TOWN MUN COUNCIL, HARIHAR v. MURKAL MAHALINGAPPA — 1974 DIGILAW 234 (KAR)

( 1 ) THE appellant is the plaintiff the Town Municipal Council, Harihar. The respondent is the first defendant. The suit was filed for the recovery of Rs. 15,000 from the defendants who were three in number. The case of the plaintiff is that the building known as " Bharat Oil Mills Expeller hall' situated in Harihar Town belonging to the Plaintiff-Municipal Council had beien taken on lease by the first defendant on 22-6-1961 for a period of one year agreeing to pay a rent of Rs. 440 per month for running cinema shows in that building, that defendants 2 and 3 wena the sureties for the due performance of the tierms of the leapa by AIR. 1965 AP. 80. first defendant, that due to the default committed by the 1st defendant in the payment of rents, a deptraint warrant was issued, that the moveable prqperties belonging to the first defendant wexe attached and that they were also sold. A sum of rs. 4963-40 had been paid by the first defendant in instalments towards the arrears of rent. By the sale of the movsable properties a sum of Rs. 2605 had been realised and the same has been adjusted towards the arrears of rent. A sum of Rs. 7568-40 was thus realised towards the arrears of rent upto 17-9-62. The first defendant was evicted by resort to HRC proceedings on 12-3-1966. A sum of Rs. 15,400 was alleged to be due towards the arrears of rent for the period from April 1963 to the end of March 1966, and giving up the claim for the period for which there was bar of limitation, the suit claim was confined to Rs. 15,000. ( 2 ) THE first defendant admitted that he had taken the suit premises on lease at the rate of Rs. 440 per month. He pleaded that the plaintiff forcibly removed the machinery and other articles installed in the suit premises by the first defendant even before the arrears accrued according to the terms of the lease and sold the same without resorting to the procedure prescribed under the law and without giving proper publicity to persons intending to bid at the auction. He also pleaded that goods worth more than Rs. 15,000 were sold for a paltry sum and the plaintiff is therefore accountable for the price of the goods illegally seized by the plaintiff. He also pleaded that goods worth more than Rs. 15,000 were sold for a paltry sum and the plaintiff is therefore accountable for the price of the goods illegally seized by the plaintiff. He also pleaded that if a proper account is taken, it will be found that the defendant is no,t liable to pay any sum to the plaintiff. He further pleaded that the action of the plaintiff in seizing the machinery prevented the first defendant from running his cinema business which resulted in loss to the first defendant and that the total loss incurred by the first defendant due to the illegal action of the plaintiff amounts to Rs. 40,000. But this plea does not appear to have been pursued by the first defendant and is not material for the purposes of this appeal. ( 3 ) THE trial Court decreed the suit against the first defendant for rs. 13,416. It absolved defendants 2 and 3 of their liability. The first defendant appealed. In the lower appellate Court, I. A.-VII was filed by the first defendant under Or. 14, R. 5 CPC. That application was allowed. Tow additional issues were raised and the trial Court was directed to record evidence on the said issues, to record a finding thereon and to submit the same to the lower appellate Court, The two issues relted to the total value of the moveables of the first defendant which were got attached by the plaintiff and got sold by it, and the question whether the total value of the same amounted to Rs. 15,000 as pleaded by the first defendant. The trial Court recorded its finding to the effect that the total value of the articles seized and sold was Rs. 6070 and not Rs. 15,000 as stated by the first defendant in his written statement. Thereafter hearing the parties, the lower appellate Court came to the conclusion that the value of the moveables attached and sold was Rs. 12,200. Taking into consideration the advance which had been paid by the first defendant, i. e. Rs. l320, and the admitted amount which had already been received by the plaintiff towards the arrears of rent, namely, Rs. 4083-40, it came to the conclusion that the total amount which roust be, deemed to have been paid by the first defendant to the plaintiff-Municipal Council exceeded the amount claimed by the plaintiff. l320, and the admitted amount which had already been received by the plaintiff towards the arrears of rent, namely, Rs. 4083-40, it came to the conclusion that the total amount which roust be, deemed to have been paid by the first defendant to the plaintiff-Municipal Council exceeded the amount claimed by the plaintiff. Accordingly, it reversed the decree of the trial Court and dismissed the suit. ( 4 ) IT is contended by Mr. B. K. Ramachandra Rao appearing for the appellant-plantiff, that the plea taken by the first defendant was not a plea qf discharge or set off, but was an independent claim baaed on a different cause of action, that only a separate suit should have been filed and that the lower appellate Court was in error in framing the additional issues and directing the evidence to be recorded thereon. He further contended that even if the plea, of the first defendant is to be construed as an equitable set off, the same should not have been considered by the lower appellate court in the absence, of the necessary Court-fee being paid thereon. It was further contended that in any case, the valuation arrived at by the Iower appellate Court is excessive. In Raghavendra Rao v, Devanga Bank Ltd, 15 Myslj. 