Dismissed

Akash Singhal v. Nagarmal Poddar

Orissa HC1 Feb 2023CMP/15/2023

Case brief

AI extract

What is this about?

The High Court dismissed a Commercial Petition challenging an Order VIII Rule 9 refusal. The court held that the petitioner failed to show when cause of action for set-off arose and that the petition did not satisfy statutory requirements for amendment or set-off at a belated stage.

What did the court decide?

The commercial petition was dismissed; the order dated 01.02.2023 by the Senior Civil Judge, Rourkela, allowing the defendants to file Additional Written Statement with set-off was effectively affirme

Akash Singhal Vs Nagarmal Poddar — Contract and Commercial Disputes | Orissa HC (2023)

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IN THE HIGH COURT OF ORISSA AT CUTTACK

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CMP No. 15 of 2023

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Akash Singhal

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…. Petitioner Mr.Sanjeev Udgata, Advocate

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-versus-

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Nagarmal Poddar and another …. Opp. Parties

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CORAM: JUSTICE K.R. MOHAPATRA

ORDER

Order No.

01.02.2023

1. This matter is taken up through Hybrid mode.

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2. Order dated 3^rd November, 2022 (Annexure-4) passed

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by learned Senior Civil Judge, Rourkela in Civil Suit No.274 of 2016 is under challenge in this CMP, whereby a petition filed by Defendant No.1 under Order VIII Rule 9 read with Section 151 CPC (Annexure-3), has been rejected.

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3. It is submitted by Mr. Udgata, learned counsel that the Opposite Party No.1/Plaintiff has filed the suit for recovery of the amount paid by him to settle a loan account as guarantor of Defendant No.1. Petitioner/Defendant No.1, in his written statement, has specifically pleaded that the Plaintiff-Opposite Party No.1 runs a business on sanitary items in the name and style ‘ M/s. Jagadamba Enterprises ’. The said proprietary firm is in the name of his (Plaintiff’s) brother, namely, Sri Satyadev Podar. The firm had availed a loan from State Bank of India, Main Branch, Rourkela in which the Plaintiff was the guarantor. On the request of the Plaintiff to release him from guarantorship, the Defendant No.1 deposited a sum of Rs. 9,78,956/- on 16^th March, 2009 in the account of M/s.

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Jagadamba Enterprises and in a reciprocal arrangement the Plaintiff became the guarantor in Defendant No.1’s loan account. Subsequently, on the request of the Plaintiff, the Defendant No.1 transferred and deposited a sum of Rs. 2,00,000/- on 30^th March, 2009 in the account of the wife of the Plaintiff. During the course of cross-examination, the Plaintiff as PW-1 completely denied to have received any such amount. Hence, the Defendant No.1 filed an application under Order VIII Rule 9 CPC to grant leave to file additional written statement with a claim to set off the amount he has paid. But, the said application was rejected on three grounds. Firstly , in absence of any application for amendment of the plaint, a petition under Order VIII Rule 9 CPC is not maintainable. Secondly , the Defendant No.1 has not stated the details of proposed amendment and thirdly , the petition was filed at a belated stage, i.e., after closure of the evidence from the side of the Plaintiff.

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3.1 Mr. Udgata, learned counsel further submits that subsequent pleadings includes additional written statement which can be filed at any stage of the suit even after commencement of the trial subject to leave of the Court. Since the Plaintiff blatantly denied the plea of payment of the Defendant No.1 to the Plaintiff, it necessitated the Defendant No.1 to file subsequent pleading by way of additional written statement along with set off. Further, rigors of Order VI Rule 17 CPC and Order VIII Rule 6-A CPC are not applicable to set off. In support of his case, he placed reliance on a decision of Madras High Court in the case of P.Saraswathi Vs.

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C.Subramaniam , reported in AIR 2014 Madras 50, in which it is held as under:-

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“A reading of the dictum laid down by the Hon'ble Supreme Court in the above judgment would show that the inconsistent defence can be raised in the written statement although the same is not permissible in the case of the plaint. Therefore, I do not find any force in the submission made by the learned counsel appearing for the plaintiff that since already trial has commenced, the Court below ought not to have permitted the second defendant to file additional written statement. Under Order 8 Rule 9 C.P.C., wide discretion was given to the Court to give a chance to the parties to agitate their right even by raising subsequent pleas. Moreover, no restriction was imposed with regard to the receiving of the additional written statement under Order 8 Rule 9 C.P.C. after commencement of the trial like in the case of amending the plaint under Order 6 Rule 17 C.P.C., where unless the Court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before the commencement of the trial. …”

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He further placed reliance upon a decision of the Hon’ble Supreme Court in the case of Olympic Industries Vs. Mulla Hussainy Bhai Mulla Akberally and others , reported in AIR 2009 SC (Supp.) 2029, in which it is held as under:-

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“….. The first ground was that the appellant had filed a belated application for acceptance of an additional counter statement when examination of P.W.1 was already over. So far as this ground is concerned, we do not find that delay is a ground for which the additional counter statement could not be allowed, as it is well settled that mere delay is not sufficient to refuse to allow amendment of pleadings or filing of additional counter statement. At the same time, delay is no ground for dismissal of an application under Order 8 Rule 9 of the Code of Civil Procedure where no prejudice was caused to the party opposing such amendment or acceptance of additional counter statement which could easily be compensated by cost. ….”

