Andhra HC (Pre-Telangana)
Durga Pharma Distributors And Another vs Geoffrey Manners & Co. Ltd., Bombay And ... on 29 November, 1999
Equivalent citations: 2000(1)ALD312, 2000(1)ALT221, AIR 2000 ANDHRA PRADESH 242, (2000) 1 ANDHLD 312, (2000) 1 ANDH LT 221, (2000) 2 CIVLJ 660, (2000) 3 CIVILCOURTC 559
Author: C.V.N. Sastri
Bench: C.V.N. Sastri
JUDGMENT
1. The question, which arises for consideration in this CRP relates to the Court fees payable by the defendant in the suit in respect of adjustment/set off/ counter-claim pleaded in the written statement. Indisputably if the claim made by the defendant in the written statement merely amounts to a plea of payment or adjustment of the suit claim, no Court fees is payable. On the other hand, if it amounts to a set offer a counter-claim, Court fees is required to be paid in view of Section 8 of the Andhra Pradesh Court Fees and Suits Valuation Act, 1956 which provides that the written statement pleading a set off or counter-claim shall be chargeable with fee in the same manner as a plaint. - For a proper appreciation of the question involved, it is necessary to refer to the factual matrix.
2. The plaintiff/company appointed the defendant/firm as its consignment agent by agreement dated 5-1-1990 for distribution and sale of its products in the State of Andhra Pradesh. By a notice dated 30-11-1993, the plaintiff terminated the said agreement with effect from 31-12-1993. According to the plaintiff, the termination was, however, postponed till 31-3-1994 at the request of the defendant. On 28-2-1994, the plaintiff issued a fresh notice terminating the agreement with effect from 31-3-1994 and filed the suit for recovery of a sum of Rs.68,16,078-68 representing the outstanding amount due to the plaintiff towards the goods entrusted by the plaintiff to the defendant together with interest thereon at 18% per annum from 10-4-1994 till the date of filing of the suit.
3. In the written statement filed by it, the defendant, while questioning the termination of the agreement by the plaintiff as illegal, pleaded that after mutual negotiations, an understanding was arrived at between the parties on 2-12-1993 to extend the distributorship of the defendant for a further period of three years from 31-12-1993. The defendant also pleaded that it had returned to the plaintiff damaged/ unsaleable stocks valued at Rs.35,90,808/-during the period 1990-91 to 1993-94 which had to be adjusted by the plaintiff to the credit of the defendant but the plaintiff did not do so fraudulently. As such the defendant claimed adjustment of the said amount in reduction of the suit claim. The defendant next claimed that it had to get a sum of Rs.2,49,000-00 towards commission for the month of March, 1994 and the expenditure incurred by il. The defendant finally claimed in the written statement damages from the plaintiff for breach of contract at the rate of Rs. 1,00,000-00 per month for a period of three years amounting to Rs.36,00,000-00. Thus according to the written statement, a total amount of Rs.74,36808-24 was due to it from the plaintiff under different heads as mentioned above, whereas the amount due to the plaintiff from the defendant was only Rs.60,15,558-50. After adjusting the said amounts against one another the defendant has to get from the plaintiff a sum of Rs.14,21,249-74 on which the defendant paid Court fees of Rs.16,726-00 under Section 20 of the Andhra Pradesh Court Fees and Suits Valuation Act, 1956.
4. The plaintiff filed a rejoinder contending that the alleged adjustment/set off/counter-claims pleaded by the defendant are wholly false and untenable and the same cannot be entertained or adjudicated without payment of Court fees on the entire amount of Rs. 74,36,808-24 claimed in the written statement under various heads.
5. On 31-8-1994, the office prepared a note stating that the total Court fees payable on the various claims made in the written statement is Rs. 16,352-00 whereas the defendant actually paid Rs. 16,726-00 which is more than the Court fees required to be paid and that the matter may, however, be heard on the Bench. After hearing both parties, the lower Court, by the impugned order dated 24-8-1995, held that the entire amount of Rs.74,36,808-24 claimed in the written statement is in the nature of a counter-claim but it cannot be treated as adjustment and as such the defendant is liable to pay Court fees on ihc entire amount and on the same day, the lower Court passed a consequential order directing the return of the written statement for payment of the deficit Court fees. Hence this revision.
