Introduction

In civil litigation, a defendant is not always confined to merely resisting the plaintiff’s claim. The Code of Civil Procedure, 1908 (CPC) allows the defendant, in appropriate cases, to assert independent claims against the plaintiff within the same suit.

Order VIII CPC recognises two important mechanisms for this purpose:

• Set-Off, and

• Counter-Claim.

These provisions transform the Written Statement from a defensive pleading into a strategic instrument capable of reshaping the entire dispute.

This article explains the legal framework, scope, conditions, and strategic value of set-off and counter-claim under Order VIII CPC.

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1. Conceptual Difference – Set-Off vs Counter-Claim

Though often mentioned together, set-off and counter-claim are distinct.

Understanding this distinction is essential for correct application.

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2. Set-Off – Legal Framework

Set-off is recognised under Order VIII Rule 6 CPC.

It permits a defendant, in a suit for recovery of money, to claim adjustment of a legally recoverable debt owed by the plaintiff to the defendant.

Conditions for Set-Off:

• Both claims must be for ascertained sums of money.

• Both parties must fill the same character (e.g., both acting in personal capacity).

• The amount must be legally recoverable.

If valid, set-off reduces or extinguishes the plaintiff’s claim.

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3. Nature of Legal Set-Off

Legal set-off:

• Is available only in money suits.

• Must be specifically pleaded.

• Is subject to limitation.

Courts treat it as a statutory defence rather than an independent suit.

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4. Counter-Claim – A Broader Remedy

Counter-claim is governed by Order VIII Rule 6A CPC.

It allows a defendant to:

• claim any right or relief against the plaintiff,

• in respect of a cause of action accruing before or after filing of suit,

• provided it arises before the defendant delivers his defence.

A counter-claim is treated almost as a cross-suit, and the court may pass a decree on it independently.

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5. Scope of Counter-Claim

Unlike set-off, counter-claim:

• Need not be confined to money claims.

• May relate to damages, declaration, injunction, or other relief.

• Can exceed the value of the plaintiff’s claim.

It is a powerful procedural tool to avoid multiplicity of proceedings.

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6. Counter-Claim as a Cross-Suit

A counter-claim has procedural consequences:

• Plaintiff must file a Written Statement to the counter-claim.

• The court frames separate issues for it.

• A decree may be passed even if the plaintiff withdraws the suit.

Thus, counter-claim operates almost independently.

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7. Limitation and Counter-Claim

Counter-claims are subject to limitation.

The cause of action for counter-claim must be within limitation as on the date it is filed. Courts examine limitation strictly.

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8. Strategic Considerations

For Defendants

• Counter-claim strengthens bargaining position.

• It converts defensive posture into offensive strategy.

• It avoids filing a separate suit.

For Plaintiffs

• Filing a suit may invite counter-litigation within the same proceeding.

• Careful drafting of plaint and anticipation of counter-claims is necessary.

For Corporate Clients

• Counter-claims are cost-effective.

• They consolidate disputes into one forum.

• They may influence settlement dynamics.

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9. Judicial Approach

Courts encourage counter-claims because they:

• promote procedural efficiency,

• prevent multiplicity of suits,

• ensure comprehensive adjudication of disputes.

However, courts may refuse counter-claims that:

• unduly complicate proceedings,

• are unrelated,

• or are clearly barred by limitation.

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10. Common Drafting Errors

• Confusing set-off with counter-claim.

• Failing to plead necessary facts.

• Ignoring limitation.

• Omitting court fee for counter-claim.

• Raising counter-claim at a belated stage.

Proper drafting and timing are essential.

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Conclusion

Order VIII CPC equips defendants with more than just defensive tools. Through set-off and counter-claim, the Code enables a defendant to assert substantive rights within the same proceeding.

Used strategically, these provisions enhance procedural economy and litigation effectiveness. For students, they illustrate the dynamic nature of pleadings. For advocates and corporate clients, they represent powerful instruments in civil litigation strategy.

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📌 Frequently Asked Questions (FAQs)

Q1. Is counter-claim the same as set-off?

No. Set-off is limited to monetary adjustment; counter-claim is broader and may operate as a cross-suit.

Q2. Can a counter-claim exceed the plaintiff’s claim?

Yes, subject to jurisdiction and court fees.

Q3. Is limitation applicable to counter-claims?

Yes. The counter-claim must be within limitation.

Q4. Can a counter-claim survive even if the plaintiff withdraws the suit?

Yes. It may proceed independently.

Q5. Why are counter-claims strategically important?

They consolidate disputes and strengthen the defendant’s position.