178. the plaintiff filed a suit for recovery of money alleged to be the balance due by the defendant. The defendant pleaded that he had given two cheques for encashment and deposit to the plaintiff, that he had sent four promissory notes for collection and credited to his account, and two bills also for collection and credit and that deducting the said amounts there would be a balance due by the bank itsalf to the defendant. He stated that the decree may be granted for any balance that may be found due and he is ready to pay the Court-fee for the aun ao determined. The following statement of the law distinguiahing a set off from a plea of payment, as stated in Kot Moe v. M. Seedat, AIR. 1925 Rang. 349. He stated that the decree may be granted for any balance that may be found due and he is ready to pay the Court-fee for the aun ao determined. The following statement of the law distinguiahing a set off from a plea of payment, as stated in Kot Moe v. M. Seedat, AIR. 1925 Rang. 349. was referred to with approval :"in the cesa of a plea of payment the allegation in effect means that the debt or amount of the demand alleged to be due to the plaintiff or, in the case of a partial payment the amount of the debt or demarid pro tanto paid off) had ceased to be due by reason of the alleged payment, and that consequently it was not a just demand validly in existence at the time of the institution of the suit, or at the time of the written statement as the case may be. This plea is quite different in its nature from a plea of set off raised by the defendant under the Code, which is in effect a request that the debt or amount to be found due to the plaintiff shall thereafter be treated as extinguished or satisfied in while or pro tanto by being set off against the debt or ascertained sum due to the defendant. "it was held that since it was not the case of the defendant that he had performed the contract in whole or in part by merely handing over the papers duly indorsed to the plaintiff, or that the plaintiff undertook to appropriate the face value of the documents in discharge of the debt, the plea of the first defendant amounted only to a plea of set off and not a plea of payment. In Viswanath v. Haidarali, AIR. 1956 MB. 62 the suit was filed for recovery of money. The Deft contended that the Pltff and himself were carrying on business in partnership, that accounts of the partnership were! settled, thereafter some business was carried on by parties in a different partnership and that certain mounts wers due to him from the plaintiff which exceeded the amount elaimed by the plaintiff in the suit. It was qbserved that a payment refers to a satisfaction car extinguishment of a debt effected prior to the raising of the defence of payment and that a counter-claim on the other hand is substantially a cross-action. It was qbserved that a payment refers to a satisfaction car extinguishment of a debt effected prior to the raising of the defence of payment and that a counter-claim on the other hand is substantially a cross-action. It wag held that since the; defendant claimed a dccree, for the surplus amount due to him it was a counter-claim. In sitarama v. Ramarmja, AIR. 1933 Mad. 203. in a suit brought on the basis Off a promissory noite the defendant claimed in his written statament a specified amount by way Off damages, setting out the particulars to the claim made by him as one arising from the transaction of sale which led to the excecution of the promissory not in favour of the plaintiff and by reason of the breach to covenant alleged to have been committed by the plaintiff. It was held that the claim of the defendant was one by way of set off. In durga Prasad v. Swdmi Avidya Nand, AIR. 1958 All. 574. the suit was filed for recovery to the price of stone ballast supplied to the defendant. The defendant pleaded that the plaintiff failed to supply the stone ballast and that therefore he suffered a losa and claimed set off for the said amount. It was held that the plea was not one of adjustment or payment but it amounted to a set off and it was observed as follows :"i do not think that this is a case of adjustment or payment; but the present case is of set off on the ground of damages suffered on account of non-supply of the stone ballast. If the claim by the plaintiff had betem admitted and the. amount due from the defendant to the plaintiff had been adjusted in this account, the matter would haye been, different. But the cause of action of the claim for damages being 'entirely different it is a clear case to set off covered by the Bench decision of this Court in ratan Lal v. Modem ( AIR 1950 All. 237 ). " ( 5 ) MR. Kadidal Manjappa relied on gome decisions in support of his contention that the plea taken by the first defendant in the present case is one oi adjustment of the suit claim and does not amount to a plea of set off. 237 ). " ( 5 ) MR. Kadidal Manjappa relied on gome decisions in support of his contention that the plea taken by the first defendant in the present case is one oi adjustment of the suit claim and does not amount to a plea of set off. Ha also contended that even if it is to be construed as a plea of set off the claim of the first defendant must be considered! by the Court subject to the payment of Court-fee on the amount of the claim. He relied on the decision in Laxmidas v Nanabhai, AIR. 1964 SC. 11. and urged that in the present case there is no necessity for a remand since both parties had opportunities to adduce evidence with regard to the merits of the first defendant's claim. ( 6 ) IN muslim Bank v. Hasan Shiraka, AIR. 1951 Hyd. 67. the suit was filed for eviction and arrears of rent. The defendants pleaded that credit should be given by the plaintiff for certain amounts paid by that defendants on account of the Municipal taxes and water charges which the plaintiff was bound to pay. The plea