6. The learned Counsel appearing for the respondent-plaintiff has raised two preliminary objections regarding the maintainability of the revision. Firstly it is contended that the order determining the Court fees payable is not a 'case decided' within the meaning of Section 115 CPC and the order cannot be said to cause any irreparable injury to the defendant or that it would occasion a failure of justice. Hence the revision is not maintainable. Secondly it is argued that an order rejecting the plaint on the ground that the Court fees paid is insufficient amounts to a decree within the meaning of Section 2(2) read with Order 7 Rule 11 CPC and it is appealable under Section 96 CPC. Hence no revision lies. In support of the said contentions, reliance is sought to placed on the decisions reported in M/s. Kamal Engineering Works v. Ashwani Kumar and others, AIR 1991 NOC 53 (Raj), in the matter of B.H. and I. Limited, Visakhapatnam, AIR 1985 AP 207, Zeenathnamisa v. Md. Abbas, 1996 (2) ALD 432 and S. Chengal Rao v. P. Paramasivappa, 1996 (3) ALD 968. It may, however, be mentioned that except the first decision, none of the other decisions is directly in point. In the first decision, a learned single Judge of the Rajasthan High Court held that a decision as to the amount of the Court fees payable does not amount to a 'case decided' and a revision against such an order is not maintainable. In Murthirajii v. Subbaraju, AIR (31) 1944 Madras 315, a Full Bench of the Madras High Court, affirming earlier Division Bench judgment of the same Court and following various decisions of High Courts of Calcutta, Bombay, Lahore and Patna, held that revision lies against such an order under Section 115 CPC. It was pointed out in the said judgment of the Full Bench that insistence of the payment of additional Court fees amounted to a refusal to exercise jurisdiction and the mere fact that an appeal would lie later from the consequential order passed by the Court if the Court fees were not paid, was no ground for refusing to entertain the revision. This authoritative pronouncement of the Full Bench, which is a binding precedent is alone sufficient to negative both the preliminary objections raised by the Counsel for the respondent. It may also be mentioned that a Full Bench of the Punjab High Court and the Full Bench of the Goa High Court have also taken the same view as the Full Bench of the Madras High Court (See Krishan Kumar v. Parmeshri Devi, , and Ramanata v. Judge, Comarca Court, AIR 1966 Goa I). The fact that the above decisions were rendered prior to the amendment of Section 1!5 CPC by Amendment Act, 1976, in my view, makes no difference. A direction to pay additional Court fees which is quite substantial in the present case, certainly affects the legal rights of the defendant and if the defendant is not in a position to pay the same, the order, if allowed to stand would certainly cause irreparable injury to the defendant. I do not, therefore have any hesitation in rejecting the preliminary objections raised by the Counsel for the respondent with regard to the maintainability of the revision petition.
7. Now coming to the main question, Order 8, Rule 6 CPC enables the defendant in a suit for recovery of money to claim set off against the plaintiffs demand any ascertained sum of money legally recoverable by him from the plaintiff not exceeding the pecuniary limits of the jurisdiction of the Court provided both parties fill the same character as they fill in the plaintiffs suit. Rule 6-A of Order 8 provides that a defendant in a suit may, in addition to his right of pleading a set-off under Rule 6, set up by way of counter-claim against the claim of the plaintiff, any right or claim in respect of a cause of action accruing to the defendant against the plaintiff either before or after the filing of the suit but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counterclaim is in the nature of a claim for damages or not. Provided that such counterclaim shall not exceed the pecuniary limits of the jurisdiction of the Court. The set off under Rule 6 as well as the counter-claim under Rule 6-A shall have the same effect as a cross suit so as to enable the Court to pronounce a final judgment in the same suit both on the original claim and on the set off or counter-claim as the case may be. The distinction between payment/adjustment on the one hand and set off or counterclaim on the other has been pointed out and explained in a number of judicial pronouncements earlier (See Punjab Electric Power Company Limited v. Suraj Kishan, AIR 1937 Lah. 62, M.S.C. Industries v. H.C. Bank, , Tata Iron and Steel Company v. R.N. Gupta, , State of Madhya Pradesh v. Balbhadra Singh, (DB), S. Sathapal v. Pandiyan Brick Works, , Munshi Ram v. Radha Kishan, , Andhra Pradesh State Road Transport Corporation v. P. Ramana Reddi, 1989 (I) ALT 195, M/s. Anand Enterprises, Bangalore v. Syndicate Bank, Bangalore, and Cofex Exports Limited v. Canara Bank, (DB)). It may not be necessary to consider in detail all of them. I shall only refer to such of them as are relevant for the purpose of this case.
