filed in response to the plaintiff’s plaint. Failure to plead set-off in the written statement may result in the defendant losing the right to assert it later in the proceedings.
  4. Jurisdictional Limit: The amount claimed as a set-off cannot exceed the plaintiff’s claim. The defendant’s set-off claim cannot be independent of or exceed the jurisdictional limit of the court in which the suit is filed.
  5. Procedure: The court will consider the plaintiff’s claim and the defendant’s set-off claim together to determine the net liability between the parties. The court may decide on the respective amounts owed by each party and grant appropriate relief.
  6. Judicial Discretion: The court has the discretion to allow or disallow a set-off claim based on the facts and circumstances of the case. If the court finds the set-off claim well-founded, it may adjust the respective liabilities accordingly.

The principle of set-off in the CPC provides a mechanism for a defendant to assert their own claims against the plaintiff within the same lawsuit, avoiding the need for separate legal proceedings. It ensures that both parties’ claims are considered and resolved simultaneously, leading to a more efficient and equitable resolution of the dispute.