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12. The next contention of the learned counsel for the appellant is that if the claim set up by the defendant be held to be a claim of set-off made by him, it is merely a claim to an equitable set off and as such no court-fee need be paid on the amount.

13. Learned counsel has in this connection referred us to the case of Ram Das v. Dwarka Das, A. I. R. (17) 1930 ALL. 875: (128 I. C. 763), which was decided by two learned Judges of this Court. At page 876 it was observed :

"it has been held in this Court in several cases that an equitable set-off can be claimed even independently of the specific provisions of the Code of Civil Procedure (Section III now corresponding to Order 8, Rule 6: Nand Ram v. Ram Prasad, (27 All. 145), and the earlier oases referred to therein. It is not necessary to demand court-fees on this account."

There is no reference in this case to Article 1, Schedule l, Court-fees Act. Next reference was made by learned counsel to the case of Madan Mohan v. Bhora Bam Lal, in A. I. R. (21) 1934 ALL. 115: (153 I. C. 432), where at page 117 Kendall J., observed :

"If however the set-off could be claimed as an equitable set-off there is no reason why the Court should not have allowed it without payment of a Court-fee. A legal set oft requires a court-fee because it is a claim that might be established by a separate suit in which a court-fee would have to be paid. But there is no such fee required in the case of an equitable set-off which is for an amount that may equitably be deducted from the claim of the plaintiff where a court-fee has been paid on the gross amount."
"The word "set-off" in Schedule 1 Article 1 not having been qualified in any way must include not only a legal set-off but also an equitable set-off."

Again in T.S. Sitarama Ayyar v. G. Ramanuja Mudaliar, A. I. R. (20) 1933 Mad. 203: (142 I. C. 719), Sundaram Chetty J. following the decision of this Court in Chakkhanlal v. Kanhiya Lal, (20 A. L. J. 1005 : A.I.R. (10) 1923 ALL. 118), held :

"There is nothing to show that the set-off mentioned in Article 1 is confined only to legal set-off coming under Order 8, Rule 6, Civil P. C.; prima facie the expression 'set-off used in this article may well nigh include an equitable set-off also."
"Set-off as amended includes an equitable set-off and the necessary court-fee must be paid thereon."

On a consideration of the relevant statutory provisions as well as the case-law reviewed above, in our judgment the correct position is this : Under Article 1, Schedule 1, Court-fees Act, a written statement pleading, 'set-off or counter-claim' is liable to payment of court-fee calculated ad valorem. The court-fee is to be calculated on the "amount or value of the subject-matter in dispute.' The words 'set-off and 'counter-claim' are not defined any where in the Court-fees Act. Order 8, Rule 6, Civil P. C. deals with one kind of set-off called a legal 'set-off'. A right to set-off, even independently of the provisions of the Civil Procedure Code has been recognized for a long time both by Courts of Equity in England as well as by Courts in India. This is known as an 'equitable set off. But so far as the question of payment of court-fees on a set-off or counter-claim is concerned the only statutory provision that we have is in Article 1 Schedule 1. No distinction between the two kinds of sets-off has been made in this Article. It follows therefore that court-fee is payable on a set-off or counter claim in a written statement, no matter whether it is a legal set off or equitable set-off. The ad valorem court-fee is to be determined with reference to the total amount claimed by way of set-off and not only with reference to the difference between such amount and the amount claimed in the plaint. The decision of the Court below is therefore quite correct.