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Thus, he submitted that liberty should be given to the parties to advance their case for complete adjudication of the lis between

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the parties. By refusing the Defendant No.1 to file additional written statement with set off, learned trial Court has failed to exercise its discretion judicially and thereby deprived the Petitioner/Defendant No.1 from taking a plea, which would assist the Court for complete adjudication of the suit. Therefore, Mr. Udgata, learned counsel prays for setting aside the impugned order and to permit the Petitioner to file additional written statement along with set off.

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4. Order VIII Rule 6 C.P.C. deals with ‘Set-off’. Sub-rule 1 of Rule 6 deals with particulars of set-off to be given in the written statement. For ready reference, it is reproduced hereunder:-

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“ 6. Particulars of set-off to be given in written statement.—(1) Where in a suit for the recovery of money the defendant claims to set off against the plaintiff's demand any ascertained sum of money legally recoverable by him from the plaintiff, not exceeding the pecuniary limits of the jurisdiction of the court, and both parties fill the same character as they fill in the plaintiff's suit, the defendant may, at the first hearing of the suit, but not afterwards unless permitted by the court, present a written statement containing the particulars of the debt sought to be set off.”

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4.1 Set-off can be broadly categorized as a legal set-off or an equitable set-off. Legal set-off, deals with an ascertained money claim, as under Order VIII Rule 6. But, an equitable set-off involves unascertained money claim. The requirements of a legal set-off has been set out in the case of Union of India v. Karam Chand Thapar and Bros. (Coal Sales) Ltd . , reported in (2004) 3 SCC 504, wherein it is held as under:-

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“18. What the rule deals with is legal set-off. The claim sought to be set off must be for an ascertained sum of money and legally recoverable by the claimant. What is more significant is that both the parties must fill the

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same character in respect of the two claims sought to be set off or adjusted. Apart from the rule enacted in Rule 6 abovesaid, there exists a right to set-off, called equitable, independently of the provisions of the Code. Such mutual debts and credits or cross-demands, to be available for extinction by way of equitable set-off, must have arisen out of the same transaction or ought to be so connected in their nature and circumstances as to make it inequitable for the court to allow the claim before it and leave the defendant high and dry for the present unless he files a cross-suit of his own. When a plea in the nature of equitable set-off is raised it is not done as of right and the discretion lies with the court to entertain and allow such plea or not to do so.”

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4.2 In view of the provision under Order VIII Rule 6 CPC and the aforesaid principles set out, a legal set-off must have the following character:-

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(i) the suit is one for recovery of money, (ii) there must be a definite money claim legally recoverable from the plaintiff,

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(iii) by the set off the pecuniary jurisdiction of the court is not taken away,

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(iv) parties to the suit must fill the same character as they fill in the suit filed and

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(v) a written statement containing the particulars of the debt sought to be set off may be filed by the defendant at the first hearing of the suit but not afterwards without permission of the court.

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4.3 Thus, the case of the Petitioner has to be examined keeping in mind the aforesaid principles. Undoubtedly, Petitioner-Defendant No.1 filed the petition under Order VIII Rule 9 read with Section 151 CPC (Annexure-3) with the following prayer:-

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“It is therefore prayed that, Hon’ble Court may be kindly be pleased to grant leave for inserting the particulars of set-off in the Written Statement by amendment; and for which act of your kindness the Defendant No.1 shall ever pray.”

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Neither any particulars of set-off sought to be introduced was given in the petition under Annexure-3 nor any details of the amendment was provided in the said petition. The petition was filed at a stage when the PW-1 had already been examined. No definite plea sought to be incorporated is also available in the petition under Annexure-3. However, a leave was sought for to file additional written statement with set off. But, learned trial Court in the impugned order impliedly refused the same. Though due diligence is not required to be established for acceptance of an additional written statement along with setoff, but the party seeking to file subsequent pleadings along with set-off must establish as to when the cause of action for filing of the set-off arose subsequent to filing of the written statement. Since the Plaintiff/Petitioner has already led evidence in the matter, acceptance of additional written statement along with set-off will certainly prejudice him.

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4.4 The case law upon which learned counsel for the Petitioner placed reliance have no assistance to the Petitioner, as the said case law does not deal with filing of a set-off. The language of Order VIII Rule 6 CPC is very clear to the extent that Defendant No.1 may file written statement along with setoff at first hearing of the suit, but not afterwards without the leave of the Court. On a perusal of the Petition under Annexure-3 does not make out a case either to amend the written statement after commencement of the trial of the suit, nor does it satisfy the character of a set-off to be introduced. The plea that denial of the PW-1 to have accepted the money as set out in the written statement cannot be a ground to introduce a set-off to the written statement by way of

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amendment. Thus, no acceptable plea has been taken to grant such leave to file additional written statement along with set off. Accordingly, learned trial Court has committed no error in exercising its discretion by dismissing the petition under Order VIII Rule 9 read with Section 151 CPC.

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5. Accordingly, the CMP being devoid of any merit stands dismissed.

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(K.R. Mohapatra)

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Judge

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s.s.satapathy

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Akash Singhal v. Nagarmal Poddar

Case brief

What is this about?

What did the court decide?

Akash Singhal v. Nagarmal Poddar

Case brief

What is this about?

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