relating to these amounts were considered to be payments and not in the nature of cross-claim or set off. While considering the distinction between the plea of sot off and a plea of payment, it was observed as follows :"it would be regarded as a plea of payment where the satisfaction or extinguishment of the debt is effected prior to, the stage of defence, while it would be a plea of set off where it is sought to extinguish the claim after the date when the defence is raised. "the claim of the defendants with regard to the expenditure incurred by them on account of repairs and improvements to the suit house was held to be in the nature of an equitable set off. With regard to the plea off the defendants relating to certain amounts which the defendants had paid to the creditors under instructions from the plaintiff, it was held that the decretal amount would constitute a claim by way of a legal set off. In konda Pentiah v. Chenchu Rangiah, AIR. 1955 Hyd. 176. With regard to the plea off the defendants relating to certain amounts which the defendants had paid to the creditors under instructions from the plaintiff, it was held that the decretal amount would constitute a claim by way of a legal set off. In konda Pentiah v. Chenchu Rangiah, AIR. 1955 Hyd. 176. the suit was based on a promissory note and the plea taken by the defendant was that a certain amount was held by the plaintiff in trust for the defendant and that prior to the date of the suit, the defendant had asked the plaintiff by means of a notice to pay himself the amounlt due to him qut to the said amount and that nothing remained due to the plaintiff. The distinction between an adjustment and a set off was steted to be the following :"the plea to adjustment or satisfaction premises that the extiction of the plaintiff's claim or satisfaction took place prior to the date on which the defence was raised in the suit. By a claim for set off, on the other hand, the defendant prays that the Court should enter satisfaotion in respect of the plantiff's dues from the outstanding dues qwed by the plaintiff to the defendant. It is implicit in such a plea that the mutual indebtedness has not been adjusted till that date and adjustment is sought in the suit itself. "in tata Iron and Steel Co v. R. N. Gupta, AIR, 1963 Orissa 174. the suit was brqught for recovery to a certain sum by a contractor who supplied rice to the defendant. The basis of the plaintiff's claim was the wrongful deduction by the defendant from the plaintiff's bills for other supplies. The defendant's claim against the plaintiff was fqr loss incurred by the defendant as a consequence, of the plaintiff not supplying the rice as per the sample according to the contract both the supplies forming part of one transaction. It was held that tha plea of payment necessarily refers to a satisfaction or extinction to a debt effected prior to the stage of the defence whereas the plea of set off is in the nature of a cross-claim and in effect it prays for satisfaction or extinguishment to a claim, to be made in future after the date when the plea has been set up. It was held that since both the supplies formed, part of one transaction of contract, it was a case to adjustment. The statement of the law in Halsbury's Laws of England, 3rd Edn, Vol. 34 at page 395 in the following words was referred to :" Where there has been payment, the party against whom the claim is brought pleads payment or accord and satisfaction which, in effect, alleges that the claim no longer exists. The plea to set off on this other hand, in effect, admits payment of the claim and seit up a cross-claim as being the ground on which the person against whom the claim is brought is excused from payment and entitled to judgment on the plaintiffs claim. "in state of M. P. v. Balabhadra Singh, AIR. 1964 MP. 281. one Jagtrdar instituted a suit for the recovery of a certain sum from the State Govt, the sum beting excise duty op liquor etc, which had been realised by the State Govt qn behalf of the Jagirdar. The Defendant-State resisted the claim on the ground that the defendant had already adjusted the sum toward the amount due by the plamtiff to it, and that the balance had been deposited in the treasury and subsequently in the trial Court. That sum was paid to the plaintiff through the Court. It was held that defendant-State was already in possession of adequate money to pay itself out of that payable to the plaintiff and that its plea was one of adjustment and it was observed as follows :" When two persons have certain accounts and monies are payable by each to the other, they are both entitled to mutual adjustments of the monies provided they are really due and recoverable. The distinction between payment and adjustment is that payment is made to the creditor while the adjustment is made by the debtor himself. Although it is not called 'payment' in common parlance yet it undoubtedly partakes the character of payment. At all events it cannot be called a claim for set off nor can it be said to be a counter-claim as the defendant does not seek enforcement of his claim, and, therefore, Court-fee is not due. "in Jagdish Flour and Oil Mills v. Shri Ram Laduram, AIR 1966 Raj 177 the suit was brought for recovery of the price of good supplied to the defendants. "in Jagdish Flour and Oil Mills v. Shri Ram Laduram, AIR 1966 Raj 177 the suit was brought for recovery of the price of good supplied to the defendants. The defendants pleaded an adjustment of this amount alleging that there was another contract between the parties and that there was an agreement between them before the institution of the suit for adjustment of the amount claimed in the suit. It was held that since the plea of the defendants is that adjustment had taken place before the suit, it amounted