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22. The principle of set of may be defined as the extinction of debts of which two persons are reciprocal debtors to one another, by the credits of which they are reciprocally creditors to one another.

23. While Order VIII, Rule 6, Order XXII, Rules 18 and 19, Civil P. C. are instances of legal set off, the equitable set off is mainly based on the principle of equity, justice and good con-science. The provisions for legal set off do not take away from the parties any right to set off which they had independently of the Code. For example in cases of natural debits the credits, that is in mutual open and current account cases and in cases where cross decrees arise out of the same transaction or cases where cross demands arise from different sets of transactions but are so connected in their nature and circumstances as to make it inequitable that the plaintiff or the decree-holder should recover form the defendant and the judgment-debtor driven to a cross suit or execution petition. This set off is known as equitable set off, if one may like to call then so and such a right is well recognised in India apart from the provisions of the Civil P. C.

24. The distinction between the two has, however, to be borne in mind. The difference between the legal set off and an equitable set off is that while in the former case the Court is bound to entertain and adjudicate upon the plea when raised, the defence of equitable set of cannot be claimed as a matter of right, but the Court has a discretion to adjudicate upon it in the same suit or execution proceedings or to order it to be dealt with in a separate suit or execution proceedings.

25. From what is discussed above, it would be plain that equitable set off can be claimed in a case where cross-demands, arise out of the same transaction as well as in cases where the cross-demands may not arise out of the same transaction but they are so connected in the nature or circumstances that it would be inequitable to allow one party to execute his decree driving the other party to separate proceedings of execution. No hard and fast rules can be laid down, nor it is desirable to do so as to in what circumstances in such cases equitable set off can be permitted. The granting of equitable set off rests in the discretion of the Court. This discretion is a judicial discretion and we conceive that the dominant feature of judicial discretion is that it has to be exercised accordingly to settled rules rather than individual fluctuating and unsettled opinion. Thus where a Court thinks that investigation into the claim of equitable set off will cause great delay it may refuse to allow it or may order the enquiry to proceed on such terms as it thinks fit.

29. Counter claims arising out of two separate transactions are not treated to fall outside the jurisdiction of the Court in granting equitable relief de hors the said provisions of the Civil Procedure Code. Whatever may be the position in legal set off under Order VIII, Rule 6, Civil P. c. the provision of Order XXI, Rule 18, Civil P. C. recognises the legal set off of two cross decrees arising out of separate transactions. Whatever may be the considerations for the allowing distinctly separate transactions to be the basis of the set off under Order VIII, Rule 6. in executing proceedings the two cross decrees not only can be legally set off by observing Rule 18, but they can also be equitably set off obviously because after the decrees are passed, there is precious little-unlike a claim of set off based on separate transaction in a suit under Order VIII, Rule 6 to be enquired into. Thus on the execution side the two cross decrees although arising out of two separate and unconnected transactions when legally can be set off under Rule 18 of Order XXI, Civil P. C., one fails to see why in such cases equitable set off cannot be permitted. If power exists to grant equitable set off apart from Rule 18, as we comprehend it does exist, then equitable set off in proper cases can be permitted although the decrees may have been the result of unconnected and independent transactions. The said position of law gathers support from the following decisions: Bangar Raj v. Kalidindi Suraiahmma, AIR 1957 Andh Pra 403 and Narayanan v. Krishnaru, AIR 1951 Trav-Co. 78.

32. What must follow is that the equitable set off granted by the learned Judge in the circumstances of this case cannot be said to be an improper exercise of the discretion which undoubtedly is vested in him. The two decrees were so connected with each other because of the circumstances adumberated above that it would be unfair to disallow set off.

33. Except the question of limitation, no other ground was or could be shown as to why it is not a fit case for the equitable set off. And in cases of equitable set off, the question of limitation need not stand in the way as a complete bar in ordering equitable set off. We are fortified in our view by the two following decisions, AIR 1938 Sind 31 at page 32 and AIR 1939 Lah 85 at page 86; not only that the question of limitation cannot be a complete bar but it cannot override the special circumstances to which we have made reference. The parties expressly or in any case tacitly agreed to such a set off and the judgment-debtor cannot now be permitted to turn round and object to such a set off. We cannot therefore find that there is any error in principle on the part of the learned Judge in exercising his discretion as he did in allowing the set off.