Vasantha Achi vs P. G. A. Annamalai Chettiar and others

Natesan, J.—This revision raises a question of court-fee payable on a written statement and in spite of elaborate arguments on behalf of the Government, in my view, the order of the lower Court is erroneous in its interpretation of the written statement with reference to the court-fee payable thereon. A suit has been instituted by the plaintiff Annamalai Chettiar for the recovery of a sum of Rs. 58,938-50 ps. as due on a deposit letter executed in his favour by one Ramanathan Chettiar on 8th July, 1952. The defendants have been impleaded as legal representatives of the deceased in possession of his estate. The first defendant is the widow. The 2nd defendant is the adopted son. The third defendant is the wife of the 2nd defendant. The 4th defendant is the husband of a deceased daughter of Ramanathan Chettiar and the 5th defendant is another daughter of the deceased Ramanathan Chettiar. Under the written statement filed by the 5th defendant which is adopted by the other defendants, the defence in short is the extinction of the plaintiff''s liability under a settlement long anterior to the suit leaving in favour of the defendants a claim against the plaintiff for Rs. 12,655-52 ps. A decree is sought against the plaintiff for this amount and court-fee has been paid thereon. The question for consideration is whether the fifth defendant has to pay court-fee on the entire amount inclusive of the claim which is stated to have got extinguished i.e., on a sum of Rs. 72,792-76 ps. That is the view of the Court below. The circumstances by which this large amount is claimed by the defendants may be set out as averred in the written statement. The defendants do not deny the deposit by the plaintiff of Rs. 30,000 as set out in the plaint. But their case is that at the time Rs. 30,000 was paid by the plaintiff, the firm of SP. K. Kanjitan belonging to the plaintiff''s father, Chockalingam Chettiar and his sons, that is the plaintiff and one Palaniappa Chettiar owed Ramanathan Chettiar on 13th April, 1941, a sum of Rs. 1,40,907-13-9 as deposit belonging to Ramanathan Chettiar payable on demand. Ramanathan Chettiar being in need of Rs. 50,000 requested Chockalingam Chettiar, and his two sons to pay the amount out of the deposit. Representing that they intended to divide the assets of Kanjitan firm, it was stated, that the father and the two sons would each pay one- third share to Ramanathan Chettiar who needing at that time only Rs. 50,000, took Rs. 30,000 from the plaintiff and Rs. 20,000 from Palaniappa Chettiar, the understanding being that Ramanathan Chettiar should give credit for these sums to the plaintiff and Palaniappa Chettiar against their respective one-third share of the liability in respect of Ramanathan Chettiar''s deposit in SP. K. Kanjitan firm. It is the case of the defendants that Ramanathan Chettiar could claim from the plaintiff the balance amount payable by the plaintiff as and for his one-third share after getting credit for the sum of Rs. 30,000 paid in 1952. After the death of Chockalingam Chelliar, the father of the plaintiff on 21st October, 1958 it is pleaded that there was a panchayat for the division of the assets of SP. K. Kanjitan firm, that the accounts were looked into and the amount due to Ramanathan Chettiar on the original deposit was reduced to Rs. 1,15,500. It is stated that in this the plaintiff should pay for his one-third share Rs. 38,500 with interest. But a sum of Rs. 30,000 paid by the plaintiff to Ramanathan Chettiar together with interest must be deducted from this sum of Rs. 38,500 and the plaintiff had to pay to Ramanathan Chettiar only the balance. There was a similar arrangement with reference to Palaniappa Chettiar. The written statement avers that the above said settlement was arrived at by the plaintiff, his brother Palaniappa Chettiar and Parvathi Achi, widow of Chockalingam and of course by Ramanathan Chettiar. On the basis of the aforesaid statement pleaded in the written statement, the substance of which is set out above, a decree is prayed for Rs. 12,665-52 p. against the plaintiff in favour of the defendants 1 to 3 and 5. The original of of written statement which is in Tamil makes it perfectly clear that the settlement pleaded was that Ramanathan Chettiar was entitled only to the balance due after deducting from Rs. 38,500 and interest thereon the sum of Rs. 30,000 and interest thereon. It is a clear case there what is pleaded is in extinction of the liability of the plaintiff to the defendants to the extent of the amount the plaintiff owed the defendants as on the date of the'' settlement. No doubt, the manner of working and arriving at the balance is set out, but when it is stated that at the settlement, it was decided by the Panchayat that Ramanathan Chettiar cannot claim more and could get only the difference, it amounts in fact to a payment and discharge of liability to the extent of the amount due by the plaintiff.

Now to examine the liability as to payment of court-fee, on this view of the pleading, the provision for the payment of court-fee on the written statement is found in S. 8 of the Madras Court Fees and Suits Valuation Act 1955 which runs thus :

A written statement pleading a set off or counter claim be chargeable with fee in the same manner as a plaint.

