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TMI Blog2005 (5) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, New Friends Colony, New Delhi, and paid Rs. 10 lakhs as security deposit. These premises were vacated by the company on 15-7-1997, and rent for June and July, 1997, was also paid. However, at the time of vacation of the premises aforesaid security deposit of Rs. 10 lakhs was not refunded by the respondents to the company. The Official Liquidator sent notice of demand dated 11-4-2000, calling upon the respondents to remit this amount to the official liquidator within 15 days from the receipt of the demand notice with interest. The respondents replied to this notice and stated that they had kept a sum of Rs. 5 lakhs with the company as fixed deposit by means of four FDRs, which was to carry interest at 14 per cent per annum and after adjusting the said amount and interest due thereon from Rs. 10 lakhs (security deposit), it is the respondent who had to still receive a sum of Rs. 32,952.04. 2. According to the Official Liquidator, the respondents are not entitled to the adjustment of the security deposit in the aforesaid manner and, therefore, this application is filed seeking an order against the respondents for payment of this amount with interest. 3. The reply filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application, the answer to two questions is needed : ( i )Whether the respondents can claim set-off in these proceedings ? ( ii )If answer to the first question is in the affirmative, whether the respondents have made out a case for set-off of the amount mentioned above ? 6. Before deciding these questions I may first point out the dispute on facts which is very limited in sphere. Although in the application the applicant had stated that while vacating the premises rent for June and July was paid, this is disputed by the respondents. But no proof is given to show that such rents for these two months was paid. Likewise, the respondents have claimed that maintenance charges of Rs. 1,200 for the last four months were not paid and the respondent had also to pay TDS of Rs. 16,616.04. Repair charges of Rs. 50,000 are also claimed. In the rejoinder the Official Liquidator has denied the same on the ground that the respondents have not produced any documentary evidence. Insofar as non-payment of booster pump and water charges are concerned, there cannot be a proof thereof and if it was paid, it was for the applicant to give the proof. 7. Therefore, it can be inferred that rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the point and after referring to some of the English judgments the court held that the respondents were entitled to set-off. The following observations of Rajamannar, CJ., need to be noted : "On principle and in the interests of fairness and justice, we think that a party against whom the company has instituted a suit, should not be prevented from establishing that on a proper taking of the account between the company and the party, i.e., after adjusting mutual credits and debits, no amount is due to the company or that the extent of its liability is more or less reduced. When the company has made a claim, any plea which has the effect of reducing the claim if successful would be a plea in defence. It may be for certain purposes, as, for example for court fees, a written statement containing a plea of set-off or counter-claim is treated as a cross-suit, but that is not conclusive of the matter. There can be no doubt that the pleading by the defendant is defensive in character. If it is so, then section 171 cannot apply." (p. 168) 11. In his separate but concurring judgment Vishwanatha Sastri J. (as His Lordship then was) noted that following two contentions were raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the claim of the Official Liquidator to recover a debt or other sum of money due to the company: Mersey Steel Iron Co. v. Naylor, Benzon Co. [1884] 9 App Cas. 434; Peat v. Jones and Co. [1881] 8 QBD 147; Jack v. Kipping [1882] 9 QBD 113 ; City Equitable Fire Insurance Co., In re [1930] 2 Ch. 293. Where such a set-off is claimed and established, there is in substance a deduction from one demand for money of another cross demand between the same parties with the result that the claim of the Official Liquidator stands liquidated in whole or in part as the case might be. The right of set-off is a ground of defence and is required by Order VIII, rule 6, of the Civil Procedure Code to be pleaded as a part of the written statement of the defendant. If established it is an answer to the plaintiff s claim wholly or pro tanto as the case might be. The defendant, if entitled to a set-off, is not liable to make satisfaction of the claim made against him or so much of it as equals the amount which he is entitled to set-off. If a set-off equal to the plaintiff s claim is established it is an absolute defence entitling the defendant to a decree of dismissal of the suit. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied, but not otherwise I.The suit must be one for the recovery of money. II.As regards the amount claimed to be set-off ( a )it must be an ascertained sum of money ; ( b )such sum must be legally recoverable ; ( c )it must be recoverable by the defendant or by all the defendants if more than one ; ( d )it must be recoverable by the defendant from the plaintiff or all the plaintiffs if more than one. Thus, where the defendant is sued by the agent, he cannot set-off what is due to him from the principal as the principal is not the plaintiff; ( e )it must not exceed the pecuniary limits of the jurisdiction of the court in which the suit is brought; and ( f )both parties must fill, in the defendant s claim to set-off the same, character as they fill in the plaintiff s suit." 16. On the face of it all the conditions are satisfied and no discussion is required thereon except condition II( f ). Whether both parties fill the same character as they fill in the Official Liquidator s application ? 17. Almost in identical circumstances the Punjab High Court had allowed the set-off in the case of Mehr Chand v. Amritsar Bank 28 IC 975. That was a case wher ..... X X X X Extracts X X X X X X X X Extracts X X X X
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