to plea of payment and not a plea of get off. In chandra Dutt v. Shantiram, AIR 1967 Ker. 338 the suit was brought for eviction and recovery of arrears of rent. The defendant pleaded that he had paid certain sums to the plaintiff to be adjusted towards the arrears of rent and that there was nothing due to wards the rent of the suit properties. It was held that the plea was one of adjustment and not set off and the distinction between a plea of set off and a plea of payment was seated as follows :" 'set off' has rightly been distinguished from the plea of 'payment' in several decisions, which is to the effect that where the defendant pleads adjustment or payment of certain amount to the plaintiff towards his dues prior to the date, of the suit, it is adjustment or plea of payment. It is only when the defendant pleads that a certain amount which the plaintiff owes to him or which he is under an obligation to pay to the defendant should be adjusted towards his dues by the court and which he himself had not already specified as payment to the plainiff and communicated to Mm; then and then only it would be regarded as a set off. " ( 7 ) IN the present caae, it was alleged by the plaintiff then besides the sum of Rs. 4963-40 collected from the defendant, a sum of Rs. 2605 was realised by the sale of the distrained properties of the first defendant and that the sums were adjusted towards the arrears of rent. According to the plaintiff, after such adjustment, the amount of Rs. 15,400 was still due from the first defendant and the suit was brought lor the recovery of Rs. 2605 was realised by the sale of the distrained properties of the first defendant and that the sums were adjusted towards the arrears of rent. According to the plaintiff, after such adjustment, the amount of Rs. 15,400 was still due from the first defendant and the suit was brought lor the recovery of Rs. 15,000 since, the claim for a portion of the arrears of rent was barred by time. The defendant pleaded that theplaintiff illegally removed the machinery and other articles from the suit premises and got the same sold without following the procedure according to law. He further pleaded that goods worth more thin Rs. 15,000 were sold for a small sum "as stated in the schedule annexed to the written statement," and that the plaintiff is accountable for the proper price of the goods thus taken away from the defendant. He further pleaded that on a proper account being taken it will be found that the defendant is not liable to pay any sum to the plaintiff. It may be stated that no schedule was attached to the written statement. The lower appellate Court has come to the conclusion that the seizure and sale oi the moveable properties belonging to the first defendant by the plaintiff was not authorised by law. There is no reason to differ from that finding. The question is whether the plea taken by the firsit defendant amounts to a plea of adjustment or one of set off. ( 8 ) THE suit was filed on 30-5-1066, The attachment of the moveables was on 26-7-1962 and the sale took place on 25-8-1962. According to the plaintiff, only a sum of Rs. 2605 which was realised at the sale was deducted from the amount of arrears due from the first defendant. According to the plea of the defendant, the value of the moveables attached and sold was more than Rs. 15,000 though they were sold only for Rs. 2605 due to the negligence and default on the part of the plaintiff in not giving proper publicity as required by law to the intending bidders. What the defendant pleads would tantamount to saying that even if the plaintiff was authorised to seize and sell the moveables of the first defendant those moveables would have fetched the proper value of Rs. 15,000 if the sale had been conductedi properly. What the defendant pleads would tantamount to saying that even if the plaintiff was authorised to seize and sell the moveables of the first defendant those moveables would have fetched the proper value of Rs. 15,000 if the sale had been conductedi properly. In other words, the contention of the first defendant is that due to the default on the part of the plaintiff, a lower value was fetched at the sale and that the firsit defendant is entitled to ask the plaintiff to give deduction to the real value of the moveables belonging to the first defendant as on the date of sale, i. e. Rs. 15,000. Hence, what is pleaded by the first defendant is that though the plaintiff has given deduction to only Rs. 2605 towards the value of the moveables belonging to the first defendant, it must give deduction to their real value which was Rs, 15,000 in other words, the plea of the first defendant amounts to stating that the plaintiff must be deemed to have appropriated the moveables belonging to the first defendant of the value of Rs. 15,000 towards the rents due from the first defendant i. e. towards the suit claim. Hence, this plea amounts to a plea of payment or adjustment and not a set off since what the defendant states is that even prior to the date' of his defence, the suit claim has been already satisfide and that there is nothing more for the first defendant to pay to the plaintiff. ( 9 ) THE next question is whether the valuation arrived aft by the lower appellate Court is correct. It is after arriving at such a valuation that the lower appellate Court came to the conclusion that the machinery and articles were worth Rs. 12,200 at the time they were attached. The lower appellate Court has considered. the entiree oral and documentary evidence and the circumstances and probabilities of the case while arriving at the above said valutlion. There is no reason to) differ from the finding of the lower appellate Court in. this regard. This appeal fails and is accordingly dismissed with costs. --- *** --- .