There is not any substantial difference between this provision and the corresponding provision of Art. (1) of S.I of the Court Fees Act of 1870. The provision as to a plea of set off is found in O. VIII R. 6. C. P. C. To claim a set off under that rule, this rule provides for legal set off, apart from the suit being one for the recovery of money, as regards the amount claimed to be set off the following conditions inter alia must be satisfied, namely, that the sum must be an ascertained sum of money and must be legally recoverable. There can also be equitable set off which principally arises in cases of cross demands arising out of the same transactions or so connected in their nature and circumstances that they can be looked upon as part of one transaction. There is no dispute that where set off is claimed legal or equitable, court-fee is payable on the amount claimed in set off. The question is whether what is pleaded in this case is a set off. In their written statement it should be noticed that the plea of the defendants is that to the extent the plaintiff owed moneys to Ramanathan Chettiar, under the Panchayat and settlement, the same could not be recovered by Ramanathan Chettiar and he could recover only the balance due, crediting the plaintiff with the amount paid by him in 1952. On the balance, the correct court-fee has been paid as a claim, and a decree prayed for against the plaintiff, as if it is a plaint for the amount. In effect, there is a defence to the extent of the plaint claim, of actual discharges by adjustment, not just promised and a counter claim for the balance. No one would contend that a defence of discharge if disputed is liable for court-fee, but that is what the present order comes to.

Learned Counsel Mr. Ramalingam appearing for the Government Pleader referred me to a number of decisions. But in my view they are of little help as each case must be decided on its pleadings, the law being clear. Reference was made to certain passages in Halsbury''s Laws of England 3rd Edn. Vol. 34 at page 395 where "set off" is defined in paragraph 669 of the volume thus:

When A has a claim for a sum of money against B and B has a cross-claim for a sum of money against A, such that B is to the extent of his cross-claim entitled to be absolved from payment of A''s claim, and to plead his cross-claim as a defence to an action by 4 for the enforcement of his claim, then B is said to have to the extent of his cross-claim, a right of set off against A.

In paragraph 672 at the same page the distinction between set off and payment is made:

Set off is entirely distinct from payment. Payment is satisfaction of a claim made by or on behalf of a person against whom the claim is brought Where there has been payment, the party against whom the claim is brought pleads payment or accord satisfaction which in effect alleges that the claim no longer exists. A plea of set off, on the other hand, in effect admits the existence of the claim, and sets up a cross claim as being ground on which the person against whom the claim is brought is excused from payment and entitled to judgment on the plaintiff''s claim. Until judgment is in favour of the defendant on the ground of set off has been given, the plaintiff''s claim is not extinguished.

Referring to the last observation in the above passage from Halsbury, it will be noticed that the plea in the written statement here is, that as a result of the settlement by the Panchayat, the defendant could recover only the balance; the plaintiff''s claim in fact got extinguished as a result of the settlement. Learned Counsel for the Government referred also to Ibrahim v. Barkat All AIR 1956 M. B. 62. It is therein stated at page 63 thus :

Under Art. 1, Sch. 1 of the Court fees Act, written statement pleading a set off or counterclaim to pay "ad valorem" Court-fee. We have therefore to consider whether the plea of the defendant amounts to a plea of payment or set off or counter claim. If it is a plea of payment there would be no court-fees payable. But if it is a plea of set off or counter claim, Court fee has to be paid.

A payment refers to a satisfaction or extinguishment of a debt effected prior to the raising of the defence of payment. A counter claim on the other hand is substantially a cross claim. Bearing these definitions in mind we have to see whether the plea of the defendant is one of payment or counter claim.

The decision of the Nagpur High Court in AIR 1940 177 (Nagpur) was also referred. The decision points out that O. 8 R. 6refers to legal set off and even in cases where equitable set off is pleaded, court-fee should be paid. It is therein observed that under Art 1, Sch. I, court-fees must be paid on a set-off and it must be paid on the full amount of the set off and not only on the amount claimed in excess of that claimed by the plaintiff. That this is so is not disputed by the learned Counsel for the petitioner. The question is whether in the present case to the extent of the plaint claim it is a plea of set off or extinguishment of the liability by the terms of the settlement.

The decision in AIR 1937 62 (Lahore) is a good illustration. There the plaintiff brought a suit against the defendant for the recovery of a sum of Rs. 149 on account of fees due to him as Director of the defendant company. The defendant pleaded that Rs. 147-14-3 was due to the company from the plaintiff on account of interest due on calls on plaintiff''s shares which had not been paid in time and that this sum had been adjusted in the accounts leaving out a balance of Rs: 3-14-3 as due to the defendant company. The plaintiff denied any liability for interest and pleaded that the defendant must pay court-fee. Dealing with the question of court-fee, Bhide J observes:

This question of "set off" does not appear to me to arise in the case, as the plea of the defendant really was that the claims had already been adjusted and balance of Rs. 3-14-3 was due to the defendant. The defendant was therefore claiming only the latter sum and not Rs. 147-14-3.