8. In Tata Iron and Steel Company v. R.N. Gupta (supra), a Division Bench of theOrissa High Court, held that a plea of satisfaction or extinguishment of a debt or a claim, set up merely by way of defence is very different from a plea of set-off. A plea of payment necessarily refers to a satisfaction or extinguishment of a debt effected prior to the stage of defence, whereas a plea of set-off is in the nature off a cross claim and in effect it prays for a satisfaction or extinguishment of a claim to be made in the future after the date when the plea has been set up. If it were held to be merely a plea regarding adjustment of accounts and no more, no Court fees would be payable on the amount mentioned in such a plea. The plaintiff in that case, who supplied rice to the defendant, filed a suit for recovery of certain sums wrongfully deducted by the defendant from the plaintiffs bills for the rice supplied and also for damages for the loss suffered by the plaintiff on account of the wrongful rejection of some stocks sent by the plaintiff. In defence, the defendant pleaded that the rice supplied was not as per sample and, therefore, the defendant was obliged to procure rice from other sources incurring loss and the same was adjusted by deducting from the bills of the plaintiff in respect of other supplies made by the plaintiff. It was held that both the supplies formed part of the same transaction of contract for supply of rice and the defendant was justified in making such an adjustment by deducting from the bills of the plaintiff instead of claiming the same by way of set off.
9. In State of Madhya Pradesh v. Balabhadra Singh (supra), the distinction between payment and adjustment is pointed out by stating that while a payment is made to the creditor, adjustment is made by the debtor himself. In that case the plaintiff, who was, a Jagirdar, sued the State Government for recovery of the amount payable to him on the abolition of the jagir. The State Government, while admitting its liability to pay the said amount, asserted that the same was already adjusted by it towards the cess due to it from the plaintiff. In that case the Court held as follows:
"Here the defendant State was already in possession of adequate money to pay itself out of that payable to the plaintiff. In other words, it was a plea of adjustment. When two persons have certain accounts and monies are payable by each to the other, they are both entitled to mutual adjustments of the monies provided they are really due and recoverable. The distinction between payment and adjustment is that payment is made to the creditor while the adjustment is made by the debtor himself. Although it is not called "payment' in common parlance yet it undoubtedly partakes the character of payment. At all events, it cannot be called a claim for set off, nor can it be said lo by a counterclaim as the defendant does not seek enforcement of his claim and, therefore, Court fee is not due."
The Court further held that on general principles, a person is entitled to pay to himself that amount which is due to him from another if he has in his hand monies belonging to that other provided that his dues are legally recoverable. Although that question will be adjudged by the Court of law when it arises, he is not obliged to sue for the recovery of the money which he is already in possession of. It was accordingly held that no Court fee is required to be paid on the amount claimed to have been so adjusted.
10. In D. Seshaiah v. B. Veerabhaaraiah, , a Full Bench of this Court defined set off in the following terms:
"The principle of set off may be defined as the extension of debts of which two persons are reciprocal debtors to one another by the credits of which they are reciprocally creditors to one other."
In Andhra Pradesh State Road Trampot Corporation v. P. Ramana Reddi (supra), a learned single Judge of this Court held that set off is a claim that arises under the same transaction which confers a right to recover the same as an independent debt but an adjustment or payment in respect of the amount due to the plaintiff has extinguished the debt as the defendant is not claiming any right to recover the amount but only seeking to establish that the claim of the plaintiff cannot be arrived at without reference to the payment or adjustment already made. That case arose out of a suit filed by the contractor for recovery of a certain amount allegedly due to him for the work done by him. In defence the corporation pleaded that the value of the cement, steel and other materials supplied by it has to be deducted from the bills payable to the plaintiff and that the plaintiff is entitled to the balance after such adjustment. It was held that the said claim for deductions made by the corporation amounts to only an adjustment of payment and it is not in the nature of a counter-claim and as such no Court fees is required to be paid thereon.
11. In M/s. Anand Enterprises, Bangalore v. Syndicate Bank, Bangalore (supra), in a suit filed by a bank for recovery of amount due under a loan from the defendant, the defendant took a plea that due to the delay on the part of the bank in advancing the loan, it suffered losses to the tune of rupees four lakhs and wanted the same to be set off against the suit claim. It was held that the claim made by the defendant was only a set off but not a counter-claim. It was also held that Court fee in such a case was payable only after the damages were duly ascertained and quantified by the Court.
12. In Cqfex Exports Limited v. Canara Bank (supra), a Division Bench of the High Court, after an elaborate review of the case law and after referring to several treatises like Halsbury 's Laws of England, Corpus Juris etc., summarised the principles as follows:
The defendant has a right to defend himself by raising all possible pleas permitted by law. No Court fee is leviable on a written statement. The nature of the several pleas, which can be taken by a defendant faced with a suit for recovery of a debt broadly be classified as payment, adjustment, set oft and counter-claim. A payment is satisfaction or extinguishment of a debt prior to the filing of the written statement. An adjustment contemplates existence of mutual demands between the same parties in the same capacity. The broad distinction between a payment and an adjustment is that in an act of payment one parly deals with the other, while in an adjustment it is an act of the party himself prior to the filing of the written statement though the benefit of both is claimed by raising a plea in the written statement. A plea of adjustment is to be distinguished from a plea of set off or counter-claim. Adjustment like payment is relatable to a period anterior to the date of such plea being set out before the Court. A plea in the nature of payment, adjustment and the like can be raised in defence as of right. The plea if upheld, has the effect of mitigating or wiping out the plaintiffs claim on the date of the suit itself. The plea is not a claim made by the defendant. A counterclaim or a plea of set off is a claim made by defendant. It does not extinguish the plaintiffs claim; it exonerates the defendant from honouring plaintiffs claim though upheld. Such plea if raised shall be gone into by the Court, if permitted by law applicable to the Court and would have the effect of a decree in favour of the defendant taking away plaintiffs right to realise such amount as has been upheld in favour of the defendant. Set off may be legal or equitable. The right to set off dealt with by Order 8 Rule 6 CPC is a legal set off. Its characteristics are that the sum of money is ascertained and both the parties fill the same character as they fill in the suit. Independently of the provisions in the CPC the Courts of equity in England allowed a plea of equitable set off being entertained though the amount was unascertained and there were mutual debits and suits amounting to cross-demands arising out of the same transaction or so connected in their nature and circumstances as to make it inequitable so that the plaintiff should recover and the defendant driven to a cross suit. For payment of Court-fee there is no distinction between legal and equitable set off. Both attract applicability of Schedule 1, Article 1 of the Court Fees Act.
13. Applying the above principles to the case on hand, it can be easily seen that all the claims made by the defendant in the written statement are really in the nature of a set off or counter-claim but not any payment or adjustment. It is not at all the case of the defendant that it made any payment towards the amount claimed in the suit or that it adjusted any amount of the plaintiff lying in its hands towards the amounts allegedly due to it under the various heads mentioned in the written statement. On the other hand, it is the case of the defendant that the plaintiff has to make such adjustment but failed to do so and the defendant, therefore, now wants to set off those amounts against the amount claimed by the plaintiff in the suit and accordingly paid Court fee on the difference between the two. In Sathiapal v. Pandiyan Brick Works (supra), it is held that it is well settled that if the defendant pleads set off, Court fees is payable on the whole amount of the set off claimed and not merely on the difference between the set off and the amount claimed in the plaint. As against this judgment, the learned Counsel for the defendant sought to place reliance on the judgment of the Punjab High Court in M.S.C. Industries v. H.C. Bank (supra). I do not think that the said judgment is of any assistance to the petitioner herein. In that case a suit and a cross-suit have both been filed and proper Court fees have been paid by plaintiffs in both the suits and the written statement in the former is practically worded in the same manner as the plaint in the latter. It was held (hat the written statement in the former suit cannot be treated as claiming a set off independently and Court fees cannot be demanded on the amount claimed by way of set off in the written statement. In