It may be stated that as it was found in that case that there could be no legal adjustment without the consent of the plaintiff and there was no satisfactory proof of the plaintiff''s consent, a decree was made in favour of the plaintiff as claim.

Learned Counsel appearing for the Government Pleader strenuously contends that in this case, the plaintiff has denied the settlement and as the defendant would have to prove his case of settlement, he must pay court-fee on the entire amount. This, in fact, is the approach of the lower Court. It is observed by the lower Court that as the agreement and the adjustment are denied by the plaintiff, the contesting defendants will have to prove their claim independently and there is no question of any adjustment of their counter-claim with the admitted liability of Ramanathan Chettiar on the deposit voucher due to the plaintiff. Here the learned Subordinate Judge has gone wrong, as a written statement is chargeable in the same manner as a plaint and for the purpose of court-fee the allegations in the plaint must be taken to be true. A written statement setting up a plea of set off must be viewed as a plaint, and, to any extent, if there is a plea of extinguishment of the plaintiff''s liability anterior to the suit it must be taken as true for the purpose of charging court-fee. That the Court has to adjudicate on the truth of the adjustment pleaded is no criterion for charging court-fee. The Court will have no doubt to decide two things: whether moneys were due to the defendant and secondly whether there was a settlement and adjustment of the cross claim between the plaintiff and defendant leaving out subsisting only the outstanding balance. If the defendant fails to sustain his plea of adjustment or settlement anterior to the suit even though plaintiff has to pay him moneys his defence to plaintiff''s action will fall on the merits, the plaintiff getting the decree for the full amount as claimed.

Reference in this connection may be made to the decision of Raghava Rao J in Koyan v. Rajammal (1953) I M. L.J. 804 where it is observed :

Where the written statement on its allegations refers to the payments which will have the effect of either extinguishing or reducing the suit claim as payments which in law must be held to be in the nature of payments to the plaintiff himself the defendant is not under an obligation to pay any court-fee on that amount although when he fails to prove the legal effect of the payments in question to be that of payments to the plaintiff himself the plea of credit claimed by the defendant on the foot of payments may have to fail. This latter principle is really a corollary to the larger principle applicable to plaints that the payment of court-fee on the plaint must be judged with reference to the allegations in the plaint.

Having been taken through the written statement by the learned Counsel for the petitioner and the learned Counsel representing the Government, both in the translation and in the original Tamil, I have come to the conclusion that the plea in the written statement with reference to the plaintiff''s is one of an adjustment at the time of the settlement claim relied on in the written statement. It is not a case of an agreement to set off. According to the written statement, there was no outstanding liability of Ramanathan Chettiar to the plaintiff after the settlement, the liability being the other way namely that of the plaintiff to pay the difference. The fact that, for the purpose of the claim, interest has been calculated by the defendant upto date on both the amounts is not a matter of consequence when we are concerned with the basis of the plea in the written statement and the terms of the settlement. I do not understand the plea in the written statement as referring to a settlement providing for a set off at some future date. Learned Counsel for the petitioner defendant affirms that such is not his plea and his plea is one of extinguishment of the plaintiff''s liability to the extent it was possible. That being so, the payment of court-fee only on the difference, which alone, according to the defendant, Ramanathan Chettiar was entitled to claim against the plaintiff, is proper. The above reasoning will cover only the claim of the defendant as regards extinguishment of the plaintiff''s liability in respect of the sum of Rs. 38,500 by the settlement. But so far as the sum of Rs. 500, which the plaintiff is stated to have taken as a loan from Ramanathan Chettiar is concerned, this panchayat settlement and extinguishment of liability will not be available. As far as this amount is concerned, it is a clear case where set off is pleaded. In respect of this amount the defendant will have to pay court-fee. The amount as detailed in the written statement comes to a sum of Rs. 1087-20. The defendant will have to pay court-fee on this amount of Rs. 1087-20. which is not covered by any agreement of adjustment. The defendants are not entitled to adjust this sum against the plaintiff''s claim without the consent of the plaintiff and it is an outstanding debt on the date of the suit. Additional court-fee will therefore have be paid on the written statement for this sum of Rs. 1087-20 only. The order of the Court below directing the fifth defendant to pay court-fee on the entire amount of the counter claim is therefore set aside and the additional court-fee payable limited to that payable on Rs. 1087-20. The revision is allowed accordingly. There will be no order as to costs. Time for payment of additional court-fee two weeks from receipt of records in the trial Court.