other words, the defendant cannot be called upon to pay a double Court fee firstly upon the written statement as set off and secondly again on his plaint in the cross-suit This case, therefore, is of no help to the petitioner herein. The suit claim mostly relates to the goods delivered by the plaintiff to the defendant in March, 1994. In the written statement, the defendant, while not disputing its liability for the sum of Rs.60,15,558-50 representing the value of the goods delivered by the plaintiff to it in March, 1994, wanted to set off against the said sum the various amounts claimed by it under different heads in the written statement. There is no question of any adjustment or reduction or extinguishment of the plaintiffs claim. What the defendant claims here is an independent cross-claim or counter-claim. The plaintiff seriously disputes the various claims made by the defendant in the written statement and asserts that they are utterly false, baseless and untenable and some of them are also barred by limitation. It is also contended that all expired, damaged or unsaleable goods are generally replaced by the plaintiff and, in any case, the question of any reimbursement to the defendant in respect of such goods does not arise as the goods admittedly belonged to the plaintiff. It is further contended that the claim for damages is based upon a totally new and independent cause of action i.e., the alleged fresh agreement dated 2-12-1993 and breach of the said agreement by the plaintiff which is totally unconnected with the suit claim. These are, however, questions to be gone into at the time of the trial. For the purpose of determining the Court fee payable, the Court cannot go into the merits or decide whether the claims made by the defendant are tenable or not.
14. For the foregoing reasons, I am inclined to agree with the conclusion of the lower Court that the various claims made by the defendant in the written statement are in the nature of a set off or counter-claim and the defendant is liable to pay Court fees in respect of those claims. However, insofar as the claim for damages at the rate of Rs.1,00,000/- per month is concerned, I am of the view that the defendant is liable to pay Court fees on past damages only for the time being i.e., damages for the period prior to the filing of the written statement. So far as the future damages are concerned, Court fees will have to be paid after the same are duly ascertained and quantified by the Court. The learned Counsel for the plaintiff-respondent has contended that inasmuch as the defendant has quantified the future damages also and claimed a specified amount of Rs.3 6,00,000-00 under this head, the Court fee is liable to be paid on the entire sum of Rs-36,00,000-00 under Section 20 of the Andhra Pradesh Court Fees Act and Suits Valuation Act. It must, however, be deemed to be a tentative estimate only which is subject to the final detenuination of the Court. I am inclined to agree with the view taken by the Kamataka High Court in this behalf in the decision reported in M/s. Anand Enterprises, Bangalore v. Syndicate Bank, Bangalore (supra). The following observations of the Allahabad Court in the case of Devi Chand v. Har Kishan Das, ILR (1954) 2 All. 531, are apposite:--
"In this connection, it must be remembered that, where there has been a breach of contract which was lo run for several years, and as a result of the breach, the plaintiff claims damages the right to claim damages has accrued on the date of the breach, though, in determining the amount, the Courts have to make an estimate of likely damage suffered by the plaintiff for the early termination of the contract and anticipate as best as they can, what those damages are likely to be. Though in case of a breach of contract, the plaintiff is entitled as far as possible to be put in the same position as he would have been in case the contract had been carried out and get all such damages as naturally flow from the defendant's failure to perform his part of the contract and are not too remote, the plaintiff is under an obligation to mitigate the damages as far as possible. As regards the damages naturally suffered upto the date of the decree, correct figures can be worked out but as regards the damages to the suffered in the future, the estimate can be a rough one."
I am, therefore, satisfied that the defendant is not liable to pay Court fees on the future damages for the time being and Court fees thereon will have to be paid after ascertainment by the Court only. Subject to this modification, the CRP is dismissed but under the circumstances, without costs. The petitioner-defendant is granted four weeks' time from the date of receipt of this order to pay the deficit Court fees payable on the written statement as per this order. The written statement together with the Court fees stamps already affixed to it shall be sent back to the lower Court along with a copy of this order forthwith. In view of the directions granted earlier by this Court for expeditious disposal of the suit, the lower Court will dispose of the suit with utmost expedition preferably within three months from the date of receipt of this order.